You can look at all sorts of statistics—for example, the underdog has beaten the spread in 11 of the last 14 Super Bowls—but there is one statistic that may be the key. Bookies are not bettors. They set the spread to equalize the dollars wagered on each team so that they will come out ahead no matter who wins. The odds they set are a reflection of the betting public’s assessment of the teams—and humans—being human—are susceptible to predictable misperceptions.
One is overconfidence. Gambling is a zero-sum game in that if bookies make money, and they do, it must be because bettors lose money. Yet, despite their losses, gamblers keep betting because of a mistaken faith in their ability to pick winners. When they win, it is because they are smart. When they lose, it is because of bad breaks and bad officiating. It’s not their fault.
Bettors are correct when they say that football games are buffeted by chance. They are incorrect, however, in their belief that luck only matters in the games they lose. All football games are affected by good fortune and misfortune. Sometimes, a defender raises a hand at just the right time and deflects a pass; sometimes he doesn’t. Sometimes, a receiver drops a well thrown pass; sometimes he catches a poorly thrown pass. Sometimes, a fumbled ball is recovered by the team that fumbled; sometimes, it isn’t. Sometimes, the official throws a flag; sometimes, he doesn’t.
Yet, coaches, players, and fans do not appreciate the implication. Because athletic performances are affected by luck, and luck is fleeting, extreme performances typically are followed by performances that are less extreme. Teams consequently regress toward the mean, in that those teams that do the best one week typically do not do as well the next week.
Marcus Lee and I looked at a betting strategy based on the simple presumption that a blindness to regression causes gamblers to overrate successful teams. When a team beats the spread, one possible interpretation is that the team’s ability is better than previously believed. Another interpretation is that the team was lucky and the amount by which it beat the spread overstates its ability. If bettors do not fully appreciate this, they will think too highly of the team and push the team’s point spread too high the next week. If so, it may be profitable to bet against teams that beat the point spread and bet on teams that did not.
In each game, our strategy was to bet against whichever of the two opposing teams has been doing better against its point spreads. We did not estimate the teams’ abilities. We simply assumed that the bettors push the spread too high for teams that have been the most successful in beating the spread. And that is what we found—teams that have been doing well against the spread are favored too highly.
Leading up the Super Bowl, the Patriots were favored by 16.5 points against Houston and won by 18, and were favored by 6 against Pittsburg and won by 19. Overall, they beat their spreads by 14.5 points. Pretty good, but not as good as Atlanta, which crushed its spreads. The Falcons were favored by 6.5 points against Seattle and won by 16, and were favored by 6 against Green Bay and won by 23. Overall, they beat their spreads by an astonishing 26.5 points. Either Atlanta is a lot better than people people thought a few weeks ago, or they had some good fortune in their last two games and are not as good as people think now. The latter is more likely.
My guess—and it is probably worth what it cost you—is that New England will beat the spread Sunday.