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Why College Footbll Lines Move
Remember that sportsbooks make their money by withholding a small commission on winning wagers.
If Player A bets on Georgia Tech –4, risking the standard $110 to win $100 and Player B bets $110 to win $100 on USC +4, then the sportsbook makes $10 regardless of the outcome, as long as the final score isn’t Georgia Tech by 4 points (in which case both wagers would be pushed and nobody makes any money). Since the total wagered is $220, the house’s gross profit % in this simple scenario is about 4.5%. This number is the Theoretical Hold Percentage (or THP for short) for a straight wager. Now lets discuss a couple of reasons why this number is only theoretical.
First, in the real world, action is very rarely perfectly balanced and sportsbooks almost always have a vested interest in the outcome of every game. When action isn’t balanced, and the outcome of an event could lead to a loss for the house, the sportsbook is exposed. Each sportsbook determines how exposed it can be on any given event. It is a combination of this tolerance for risk and the sportsbook’s wagering action that drives line changes. If a sportsbook has $5,500 wagered by its clients on Georgia Tech –4 and $2,200 wagered on USC +4, then the sportsbook stands to lose $2,800 if Georgia Tech covers (collects $2,200 from players who bet on USC but has to pay $5,000 to players who bet on Georgia Tech) but stands to win $3,500 if USC covers (collects $5,500 from players who bet on Georgia Tech but has to pay $2,000 to players who bet on USC). This may not seem like much risk, but if you multiple these numbers by 10, 20, 50, 1000 or more, you can appreciate why sportsbooks move lines to balance action. One sportsbook might move to –4.5 when it is exposed by $5,000 on Gerogia Tech where another sportsbook might be comfortable at –4 until it is $250,000 offside. It depends on the anticipated total handle, the game, the sport and the book’s tolerance for risk.
Some sportsbooks handicap the games themselves and may shade the line a half point or more in a direction to generate more wagering on the team they think will not cover. If they like Gerogia Tech to cover the –4, they may open the line at –4.5. If they like USC, they may open the line at –3.5. Or, they may open the game at –4 and simply decide to allow more risk on one team then the other. For example if the house likes Gergia Tech and has a normal risk tolerance of $25,000 on a given line, the house may then decide to move to –4.5 after only being $10,000 offside on Gerogia Tech, but would wait to be $40,000 offside on B before moving to –3.5.
Right now, other than cursing me for too much math, you may be thinking: “why don’t sportsbooks just keep moving the line until they are balanced?” The reason sportsbooks don’t balance action at any cost is because there is also a risk involved every time a line is moved. Let’s use some very simple examples to demonstrate the risks. Example #1: There is $110 on Georgia Tech –4 so the house moves the line to –4.5 to attract action on USC (now at +4.5). Someone bets on USC +4.5 for $110 so the house is happy. However, there is an unpleasant side effect if the final score is Georgia Tech –4. The player who bet on Gerogia Tech has his wager pushed, but the player who bet on USC wins and collects $100, so the house loses $100. When the final score lands on one of the outer extremes of the range of pointspreads for a game the house is said to have been sided.
Example #2: There is $110 on Georgia Tech –3.5, so the house moves the line to –4 to attract action on USC. At –4 it takes $110 more on Georgia Tech and decides to move to –4.5. Someone bets on USC +4.5 for $220 so the house is happy ($220 total on each team). In this case, there is a very unpleasant side effect if the final score is Georgia Tech –4. The player who bet on Georgia Tech –3.5 wins $100, the player who bet at -4 has his wager pushed and the player who bet on USC wins and collects $200 so the house loses $300. When the final score lands between the outer extremes of the range of pointspreads for a game the house is said to have been middled.
It is the risk of getting sided or middled that keep books from moving lines, and it is the risk of having a position on a losing team that force them to move the line. Books that move lines too far can suffer heavy losses with a bad outcome, as will books that don’t move lines enough. The difficulty in knowing when to move lines is what makes bookmaking an art and not a science. Just remember that every book moves lines a little differently and so every day there are differences in the lines between books for the exact same game.
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