Excerpts from a newsletter by John Authers at Bloomberg:
In a new paper, Moskowitz recounts the results gleaned from more than 100,000 betting contracts from the largest Las Vegas and online sports gambling books across four U.S. professional sports leagues: the National Basketball Association, the National Football League, Major League Baseball , and the National Hockey League, with multiple contracts per game that allow for bets on who wins, by how much, and total points scored. The contracts he covered spanned three decades...Moneyline does offer more of a chance to make money, because bettors are prone to a classic behavioral error. The natural tendency to want the underdog to win, combined with the hope of a higher payoff by backing the team with the longer odds, means that persistent betting on the favorite will generally make money. Moneyline favorites tend to be on more generous odds than they should be, thanks to the enthusiasm for betting on less-favored sides. “It’s not that people think that the underdog is likely to win,” says Moskowitz. “It’s more that they are willing to pay a premium to have a small chance of a big payout.”..That leads to the greatest objection to sports betting; it involves an inverse-Robin Hood redistribution of money from the poor to the rich. To make this even more distasteful, it also brings the chance of a harmful gambling addiction for people who can least afford it. Sports betting is ultimately as depressingly regressive as state and national lotteries, in which the minuscule chance of a huge pay-out tends only to appeal to those with very little money, who will mostly have even less as a result of buying lottery tickets. The same thing happens when people bet on longshots in the forlorn hope of big winnings...Survival Tips: Don't bet on sports.