Sports Betting Line Movement. Why do Betting Lines Move? It’s Not What You Think!
In this article we’re going to discuss the real reason behind why sportsbooks move their lines and odds.
We highly recommend reading this with an open mind, as this may be highly contrary to what most believe, and the incorrect narratives that have been sold by recreational sportsbooks and square bettors alike.
Understanding the concepts to follow could be the single, most important lesson for aspiring sports bettors as this will drastically change the way you approach the market, and overall mindset towards reading between the lines of why odds are shifting in real-time.
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“Sportsbooks want 50/50 action on both sides”.
“Oddsmakers want balanced action and to manage liability”.
“Sportsbook operators simply want to collect the vig and take no risk”.
Do any of these statements sound familiar? We thought so…
The truth behind how sportsbooks operate couldn’t be further from the truth, and we’re here to destroy this common misconception. Let’s dive in...
First thing’s first; have you ever noticed that when you open an odds screen and look at the lines for upcoming NFL games, you’ll notice the spread on a single matchup does not differ much at all from sportsbook to sportsbook?
These numbers will almost always be within a half-point of each other. You might see -2 and -2.5, but nothing outside of that.
For example, you’ll never see the Kansas City Chiefs at -3, but then -5, and -6.5 somewhere else.
For the most part, the lines are all the same.
Don’t you find that odd that they all are able to attract 50/50 action at that given number? Everywhere?
News flash – they’re not. Another news flash – they also don’t care that they’re not.
Let’s continue…
The reason all these sportsbooks are in unison comes down to a variety of reasons, but let’s start with a key factor…
Market Making Sportsbooks: These sportsbooks are willing to take professional action from winning sports bettors. They do not discriminate via limiting or banning professional gamblers. In fact, they encourage such action. These operate and have a different business model to that of a recreational sportsbook.
Recreational Sportsbooks: These sportsbooks are not tolerant of professional action and will limit and ban professional gamblers. These are also known as square sportsbooks and only allow bets from long-term losing bettors.
This is a vital distinction as a known winning bettor would not be able to walk into a recreational sportsbook and place a $5,000 wager. The bet will not be accepted and be rejected by their risk management team. However, a known losing bettor will be welcomed with open arms for the exact same wager.
These recreational sportsbooks have no interest in 50/50 action; but they do want to know what the ‘True Line’ on a game should be.
So, what is the ‘True Line’?
True Line: This is what the most accurate number on a game should be with every factor carefully accounted for. The true line can be known based on professional bettors shaping the market with their action. This is also where the importance of ‘Closing Line Value’ comes in, and we recommend reading our other article on this subject to gain a full understanding of how the market operates.
The question many of you are probably wondering is, “How does a recreational sportsbook know what the true line should be?”
That’s where the Market Making Sportsbooks come in.
These sportsbooks accept sharp action from winning bettors and move/adjust their lines accordingly.
They do not move their lines based on balancing action. Let us repeat that…
THEY DO NOT MOVE THEIR LINES BASED ON BALANCING ACTION!
The goal for these market making sportsbooks is to utilize information to arrive at an accurate number in the cheapest way possible. They do this by allowing sharp action and adjusting limits as the day/week progresses.
Limits: This is the maximum wager a given sportsbooks will allow. This can range from $250 up to $100,000 (sometimes more) depending on the event and time.
Market making sportsbooks have a boatload of money behind them and are not interested in balancing action.
For example – have any of you been to Circa here in Las Vegas? Nice joint, right?
They are not in the business of playing pitter-patter and managing tiny amounts of risk. They are in the MONEY-MAKING BUSINESS.
We’ll get back to that in a moment…
Let’s all assume for a second that the notion of 50/50 action is what the sportsbooks want. In this scenario they will be able to collect profit based on the vig.
Although this is nice in theory; it’s simply not possible in practice.
There is always going to be public teams such as the Kansas City Chiefs. The public are going to bet this team against a less popular team whether they are listed as 7-point favorites or 10-point favorites.
If they were indeed trying to balance action, it would almost be impossible as they likely couldn’t set the line high enough. They know 80% to 90% of the public money is going to come in on the Chiefs.
Also, what happens in a situation where the sportsbooks were able to create balanced 50/50 action, and then moments before kick-off, a landslide of $100,000 wagers come in on the Chiefs? Before you know it, they have over $1 million in liability with no time to adjust and try to attract money on the other side!
Hopefully this illustrates the impossible challenge of balancing action when put into a real-world example.
Let’s get back to reality…
Sportsbooks will offer an initial limit on a game once they set their opening line. For the NFL, Circa will often allow $2,000 as the initial limit.
They will only raise this limit once they get more comfortable with their number.
Let’s use an example of how this would work.
Kansas City Chiefs are -7 vs. the Detroit Lions.
All the public money starts to come in on Kansas City. They are not going to move that line until they receive some kind of valuable information from a known sharp source.
Let’s assume a pro bettor walks in and places a couple $2,000 limit wagers on Detroit at +7. Despite perhaps more overall money being wagered on Kansas via the public, Circa may opt to value that sharp bet enough to lower this number to 6.5.
At this point, Circa may opt to bump their limit from $2,000 to $5,000. This is still a low limit, and they aren’t concerned about the public action coming in on the Chiefs at the new number of 6.5. They know a pro bettor saw value on the other side and they are happy to take most of the action on what they believe to be the losing side (at this point).
Remember; they are in the business of making money and maximizing profit.
This is a key staple that must never be forgotten.
Let’s continue…
Perhaps with the higher limit of $5,000, a pro bettor decides to lay the -6.5 with Kansas City, so they may bump the line back to 7 if they believe that action was sharper.
All market making sportsbooks have what is known as a player profile that records all their action over time and grades them in order of sharpness (for lack of a better word).
At this point, they may decide to move the limit up to $10,000 or $20,000.
Once limits reach $20,000, it starts attracting the sharpest accounts, and this is where moves become more telling and interesting.
They may now receive a decent amount of pro action for $20,000 each on Detroit +7 and may decide to move that number back down to 6.5 or 6.
It should be noted that all of this is taking place many days before the game, as the sportsbooks know most recreational bettors are only interested in placing bets closer to kick-off or at the weekend.
At this point, they may decide to bump limits up to $30,000 or as high as $50,000 knowing the ‘True Line’ should be somewhere in the region of 6 or even 5.5 based on the professional action.
At this point, they are happy to allow all public money to accumulate at the current number of 6, as this could be considered a coin-flip based on the information they received from sharp sources via betting tickets.
This approach, over the long haul, will result in them maximizing profit by taking positions along with the pro bettors. Why scrape for pennies, when they can earn big often by knowing what the number should be.
The recreational sportsbooks understand this and allow all of this to take place to simply copy and move in unison with these sharp sportsbooks (assuming they know best).
This is also referred to ‘moving on air,’ as these sportsbooks are not moving for any kind of information purpose, but instead, simply choosing to mirror the market setting shops.
The 50/50 concept is a complete myth, and it’s vital to understand this is not why lines are moving.
In fact, we know based on various studies that the market always tends towards efficiency and becomes more accurate to the true outcome of a game as the day and week progresses.
This has been proven time and time again via something known as ‘Error Metrics’.
So, what is an error metric exactly?
If Kansas City -7, ended up winning by 10, then the sportsbooks error was 3 points.
If Kansas City were -6 earlier in the week, then the error on that line would have been 4 points.
The lower the error number, the more accurate the bookmaker’s number was.
We know that when we track error metrics across 10,000+ historic games, that the error is much lower the closer we are to a game start time, than earlier in the day or week.
This proves without a shadow of a doubt, that the line becomes more accurate as more time passes. This is due to the line movement based on professional action as previously mentioned.
To summarize, sportsbooks will move their lines for only a few reasons; in order of importance…
- Sharp Action
- Injury Information
- Weather Information
Now, there are a few exceptions to this rule…
Public money does have the ability to move lines on enormous events where the accumulation of money is so vast. However, this is on the rare public events such as the Super Bowl, or a massive fight (Connor McGregor vs. Floyd Mayweather).
They simply cannot afford to take an obscene amount of risk, regardless of how comfortable they are in their number.
However, excluding those examples; sharp money and information is the only factor that sportsbooks care about, as they raise limits progressively.
They then allow the lion’s share of square action to come in at an efficient market price.
Equipped with this knowledge, you should be able to read the market more accurately and find more value and understanding in what is happening behind the scenes.
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