Naive Betting Strategy Review
We will track several simple hypothetical betting strategies this season, including 1) betting with changes in the spread, 2) fading the public (i.e. betting on teams to cover that have garnered less than 40% of public betting support), 3) taking all favorites to beat the number, 4) backing all home teams versus the line and 5) supporting home underdogs ATS.
Consistent with research on the topic, we expect certain trends to exhibit profitability over extended horizons. For example, Paul and Weinbach (2010) find evidence of statistically significant profitability related to betting against public sentiment; and Borghesi (2004), Gandar, Zuber and Lamb (2007), Borghesi (2011) and Humphreys, Paul and Weinbach (2013) all validate the existence of a home underdog effect in NFL betting markets. Our hypothesis is that, while over reasonably long timeframes these tendencies are likely to manifest, from one season to the next we allow for the potential emergence of shorter-term drifts that run counter to these bigger picture predilections. Intra-season might serve as a cross-check for our picks, from one week to the next.
The Betting Line
According to TheFootballLines.com, 12 of last week's contests saw the closing line diverge from the opening spread. The direction of this movement accurately forecast ATS outcomes for 7 games, bringing the season-to-date record to 19-17-1 for the betting line, good for a negligible profit assuming the standard vigorish of -110.
Betting Against Sentiment
Fading teams favored by 60% (or more) of spread bets was wildly profitable in week 1 but suffered a nominal loss the following week. Despite the minor setback in week 2, we speculated ahead of last week's action that early momentum might be a harbinger for persistent predictive ability by this factor over the whole of the season. On cue, and as a further testament to week 3's utter unpredictability, fading the public bounced back with a vengeance. Teams backed by extreme levels of betting support finished a paltry 2-9 versus the number in week 3. This brings the cumulative record for betting against the public to 20-10 (for 9 units of hypothetical profit), and buttresses the approach's position as the most profitable naive strategy on our radar.
Favorites
After sticking to the 50% cover rate (like glue) through two weeks of NFL action, UNDERDOGS asserted themselves last week -- to the tune of a 12-4 ATS showing. On the season, favorites are now 19-27-1, good for a 10.7 unit loss assuming the standard vig. The corollary is that backing dogs to cover every game this season would have amassed a profit of +6.1 units through week 3.
Home Teams
Teams performing before the home crowd have covered at a 53% clip (25-21-1) after week 3's 9-7 out. Home dogs did the heavy lifting last week though, submitting a 7-3 record ATS. This improves the record to 13-8 this season for underdogs on their field, good for +4.2 units of profit.
Profitability Summary for Naive Strategies
Fading the Public +9.0 units
Underdogs +6.1 units Home Dogs +4.2 units Home Teams +1.9 units
Line Movement +0.3 units
Picks and Pans
After a tremendous week 2, characterized by a 77% win rate (see here, here and here for details), we were alert to the potential for a reversion in week 3. Our concerns were magnified when our model instructed us to bet against the Broncos, Falcons, Patriots, Raiders and Cowboys -- five of the top ten teams in the League by most accounts. As it turns out, we averted crisis and finished the week 6-6 ATS and 0-1 betting totals (for a cumulative loss of 2.5 units).
In the end, the five hold your nose picks were a profitable 3-2 ATS, and perhaps saved our bacon. It was the 'locks' that hurt most: the Ravens were thoroughly outclassed across the pond by the Jags, the Steelers lost outright to the Bears, despite closing as seven point favorites and Cam Newton's Panthers looked feckless against the Saints, on both offense and defense.
The Falcons got a little help from the officials in covering at the Lions, so we can justify our failed attempt there (we could not reasonably be expected to predict that a bad call would rob Detroit of the cover opportunity, right?). And finally, in a blow to our full house signal picks, the Seahawks could not overcome the three touchdowns yielded to the Titans in the third, and came up short in what turned out to be a shootout at Nissan Stadium.
On the season, our published picks are a smart 18-9-1, for a 67% win rate and +5.0 units of actual profit (we bet each of our published picks; to date, the average vig on our losses is a juiced up 116.66). Needless to say, we are quite satisfied with our strong start, and especially pleased that week 3 did not upend our apple cart.
Our published full house plays were hindered last week by Seattle's aforementioned inability to deliver the cover, and stand at 3-2 through week 3. Recall that full house signals are registered when our five independent power rankings and computer simulations routines unanimously endorse the same outcome.
Down to Brass Tacks
Last week we noted that road teams were favored in 11 of week 3's 16 match-ups. Heading into week 4, that trend has reversed and squads at home are favored in ten instances, versus just five where Vegas expects the away team to triumph. Our framework highlights nine home teams, of 11 NFL Sunday against-the-spread picks, so we are clearly looking for a continuation of the strength hosting teams exhibited last week, albeit with a slight twist: in aggregate, about 70% of our week 4 picks support home favorites (whereas last week home underdogs were all the rage). Home favs are 12-13 ATS on the season, and seem due to have a day (or a week). The Packers' definitive cover versus the Bears Thursday night offers an early modicum of validation for this thinking.
As usual, the spreads indicated in our picks grid are from Bovada.lv, where we are laying our NFL wagers this season. Betting percentage figures are from SportsInsights . Picks shown in bold black font reflect full house signals, our system's highest conviction picks. Focusing on this small subset of picks has been especially profitable historically (21-11-1 ATS since the start of the 2016 season). Game picks shown in bold purple font are those in which each of our three sim routines agree on the expected ATS result. Such picks finished last season 31-17-2, and are 7-5-1 so far this year.
Bottom Line: Bookmakers made out like bandits last week on NFL spread bets, as the public's bias toward favorites, as documented by Paul and Weinbach (2010), worked against them in dramatic fashion. We expect squares to exact revenge this go-round, largely on the strength of a strong performance by home favorites. If this premise holds, sentiment will likewise fare well, as a majority of bettors are siding with seven of the 11 home favs this week. In accordance with this overarching outlook, seven of our 11 Sunday picks support home teams, and seven align with teams eliciting the bulk of public support. Vegas beware!
Happy betting!!