I’ll bring this back to college hoops eventually. But first, I’ve got data to show that betting on NFL point spreads is like playing the slots in that you have no control over whether you win or lose. I know, you think you are the exception. You study the trends and wait for Donny Gridiron’s 10,000 dime play and you win money all the time. And I surely can’t prove that you, specifically, don’t have magical predictive ability. But I’m nearly certain you don’t.
I have come to this conclusion using the results of the 515 participants in the Las Vegas Hilton’s Supercontest. The rules of the contest are fairly simple and provide a great experiment on whether there is skill in betting on NFL games. Each entrant pays $1500 to participate before the NFL season begins. Each week the contestants pick five games against the point spread. At the end of the season, the participant with the best record wins a pile of cash and everyone in the top 20 wins something.
There’s an idiosyncrasy in the contest worth mentioning as well – the Supercontest permits time travel. The participants use the point spreads posted as of Wednesday morning, but get until Saturday to make their picks. Thus, if information becomes available between Wednesday and Saturday, it will move the point spread in the casino but it won’t affect it in the contest. This provides the participants with an advantage that the regular gambler doesn’t have.
Because the entry fee is $1500, I think it’s a reasonable assumption that each participant thinks they are better than average at picking games. The great thing about the Supercontest is that the results are public. The Hilton releases all of the picks that each person makes and updates the standings each week. This provides us with information as to whether these participants really are better than average.
Keeping in mind that these folks think they know what they’re doing, they get to travel back in time, and they get to pick the five games they feel best about, the results are underwhelming. Through week nine, the group’s picks have been winners 51.0% of the time. For those not hip to sports betting customs, one needs to win 52.4% of the time to break even. Even using a time machine, people are not able to beat the casino. And if you remove the time travel option, these folks are probably doing no better than if they flipped a coin.
This is not proof that you, specifically, are unable to make money betting on NFL games. Nor is it proof the person behind the entry named “Iced Tea”, who is 32-13 on the season and shares the lead in the contest through week nine, has no ability either. However, there is compelling evidence that suggests this is also the case. What we need to know is if there are people in this contest that do have skill and if their ability is being masked by the poorer players in the group.
There are different ways to attack this, and the one I’m using is simple. Each week, let’s take the aggregate record of the players in the top 25 (including ties) of the standings and compare them to the players in the bottom 25 of the standings. If there’s any skill in betting against point spreads, the best players should rise to the top and the worst players to the bottom. And it follows that the best players should perform better than the worst players.
Furthermore, with each successive week, the worst players have much less incentive to perform well. The worst players have lost their chance to win big money, while the best players have large sums of cash on the line. The players at the top of the standings are not only better (theoretically) but they have incentive to do more homework to make the right picks.
Given that, the results are interesting. Let’s look at how the top 25 and bottom 25 in the standings have performed since week five. To clarify what these records represent, we are looking forward. So the week five results represent how those that were ranked in the top 25 heading into week five did on their picks that week.
Wk Top 25 Bottom 25 5 76-60 .559 74-70 .514 6 77-53 .592 90-65 .581 7 74-76 .493 82-68 .547 8 66-74 .471 60-65 .480 9 83-67 .553 84-91 .480 376-330 .533 390-359 .521
(Keep in mind because I am including the top 25 and ties, there are varying number of people in each group for each week.)
There is a difference in the performance of the top 25 over the bottom 25 over the past five weeks, but it’s insignificant and less than half of a standard deviation. (If I was more devious I could have just removed week five and tilted the results towards the bottom 25, but I try not to be like that.) The folks that no longer have incentive have missed one more game out of 100 than the folks still fighting for a big prize.
To expand the results further, the bottom 25 has outperformed the rest of the field by a winning percentage of .521 to .506 during this time. There’s no significance to that either. It’s all noise. Given that 515 people flip a coin 45 times, you’d expect 3 of them to get tails at least 32 times. There are two that have won at least 32 games in the Supercontest if you include ties as half-wins. So assuming a random process provides a pretty good estimate there, also.
This is pretty strong evidence that betting on NFL is like playing the slots. I can’t prove that Iced Tea has no skill specifically, but in any group of 515 people, there are going to be some that appear to be really good (or bad) at guessing coin flips. That’s essentially what is happening here and why Vegas is what it is. The Hilton is brilliant to put on the Supercontest because it gives the illusion that certain people can win a significant majority of their picks.
I’m not suggesting people become rational and stop betting on NFL games. (Not that anyone would care if I did.) It’s the power of the masses that makes the NFL point spread the best forecast of the outcome. The paradox here is that it’s because so many people think they can win money that nobody can. Or at least nobody has the skill to do so. People make money on the slots all the time, but in the long run, it’s also a losing endeavor. The reality is that you can save your energy researching things like how the Chiefs have done against the spread in their last ten games against the NFC North and just flip a coin. The results of the Supercontest indicate that you’re as likely to get rich that way.
Some of you may see the connection to college hoops analytics, but I’ll expand on this soon.