An NFL over/under system that beat the Vegas line
In a recent post on his NFL blog, Brian Burke comes up with a system that handily beats the Vegas “over-under” line for team wins.
Here’s the system. If a team is predicted to have 9.5 wins or more (that is, go 10-6 or better), take the under. If they’re predicted to go 6-10 or lower, take the over.
If you did that over the last two seasons, you would have gone 24-10. That is, needless to say, very impressive.
Now, it’s possible, and even easy, to mine the data and come up with formulas that pick winners in retrospect. So it could be coincidence that this method worked so well in 2005-06. Indeed, there's some selection bias, because if it hadn’t worked well, Brian wouldn’t have posted it.
But, I think this one might actually have some merit, because it takes advantage of two biases that bettors have. The two principles that fans have trouble with, according to Brian:
1. The NFL is impossible to predict before the season starts. And,
2. Regression to the mean rules the day.
Basically, a lot of what happens over a short 16-game season is luck. And so, consider a team that goes 10-6 last year. It could be that this team is an average 8-8 team that got lucky, or a really great 12-4 team that got unlucky. There are so many more average teams than great teams, though, that the odds greatly favor the “lucky team” hypothesis. But fans have trouble grasping that; they see the actual 10-6 record, and think the team is likely to repeat that performance.
The same is true, in reverse, for the teams with bad records.
So that's a decent explanation for why Brian's system works (if it does): bettors underestimate the amount of luck, and therefore think teams are less average than they actually are.
Still, it’s dangerous to suggest that a strong and liquid betting market is getting these things wrong. All I’m saying is that, compared to other betting systems based on historical results, at least this one has a very plausible explanation for why this happened.
And, intuitively, it just seems right. As of right now, TradeSports is saying that the New Orleans Saints (who are now 0-1) have a 42% chance of going 10-5 over the rest of the season. Given that they were only 10-6 last year, and 3-13 the year before, doesn’t that sound a little optimistic? There are probably personnel changes that are driving some of this enthusiasm (I don’t follow the NFL much, so Drew Brees is the only one I know), but I’d still be taking the under here.
As I said, I hesitate to suggest that sabermetricians are smart enough to beat the Vegas line. But still, if you pointed a gun to my head and forced me to choose one system to play, this would be it.