The SEC vs. the Dow Jones: A Profitable Betting Strategy in NCAA Football
Keywords:college football, financial markets, gambling, recreation
AbstractThis article tests the efficient market hypothesis (EMH) and the profitability of a simple betting strategy in National Collegiate Athletic Association (NCAA) college football. We examine all games that have a point spread, from September 2003 through January 2015, for inter-conference matches involving a Power Five/Automatic Qualifying (P5/AQ) team against a Football Championship Subdivision (FCS) opponent. We further investigate one conference using these matches from 2016 through 2018 seasons. The betting strategy evidence suggests it is nonrandom and profitable to bet against the Southeastern Conference (SEC), despite its perceived status as the nation’s top conference.
American Gaming Association. "Football Bets to Top $90 Billion for Second Straight Year." American Gaming Association, 7 Sep. 2016. https://www.americangaming.org/newsroom/press-releasess/football-bets-top-90-billion-second-straight-season. Accessed Jan. 11, 2019.
Badarinathi, R. and Kochman, L. (1996). “Football Betting and the Efficient Market Hypothesis.” American Economist, 40(2), 52-55.
Coleman, B. (2017). “Team Travel Effects and the College Football Betting Market.” Journal of Sports Economics, 18 (4). 388-425.
Connelly, B. (2019). “The 2017 S&P+ Rankings Have Been Updated.” https://www.footballstudyhall.com/2019/4/17/18412331/2017-college-football-rankings. Accessed June 11, 2019.
Even, W. E. and Noble, N. (1992). “Testing Efficiency in Gambling Markets.” Applied Economics, 24. 85-88.
Fodor, A., Krieger, K., Girdner, C., and Kirch, D. (2013). “The Power of Wagering on Power Conferences.” The Journal of Prediction Markets, 7(1), 13-25.
Francisco, J. and Moore, E. (2018). “A comment on Paul and Weinbach’s (2005) “Bettor preferences and efficient markets in totals markets.” Journal of Economics and Finance, 42(4), 836-840.
Gandar, J. Zuber, R., O’Brien, T., and Russo, B. (1988). “Testing Rationality in the Point Spread Betting Market.” Journal of Finance, 43 (4). 995-1008.
Johnson, R. (2016). “Why the SEC is playing all these bad games against FCS teams in the middle of November.” https://www.sbnation.com/college-football/2016/11/19/13676974/sec-november-fcs-games. Last accessed June 10, 2019.
Kuester, D. and Sanders, S. (2011). “Regional Information and Market Efficiency: The Case of Spread Betting in United States College Football.” Journal of Economics and Finance, 35 (1). 116-122.
Levitt, S. (2004). “Why Are Gambling Markets Organized So Differently From Financial Markets?” The Economic Journal, 114 (April), 223-246.
Mirabile, M. and Witte, M. (2016). “College Football and the Vegas Line: Deconstruction and Arbitrage.” The Journal of Prediction Markets, 10(1) 53-67.
Paul, R., Weinbach, A., and Higger, E. (2013). The Large Firm Effect: Bettor Preferences and Market Prices in NCAA Football.” The Journal of Prediction Markets, 7(2), 29-41.
Paul, R., and Weinbach, A. (2005). “Bettor Preferences and Market Efficiency in Football Totals Markets.” Journal of Economics and Finance, 29 (3). 409-415.
Paul, R., and Weinbach, A. (2011). “NFL Bettor Biases and Price Setting: Further Tests of the
Levitt Hypothesis of Sportsbook Behavior.” Applied Economics Letters, 18, 193-197.
Sagarin, J. (2019). “Jeff Sagarin’s College Football Ratings.” http://sagarin.com/sports/cfsend.htm Accessed June 11, 2019.
Sinkey, M. and Logan, T. (2014). “Does the Hot Hand Drive the Market? Evidence from College Football Betting Markets.” Eastern Economic Journal, 40 (4), 583-603.
Sports Insights, LLC. https://www.sportsinsights.com/ Accessed January 11, 2019.
Steele, P. (2019). Phil Steele’s 2019 College Football Preview.
Vegas Insider. http://www.vegasinsider.com/college-football/matchups/ Accessed June 11, 2019.