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How is the Betting Line Created?

September 14, 2010 by  
Filed under General Information

Theoretically anybody can create a betting line. All you have to do is set a point spread, a moneyline and an over/under, and then attach odds to each of those betting types. But in reality the process of creating betting lines on competitive sports in such a way as to make money for the sportsbooks is so unbelievably complex that very few can do it well. As a result, there are really only two sources of betting lines for sporting events.

The US source is a company called Las Vegas Sports Consultants (LVSC), and they have been in business since 1982. A more recent arrival to the field is the offshore sportsbook Costa Rica International Sports (CRIS). CRIS was established in 1985 and over the next several years they grew and began competing with LVSC in the arena of creating betting lines. These two organizations combined provide betting lines for virtually every sportsbook and bookie on the planet.

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You may recall in the previous section titled How do Sportsbooks Make Money on the Point Spread that we described the point spread as the number of points that the favorite is expected to win by when playing the underdog. In truth a large part of the betting public may actually believe that the favorite will beat the underdog by the number of points listed in the spread. But to hear this and then conclude that the point spread posted by the oddsmakers is meant to reflect the expected point differential is to completely miss the truth about how and why betting lines are created.

LVSC and CRIS do not set betting lines based on the expected difference in score between two teams. They set the lines so as to create equal amounts of betting on both teams. And as intricate as the creation of betting lines can become, both LVSC and CRIS create their lines using the same basic types of information. Some of the factors that go into the creation of betting lines are home field advantage, injury reports, the history of meetings between the two teams, public preference, and of course the power rankings which are themselves the product of a whole array of statistical data.

Power rankings (also called power ratings) are the cornerstone of the betting line. They are a list of all the teams competing against each other in any given sport, and the teams are ordered on the list according to which has the higher power ranking. The higher a team’s power rankings, the closer they are to the top of the list. The assumption is that for any two teams which play each other, the team with the higher ranking is likely to win. In fact, many sports handicappers believe that a comparison of the power rankings between two teams can predict the outcome of a game between those teams much more reliably than the point spread.

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Power rankings are calculated using a complicated formula combining many stats such as the win/loss percentage of a team’s opponents, the team’s average scoring margin, and the number of home games and road games on the team’s schedule. They are published by many different sources but the most widely accepted rankings come from media providers such as major broadcasters, nationally distributed newspapers and magazines. Every provider has their own specific formula for creating these rankings, and some of these formulas are actually posted for the readers.

But the power rankings are just the beginning of the process. All sorts of other information must be taken into account and processed. Injuries to players can have a dramatic effect on the odds, especially if the injured player is in a key position like quarterback or is otherwise one of the standout players on the team. And regardless of how the two teams match up against each other in reality, the public may bet heavily on one team simply because that team is popular and well liked. In such a case the sportsbooks will need to offer attractive odds on the opponent so as to encourage more people to bet against the popular team.

Betting lines which originate from LVSC and CRIS soon make their way around to the hundreds of online sportsbooks that populate the internet. But just because the major creators of betting lines post certain point spreads or moneylines doesn’t mean that every sportsbook has to copy them precisely. Indeed, many individual sportsbooks may use the Vegas and Costa Rica betting lines as a starting point, but the sportsbooks have very competent oddsmakers of their own who can tweak the established lines in an effort to maximize the sportsbooks profits.