Anyone familiar with Sports Insights knows we advocate a contrarian approach to sports betting. Like contrarian investing, this strategy is characterized by placing funds behind unpopular stocks (or teams) in contrast to prevailing opinions. A contrarian believes mob psychology -- which is largely comprised of casual "weekend warrior" bettors -- can lead to exploitable mispricing.
Within the framework of the sports betting marketplace, most bettors can be categorized as either "sharps" or "squares." Sharps, who are alternatively referred to as wise guys or betting syndicates, spread large bets across multiple sportsbooks. Widely respected, sharps are a smaller group that moves lines across the marketplace. They are not necessarily defined by the size of their wager, but rather by their winning track record and consistent ability to get the best of the number.
The majority of bettors can be categorized as squares, who casually place wagers based on gut feelings and instinct, rather than data analytics and model building. Squares love winning teams and high-scoring games, and therefore tend to pound favorites and overs. This has historically created a slight edge in betting on underdogs and unders.
Widespread pessimism about a team can lead to one-sided betting. This influx of public money often causes sportsbooks to mitigate their risk by adjusting the line, and forcing casual bettors to take a bad number on the popular side of the game. Although they're not necessarily looking to balance their books, oddsmakers excel at accounting for public money, and often shade their opening line to account for known biases.
Using a contrarian philosophy, many strategies can be used to extract value each week. Betting against the public is one cornerstone, but there are additional ways bettors can use public betting information in conjunction with historically profitable trends. Using our historical college football database, I have identified three ways that bettors can win during bowl season.