line movement

QUESTION OF THE DAY: "Line Movements"

Today's question is much longer and more detailed than usual. But, it's a very important question and I want to take time answering it as best I can. So, please bear with me while I take this in separate parts. I will interject my comments below with the "REPLY" notation. Then, we will proceed to the next part and move on.

Nolan:

As I'm sure so many others have told you, I've enjoyed reading your column at MadJack's immensely these last several months. You are about the only professional that I've come across in my many years of gambling that has been willing to take the time and energy to share his experience and knowledge to the extent you have. Believe me, I realize how much hard work goes into putting your thoughts down in writing. I could go on at great length with the platitudes, but suffice it to say that I consider what you are doing at MadJack's a very rare learning opportunity for which I am ever so grateful.

I try to catch most every column, so unless I've just flat missed it, I don't believe I've seen you discuss (at least to any great length) the subject of line movement in relation to handicapping. A few years ago there was a spirited debate on another message board as to whether or not observing line movement (particularly sudden across the board movement) played any role in handicapping a game. The purists loudly insisted that true handicapping involves the traditional fundamental and/or trend analysis approach and would have none of this business of using line movement to aid in determining a play. Others insisted that because handicapping involves observing past events and their related outcomes, and then trying to identify and quantify those observations that are the most highly correlated with the outcomes, that line movement was just one more such observation that can be used in making a prediction.

REPLY: Before I get to your specific question, I do have one comment. For those who are not aware, there have been serious debates as to whether, in general, a major line move means the influx of "smart money" (an indication of a stronger play), OR is simply an indication that the public likes a certain side based on the latest news reports and perhaps their false perceptions of the game, thus meaning the real "value" comes by betting the other way, since Las Vegas presumably (clearing my throat loudly here) "doesn't make mistakes."

My initial reaction to this topic is that a debate on religion or evolution would be easier to solve -- because both sides can make very compelling arguments, but there seems to me no compelling case on either side. By the way, I've heard this same debate in horseracing circles, as well. For example, how does one interpret the course of events when the parimutual odds on a horse drop from 8-1 to 9-2 at the last minute? A large bet, yes. But is it smart money? That stated and noted, let's move on:

Now...I'm sure these two schools of thought can be debated ad infinitum, but my question is not as concerned with settling the above argument as it is in hearing your thoughts on:

1) What is this sudden ATB (across the board) line movement? I particularly mean the sudden movement one often observes at the offshores? That is, is it often the books just "making an adjustment" to be in sync with each other, or is it often just what it looks like...a syndicate or large player getting down on a particular side or total?

REPLY: First, I will say that I am not as familiar with off-shore operations as I am with Nevada sportsbooks. However, I assume off-shore operations are basically now in line with what goes on in Nevada, and the dynamics that influence the lines are pretty much the same. All of the Nevada books now share information with each other. This is done online. They subscribe to the same service that basically serves as an information "clearinghouse" for sportsbook managers -- including a database of all the lines that are available at the major books in Nevada (I do not believe that ANY off-shore books are included in the Nevada exchange, but I could be wrong -- if anyone knows, please e-mail me). When the NBA morning lines are initiated (which usually comes about 8:30 am PST) most books put their early numbers online and immediately look for discrepancies. They may see. for example, an obscure college basketball game where their line is off by several points (it's rare, since there are now power ratings, advance lines, and the Las Vegas Sports Consultants i.e. Roxy's former service -- all of which can create lines which are pretty much in unison before the actual lines come out each a.m.). When there is an obvious discrepancy in the early numbers, the book will usually make the correction immediately and make it in line with the number posted by the other major books. Then, the opening line is posted (actually written on the board in the casino). At this instant, there are usually bettors ready to pounce on "soft" lines. You don't see this nearly as much in terms of volume in basketball or baseball as the NFL, but there are players that purposely wait for the opening line and look for oddities, then make large wagers at the window. I am not familiar with the amount of money it takes to move a line these days (it would depend on the size of the book and the significance of the game). There are some suggestions that the books actually put out what they know to be "weak" numbers so they can see where the action is and quickly make the necessary adjustments. In other words, they use the "sharpies" to tailor their lines to the public. I'm not qualified to determine whether or not this is true. But I suspect there is some tit-for-tat that goes on in the early action.

As to your point about ATB (across the board) movement -- I attribute that to each book being tuned-in to the same database, where wagers can be tracked and information is shared. If several books start to get heavy action on a side, they can quickly determine if a similar pattern is developing at other off-shore sites. There may even be some kind of computer program that "red flags" large wagers and immediately shoots adjustments across the board to all the off-shore books, much like computers are used in the stock market where stocks are bought and sold by computer once the offering reaches a predetermined price. As the level of sophistication has increased off-shore, it's very possible that there is a program code that automatically makes line adjustments -- or at least "red flags" adjustments that need to be made. Again, I will defer to any sportsbook operators or off-shore programmers that want to interject something on this point. I also assume there is some relationship to Nevada in terms of line monitoring (for comparison purposes, at least). Assuming there is no program tie-in by the offshore books, and a program that flags the adjustment games does not exist (remember, there are hundreds of offshore books and many may still be operating independently at the fringes), it's still natural that there would be a domino effect and other books would follow a significant line move at one of the majors. Another point: Some off-shore books may have agreements to "call off" action with each other, in case there is a disproportionate amount of wagering on one side. This too, could influence line movements from one book to another.

You also make a point about the quickness by which line adjustments are made and the consistency you have observed in the lines and totals. Since off-shore operations are even more closely tied to computers and large databases that can track the size of wagers with a keystroke, perhaps they are able to make lines adjustments more readily -- while some of the Nevada books have more of a "lag time" just by the nature of their operations (remember, some of the older sportsbooks are still working with dated technology) and the line adjustments are not always in synch, and therefore not as obvious to the public.

ANOTHER POINT TO CONSIDER: An ATB line movement early in the day (or week) is more indicative of getting in line with the other sportsbooks (which means a bad initial line), whereas if you observe this pattern late in the day (say, near game time) it just means the money is coming in heavy on one side -- since any early errors would have been ironed out by late in the day. As previously stated, if a line moves a point or two very early, it could mean a large wager has come in one a side. But most books know they can make-up a large wager (within reason) given they have several hours until game time. A late line movement is intended to get bettors on the other side fast, and the more the line moves late, the more of a "panic" is setting in at the sportsbooks.

ONE OTHER CONSIDERATION: If we see a 2-point line movement on the Creighton-Xavior basketball game, for instance, this could be because of the most flimsy of reasons. It's just been announced on the wire that one of the starters has the flu. Or, a bunch of large bets have come in on one side. Or, both. These games are very fragile. It doesn’t' take much to move a line in the colleges (especially a second-tier game), so I would give more credence to "smart money" moving lines in the low-profile games. No one puts $10,000 on Creighton unless he has good reason (there are exceptions, of course -- only that I'm saying to watch the line moves in the second-tier games…those are more menaingful). Conversely, if a line moves 2 points in an NBA game (say New York is playing Miami which would be a high-profile game generating millions of dollars in action), that means there's an absolute ton of money going on one side. In this case, I would be much less "trusting" about a line move in a high-profile game versus a low profile game. If a line moves two points on Xavier, it usually means a helluva' lot more than if the line moves two points on the Knicks.

2) Why is this sudden ATB line movement sometimes, often over a long period of time, highly correlated with the ATS winner of the contest, then only to be followed by a period of time where this correlation falls apart?

REPLY: You are asking why streaks occur. Essentially, you have noticed a pattern where the line movement seems to determine the ATS winner with greater regularity for an inordinate amount of time, followed by a cold spell in which the opposite effect occurs. I do not subscribe to this point of view. In fact, I would be willing to bet that if you took all of the NBA games this season and tracked the line movement, you would certainly see many streaks occurring, but you would not be able to identify any reason or predictability for the course of events. In other words, you would pretty much see the same "phenomenon" at a craps table or a roulette wheel (red and black). One shooter holds the dice for twenty minutes. Then, the dice run cold for half an hour. The wheel comes up red three straight times, then black four straight times. Biased wheel? No. It happens. We, as humans, are predisposed to notice patterns -- and when we see repetitive results, we become convinced there are forces at work that cause this to happen. My view, is that it is perfectly random. The great Hungarian-born mathematician John von Neumann (1903-1957) wrote on this subject in greater detail than I can possibly go into here. See his works on game theory where he proved this point about humans predisposed to noticing patterns, which were in fact random events. This point is critical. Line movements might actually run one way for awhile and run the other way for awhile. And other nights, the line movement will go 4-4. Perhaps, a point can be made that line movements favor the team covering by 52-48 percent over the course of a season, which would be indicative that a line movement indicates "smart money." But this appears to be within standard deviation, and unless this is occurring year in and year out over the last decade, I would not give any credence to this theory. I'm not trying to lecture you on this point, because this is strictly personal opinion based on what you have told me -- I'm only trying to explain the reason for this pattern based on my understanding (and interpretation) of this in relation to conventional gambling theory.

This second question arises out of my own experience. I realize, of course, that tracking line movement has always been done by players. But with the age of the internet it seems to have taken on a new significance. I say that because roughly three years ago a group of us (largely just a loose collection of us guys, and one gal, that "met" on the discussion boards and formed an email group) began observing a stronger than usual correlation in sudden ATB line movement with picking winners in baseball. We used Don Best's IE line tracking service to watch the lines. Back then, the service had the lines of several of the Vegas books as well as the offshores; today it consists of virtually nothing but offshores. For the first half of the season, these line movements were golden. I mean absolute pure gold. Please understand, there are some fairly astute handicappers among our group, and we often could not understand the rational for the line move. In fact, some of our best, most solid picks came down on the other side, yet we quickly learned not to go against the line move. As I said, for the first half of the season all was great, but after the All Star Break it wasn't the same. The line move didn't quite look the same (i.e., not as large..and often not totally ATB) and it sure wasn't as highly correlated with the ATS winner.

The second such streak occurred during the following NBA season...around January to March, if memory serves. This time it wasn't on a side but rather on the total. For that period, watching line movement on NBA totals was the same as filling out a blank check. But like the baseball season that preceded it, this line movement factor quickly dropped into the toilet as well.

Since that time, however, there hasn't been a period quite as good as these two were, but there have been times that were close. Each succeeding year and season seem to have periods of mixed results. There do appear to be periods, however, where the line movement factor comes back into form for a little while. These last couple of weeks have produced one or two games an evening for example (oh..by the way, Saturday line movements were and are usually not near as good an indicator as a mid-week movement was...due to the influx of the casual weekend bettor, I'm sure).

Like a lot of my email group, I have my own theories as to what this was all about...especially why it's not now as good as it was then. I'm sure there are many factors at work. I feel that three years ago, a lot of the so-called "smart money" moved offshore in a big way and that over time as more and more average folks began wagering offshore, this effect has become somewhat diluted. Still...my theories don't quite explain all of what I've observed. I'm still shooting in the dark as I don't have any real information to base these ideas on. I'd be interested to learn what you know of it all. I'd also be interested to know if you have any thoughts on how we might take advantage of such observations in this age of the internet (beats the old days of trying to use a call-in service to get line moves...ugh). That is, if we know of certain situations where books are likely to make an adjustment, we might be able to weed out a "false move" from a true "reaction-to-a-wager" move.

I realize you get dozens of emails per day, and I apologize if this one rambled on a bit. However, if you do find the time to discuss the subject in a future column (or in a return email), I'd be most appreciative.

Thanks,

-DC

REPLY: Well, the last part of your question is certainly very interesting. I'm impressed by the tenacity by which you have investigated these questions. It appears you have already addressed some of the questions with your own theories. In turn, I am not prepared to contradict your findings, other than to offer my view of what you have seen and speculate as to the reasons for it with my interpretation of events in conjunction with contemporary changes in sports wagering. Specifically, about the issue of "casual" money or "weekend bettors" watering-down the line movement -- I do believe this is a significant factor. Since you already noticed that the correlation between line-movement and ATS/SU winner in weekend games was not as strong as mid-week games, it is fair to postulate that the disproportionate size and amount of wagers on mid-week games made line movements easier to identify and therefore permitted you to take full advantage of them. However, how do you explain why the system ran hot for a certain period and cold for a certain period? I think we can rule out any "conspiracy" theories about the books altering their basic operations or the influence of large betting operations on the system. Assuming you agree, we can probably ascribe these "streaks" to random chance. Perhaps you are still not convinced. Let me continue.

You also make a valid point that off-shore operations have enjoyed a huge influx of business in recent years -- and no doubt have also improved their level of sophistication where they won't get burned with a bad line, as in previous years. This has diluted the influence of the sports betting "eagles." Fact is, they get lost in a sea of pigeons. I'm not trying to be funny, but it illustrates the point that as more "casual bettors" are involved, the more difficult it is to track smart money.

SIDEBAR: Remember the previous question, where I brought up the Las Vegas sports betting professional named "RAY." I told you that RAY was a real mover in sports betting. Remember that RAY has a direct line to people all over the country who follow the teams, befriend the athletes, and know everything that goes on about the team? Let's assume RAY hits a high percentage of his plays (which is a fact). Well, imagine if we could just track RAY'S bets and coattail his picks? I presume this would have been very possible in the early days of offshore betting -- if bettors like RAY used offshore services. Hence, you might have observed the phenomenon that the line-movement often correlated with the winner of the game because there were others (like RAY) out there who altered lines and seemed to pick winners with regularity. But today, RAY's bets are completely concealed by millions of dollars from casual bettors which makes it impossible to track actual "line movement justification."

Now, back to your question. You made the following statement which is very important: Each succeeding year and season seem to have periods of mixed results.

Do you see how critical this statement is? You OBSERVED a pattern whereby the ATS winner often corresponded with the line movement at various periods of the baseball season and basketball season. But since then, you have noticed only "mixed results." You are still convinced that the correlation exists in some form (especially since you ran hot and cashed a lot of winning tickets, I presume). But, in recent seasons, you have not been able to identify a pattern nor determine whether or not your theory is in fact, true.

I realize I am being very skeptical about this, and I do not mean to degrade your observations and the work of your group in any way. To the contrary, I think you have come close to uncovering a determinant of real value. But, until you can qualify this with some specific parameters, the theory is bogus, and not worth considering. To further illustrate my conclusion, let's say you were able to identify that the correlation "worked" for just the first month after the All-Star break, but no other time, and you observed this over at least 2-3 seasons. If this were the case, we might be able to summarize that this goes beyond random chance. But just to merely point out a couple of hot streaks at various times in a couple of sports is indicative of nothing more than the "theory of large numbers" where patterns and sequences are inevitable. That said, I would like to continue to explore this and keep an open dialogue with you if you uncover any proof that such a correlation exists.

NOTE: I offer this forum to anyone who would like to counter my retort with their own results or interpretation of events. I also offer DC (the writer of the e-mail) to respond if he wishes. I will be glad to post more on this exchange. Thanks to DC for an extremely informative letter.