Why Lines Move

King Yao is the author of Weighing the Odds in Hold‘em Poker, and Weighing the Odds in Sports Betting. He uses his experience from making millions in financial derivative markets and translates it into gambling. Since he left his trading position in 2000, he has been playing poker and betting on sports. He travels to Las Vegas frequently, especially during football season.

Let’s discuss basic principles of sports betting. All sports bettors should know the information below. All other types of casino advantage players, including blackjack players of all skill sets, which includes card counters, should have good working knowledge of Expected Value as well. You should not be betting online or anywhere else without this fundamental knowledge.

Why Lines Move

Once lines are open, there are many reasons for sportsbooks to move them. Sportsbooks can independently move their lines for any reason, including:

• Taking big action on one side
• Seeing a sharp bettor bet on one side and having the desire to be on that same side
• Breaking news concerning players and/or teams such asinjuries or lineup change
• A changing weather forecast
• Seeing the lines move at other sportsbooks (called “moving on air”)

Increased interest and betting activity in any event leads to a higher chance of sportsbooks moving their lines. More line movements allow for the increased possibility of different lines at different sportsbooks. This gives line hunters more opportunity to take advantage of differing lines. Popular sports with high betting activity are often the sharp bettor’s favorite sports due to the high number of opportunities caused by the general interest from squares.

In high-volume sports, middlers and scalpers act similar to arbitragers in the financial markets by taking advantage of pricing differentials between sportsbooks.

Sportsbooks in Nevada can only take bets; they cannot act as customers and make bets. (Individuals such as owners of casinos and sportsbook managers may make bets at other casinos.) Thus Nevada sportsbooks cannot lay off any of their action with other sportsbooks. The only way they can try to adjust their positions is by moving their lines. In comparison, market makers in financial markets must make markets in their particular products, but they are free to trade in other markets. They can use other products to hedge their exposure, possibly allowing them to make bigger markets in their own products. For example, options market makers can hedge with underlying products (in equity options, the underlying product is the stock) to reduce their risk.

Nevada sportsbooks cannot be proactive; they can be only reactive. This may mean lower limits in Nevada. Sportsbooks outside of Nevada may not be under the same restrictions and may be free to make bets with other sportsbooks. Perhaps this is one of the factors that makes the sportsbooks at the multi-billion-dollar casinos in Nevada smaller than some outfits elsewhere.

Lines can be adjusted at any time, but generally in major sports, they seem to move the most early and late. Lines move early if they are weak and taken advantage of by sharp bettors. Lines move late when sportsbooks accept huge bets on one side and want to attract action on the other side.

In the past, once the game started, the betting action was over. With the advent of in-game betting and halftime betting, markets may still be active even after a game starts. Only when the game or event ends does the market truly close.

This is part of an occasional series of articles.

Excerpted with permission from the e-book version of Weighing the Odds in Sports Betting by King Yao, edited for this format.