A sportsbook is an establishment that accepts wagers on sporting events. They collect a commission, also known as the vig or juice, on losing bets and pay out winning bettors. In the United States, sportsbooks are legally regulated by state law or the Federal Wire Act of 1961. They may be operated over the Internet, in brick-and-mortar locations, or on gambling cruise ships. Regardless of location, legality, or method of operation, sportsbooks must comply with all relevant laws to operate in their jurisdiction.
Whether a bettor chooses to wager on the outcome of a game or on individual player performance, a sportsbook’s job is to provide a fair and equitable platform for all parties. To do so, they must understand the underlying mathematics of sports betting markets, including odds, house edge, and payout structures. Then, they must be able to adjust their prices accordingly in order to attract customers and retain them over time.
The aim of this article is to develop a statistical framework for the astute sports bettor that provides answers to key questions about wagering on football matches. We model the relevant margin of victory distribution as a random variable and propose a set of propositions that convey the answers to these questions. We then instantiate these propositions using data on National Football League games. Our results show that, unless the sportsbook’s proposed spread accurately captures the median margin of victory, wagering yields a negative expected profit.
