A sportsbook is a venue, online or in-person, where gamblers can place wagers on various sporting events. The most popular events are American football, basketball, baseball, hockey, and tennis, but there are plenty of other options as well. Sportsbooks also accept bets on horse and greyhound racing, jai alai, and other games.
Sportsbooks set betting lines so that they will generate a profit over the long term. This is accomplished by adjusting the odds on each side of a bet to create an expected return on a unit bet. Depending on the sport, a sportsbook may move betting lines for a number of reasons. For example, a line might open that induces too much action on one side of the bet, which opens the sportsbook to large liabilities. In this case, the sportsbook will move the betting line to better balance action and reduce liability.
The seminal findings of Kuypers and Levitt suggest that in some matches, sportsbooks intentionally propose point spreads that deviate from their estimated median margin of victory in order to entice a preponderance of bets on the side that maximizes excess error. To quantify this phenomenon, we compute the hypothetical expected profit on a unit bet for point spreads that differ from the true median margin of victory by 1, 2, and 3 points in each direction. The results are shown in Fig 1a.