A GENERALIZED-MODEL FOR TESTING THE HOME AND FAVORITE TEAM ADVANTAGE IN POINT-SPREAD MARKETS

Most sports teams play as either the favorite or the underdog and eith er at home or away. The failure to recognize the symmetric and interde pendent relations between these characteristics has led previous resea rchers to use potentially biased methods to test for rationality and e fficiency in football betting markets and thus to reach inappropriate conclusions. We develop a more general specification, which also incor porates 'pick-em' games and games played on neutral sites, and find li ttle or no evidence against market efficiency in the NFL and college b etting markets for regular season games. We do, however, uncover evide nce of biased betting lines for Superbowls.