INFORMED TRADERS AND PRICE VARIATIONS IN THE BETTING MARKET FOR PROFESSIONAL BASKETBALL GAMES

This paper examines betting line changes from the opening to the closi ng of the point spread betting market on National Basketball Associati on games for evidence of informed trader betting. We show that within- betting period line changes significantly improve the accuracy of bett ing lines as forecasts of game outcomes. We examine individual line ch ange magnitudes and show that these are directly and proportionately r elated to biases in opening lines. Further, line changes are of suffic ient magnitude to remove these biases by the close of betting. We inte rpret these results as evidence that informed traders are influential in this market.