A sportsbook is a gambling establishment that accepts bets on a wide variety of sporting events. These venues are often licensed and regulated. They offer a number of betting options, including moneyline, point spread, and total bets. They also offer a variety of promotions and bonuses. A sportsbook can be located in a casino or on the Internet. It may also be found on gambling cruise ships or through self-serve kiosks at a racetrack. A sportsbook can also be run from home.
The central message of this article is that optimal wagering requires accurate estimation of the outcome variable’s quantiles. In the case of sportsbook point spreads and totals, this involves estimating the median margin of victory (m) and the probability of winning on each side of the line (Theorem 2). Consequently, if the sportsbook’s proposed value deviates by more than 2.4 percentiles from the estimated quantiles, then wagering yields a negative expected profit—even if consistent wagers are placed on the side with the highest expected probability of winning.
Fortunately, the extent of such deviations has been established for some of the most common types of bets. In this paper, we examine the case of ATS (against-the-spread) bets on NFL games, where the odds are set 12 days before kickoff. The results show that, on average, the sportsbook’s proposed value deviates 3.3 percentiles from the true median. The value of this deviation, expressed in units of points, is the figure shown in Fig. 4. The analysis was performed for a series of stratified samples, and the height of each bar represents the average of the hypothetical expected profit per unit bet for a single-unit bet on either team.