MLB Sharp Money: Profiting from Reverse Line Movement

MLB Sharp Money: Profiting from Reverse Line Movement

At Sports Insights, one of our founding philosophies is simple: always bet against the public. It’s basic, yet historically it’s been tremendously profitable. However, as technology has improved and social media allows news to travel faster than ever; bettors have become smarter and more well-informed.

We’ve seen well-educated individuals bypass more traditional professions in favor of starting their own betting syndicates, and these are the sharp bettors that are worth following. But how can somebody know which side these syndicates have taken? That is where sharp money indicators like reverse line movement can be extremely helpful.

One common misconception is that sportsbooks will make a team a 7-point favorite because they believe that team will most likely win by seven points. That’s not the case. Ideally, a sportsbook will attract 50% of their action on each side of a game. This limits their liability and allows the book to sit back and collect the vig (or juice as it’s also known).

Baseball is typically bet on the moneyline as opposed to the spread/runline, but the philosophy held by sportsbooks remains the same — set a line that will attract equal money on both sides. Using the public betting trends from our seven contributing sportsbooks, we have a terrific grasp on how many bettors are taking each side, but the more important piece of information is how much money has been placed on each side? Although there’s no way to know this information definitely, reverse line movement tells us a lot.

For example, let’s say the New York Yankees are playing the Boston Red Sox. If 80% of bettors are taking the Red Sox as a -130 favorite, you would anticipate that the line would move to -135 or -140 as oddsmakers attempt to encourage action on the Yankees and thus limit their liability. However, if the line drops to -125, we know that enough money came in on the Yankees to override this overwhelming public betting.

Think about it this way: If four out of five bettors wager $50 on the Red Sox but the fifth bettor places $1,000 on the Yankees, the sportsbook would have $800 worth of liability should the Red Sox lose. To avoid this situation, oddsmakers will encourage bettors to take Boston despite the fact that 80% of bets have been placed on them.

Using our Bet Labs software, we decided to determine where the optimal level for reverse line movement was for MLB bettors. To begin, we examined teams receiving less than 30% of moneyline bets to make sure we had a strong contrarian system. Next, we added the “moneyline change open to close” filter. For this filter, a negative number indicates that the line got worse for the team (i.e. a team moves from +140 to +130 or -120 to -130), so we focused on teams who saw their line worsen by at least 10 cents.

This simple system produced a 774-960 record; however, because we are typically betting on underdogs it produced +72.71 units and a 4.2% ROI. Knowing that home field advantage is chronically undervalued, we filtered out all visitors and vastly improved our system. The screenshot below displays how home teams have fared when they trigger reverse line movement.

You’ll immediately notice that despite nearly cutting the number of past matches in half, the units won actually improves by 20 units, resulting in a 9% return on investment (ROI). If you were to filter our all favorites, the units won remain essentially unchanged while the ROI improves to 10%. For the 2014 season, this system has gone 11-11 with +0.29 units earned and a 1.3% ROI.

It’s also important to note that this system fits the three common characteristics of a winning betting system: large sample size, consistent year-to-year results and clearly defined data ranges to avoid custom-fitting the data. We also recommend that before creating a betting system, customers have a guiding hypothesis to explain the results.

Want to create your own winning MLB betting systems? Make sure to try our 6-day Bet Labs trial for just $25 and start winning today!

8/19/14 Update: This system is 26-22 (+3.87 units) on the season and 480-476 (+92.21 units) overall.

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