A sportsbook is a business that accepts wagers on sporting events and pays bettors who win. They make their profits by charging a commission on lost bets, known as the vig (vigorish). It is important to understand how this system works before placing a bet at a sportsbook.
There are many different types of bets you can place at a sportsbook, such as handicaps against the spread, over/under bets, and prop bets. These bets are made on specific aspects of an event, such as the number of points scored or the total yards of a quarterback’s passing game. When a bet is placed on these types of bets, the odds will move to reflect the action that is being taken. The reason for this is that a sportsbook wants to balance the action on both sides of a bet.
In addition to moving the odds on individual bets, sportsbooks will also move the totals in over/under bets. For example, if the over/under for Patrick Mahomes’ passing total opened at 249.5 yards and the sportsbook received a lot of action on the over side, they would lower the total to discourage more bets on the over and raise the total to encourage more action on the under.
This article presents a statistical framework by which the astute sports bettor may guide his or her wagering decisions. It treats the relevant outcome, such as margin of victory or point total, as a random variable and employs a distribution-based method to derive an estimate of its probability density function. The resulting estimates of the probability that sportsbooks accurately capture the median outcome are then employed to determine confidence intervals on regression parameters relating median outcomes to sportsbook odds.