How do Sportsbooks Set Point Spreads?

The most popular kind of wager in sports betting is wagering on the point spread.

It's called a "point spread" because it's a number that adjusts the points of a matchup's final score. But how do bookmakers come up with this number?

Purpose of point spreads

To answer the above question, we first must understand the purpose of point spreads. Spreads exist to turn wagers into essential coin flips, where each side of the line has a 50% of occurring. This is because sportsbooks want action on each side of the line to be as close to even as possible.

To showcase this purpose, let's look at a matchup where the favorite has a 70% chance to win and the underdog has a 30% to win. Without a spread, all the action will come in on the favorite. The spread combats this by adjusting the final score in favor of the underdog (books also use moneylines to combat this, but we'll save that fora separate post).

How do bookmakers set lines?

Now we know the goal of a spread is to adjust the score so that half of the action comes in on the underdog and the other half comes in on the favorite. But how to bookmakers arrive at this magical number that will lead a 50/50 split?

Bookmakers use tons of game data and statistical analysis to form power ratings for each sports league. These ratings don't just spit out the teams in order. The ratings assign a number to each team and the different between two teams' ratings gives a starting point for the spread.  

In addition to power ratings, bookmakers take many other factors into account like home field advantage, player matchups, injuries, and more. Historical betting data also assists books in helping them find that 50/50 split.

Hiring people to obtain the necessary data, crunch the numbers, and then finally set the lines is expensive. This is why in today's sports betting landscape, most books just copy opening lines of established oddsmakers.

The importance of even action

We’ve established that sportsbooks want the action on either side of a line to be even, but why is that? Sportsbooks are businesses, so their goal is to make as much money as possible. When action is split 50/50, sportsbooks are guaranteed to make money on the game. This is because books charge bettors a 10% commission on their winnings.

Let's say a sportsbook has $1000 in wagers on a game and the spread split the money perfectly, $500 on each side. No matter the outcome, the sportsbook will keep $500 from the losing side, and only pay out $450 to the winning side. The sportsbook has a guaranteed profit of $50.

Now let's say a spread led to a 60/40 split, instead of 50/50. There's $600 on one side and $400 on the other. If the $400 side loses, the sportsbook keeps the $400, but pays out $540 to the winning side. That's a loss of $140. This is why getting as close to 50/50 as possible is so important for sportsbooks.

What this means for bettors

When you're betting a point spread, realize that roughly half of the action agrees with you and the other half disagrees with you. As mentioned earlier, sportsbooks charge a 10% fee to eliminate their risk in taking bets. So why not bet with someone on the opposite side of the line and avoid the fee?

Here at BetBuds, you're not placing a bet at sportsbook. You're betting against people who disagree with you. This means there is no 10% fee. Whatever you're wagering on the spread, you get to keep all of it if you win. There's no commission or fees. Sign up now and keep all of your winnings!

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