Bookmakers Struggling to Determine Value of Home-Field Advantage with Few or No Fans in Stadium

JohnWallStreet
·5 min read

In a Q3 trading statement, William Hill told shareholders the lack of fans in the stands at sporting events explains the series of unlikely results that have negatively influenced the company’s top line (aka gross win margins). “With many events continuing to be held behind closed doors, results have been more unpredictable than normal,” the update read (see: Aston Villa’s 7-2 victory over Liverpool on Oct. 4).

The U.K.-based operator isn’t the only bookmaker that has struggled to determine what home-field advantage is worth in a COVID-19 world. But it is the only company (that does significant business in the U.S.) to publicly acknowledge profitability has been impacted as a result. Andrew Mannino (senior sports content analyst, PointsBet) theorizes that because U.S.-based operators are taking the bulk of their wagers on the NFL and college football games, they’ve been afforded a bit more leeway in setting odds and thus have not experienced the same revenue losses. “The larger the spread, the less of an impact home-field advantage should be expected to have. So in a sport like football where spreads can be significant, home-field advantage is not going to have the same impact [on the game’s outcome] as something like soccer,” he said. Of course, the British bookmaker takes more bets on soccer than any other sport.

Our Take: There’s little debate that having limited—or zero—fans in the stands has “[caused] a reduction in home-field advantage,” Mannino said. But unlike the NBA or NHL bubbles, teams playing in their home stadiums still enjoy some semblance of a home-field advantage, even if the venue is empty (think: familiarity with field, no need to travel). Figuring out “the precise degree of what that home-field advantage means is something still being defined,” he added.

The reason it has been so challenging for sportsbook operators to properly account for games in near empty (or empty) buildings is the lack of historical data available. While William Hill has results from the end of the 2019-2020 EPL season and the beginning of the current campaign to lean on, “compared to the last 10 years of Premier League matches that short restart data is a small sample size to work from,” Mannino explained, particularly with a collective of unlikely outcomes skewing the results. Nick Bogdanovich (Director of Trading, William Hill US) agreed that data point limitations are hampering bookmakers in their ability to set sharp odds: “We’re in brand new times. There’s nothing to fall back on but your gut and a good guess.”

William Hill’s trading statement said the company “expects the [unpredictable outcomes] to continue” with sports likely to be played before under-capacity crowds for the foreseeable future. But that does not necessarily mean company gross win margins will remain volatile. Both Mannino and Bogdanovich believe betting lines should get sharper across the industry as the football and soccer seasons wear on and the number of games played within the current environment (and, therefore, data points) continues to grow.

Bogdanovich suggested William Hill’s comments were referring to “Europe and soccer.” But bookmakers in the U.S. have been struggling to peg football odds this fall, too. “One example to look at would be the unbelievable number of overs that hit over the first six weeks of the NFL season,” Mannino said. While the lack of data points is certainly contributing to operators missing on over-under totals, Bogdanovich said it would be naïve to ignore factors like the lack of preseason games, limited practice schedules and players being forced to sit out of games due to positive COVID-19 tests. “The importance of [those factors] is huge. The question is, How do you quantify them?” he asked.

Unpredictability in game outcomes hasn’t really been a theme within college football or the NFL in 2020. But unlike William Hill’s U.K. operation, Bogdanovich suggested a rash of upsets would likely benefit the company’s U.S. arm. Contrary to popular belief, “having equal action on both sides is a myth and a legend; we never have balanced books. We always have a decision. And the masses like predictability and play the same four or five teams each week. So, [the sportsbook] wants goofiness or randomness in those games,” he said.

College basketball games present the greatest challenge—and risk—to U.S. bookmakers. Bogdanovich explained, “When you’re dealing with 245 teams, those are games it’s very difficult to make [odds for] and in these COVID-19 times, it’s almost impossible to make a real solid line.” In addition to the unbalanced exhibition and non-conference schedules this season, “the information is harder to come by when you’re dealing with 19-year-old kids,” he said. And unlike with football, the masses don’t bet on college basketball games, meaning “the professionals can dominate those lines [if they’re off],” Bogdanovich added.

It should be noted bookmakers did not have to account for home-field advantage (or a lack thereof) during the NBA or NHL playoffs, since they were in a bubble. Bogdanovich said the company “just had a power ranking and went with it.” That was not the case for MLB, though, despite teams playing post-season games at neutral sites. “Whoever bats last has a slight advantage,” the William Hill executive explained.

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