Betting Market Efficiency during the COVID Crisis: Evidence from the 2020-2021 NFL Season
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2021
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Haverford College. Department of Economics
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Thesis
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eng
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Open Access
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Abstract
The COVID-19 outbreak presents an unprecedented shock to betting markets and financial markets alike. With limited capacity in stadiums, the COVID crisis allows us to isolate the impact of crowd support from other determinants of home-field advantage such as stadium familiarity and travel. We find that home-field advantage is eliminated for the first time in NFL history, suggesting that fansare the primary drivers of the advantage. We then evaluate the extent to which betting lines are incorporating the fanless home-field advantage, testing the efficient market hypothesis over the 2020-2021 NFL season. We see quick adaptation in spread setting over the course of the season as the new home-field advantage is realized. As spreads adjust, we find that NFL betting markets areefficient in pricing home-field advantage, leaving no room for profitable exploitation.