The Impact of COVID-19 on Sports Betting Markets

TL;DR

This paper examines how the COVID-19 pandemic created betting market inefficiencies in NBA games, allowing strategic underdog betting to yield significant profits, unlike other sports.

Contribution

It identifies a unique market inefficiency in NBA betting during COVID-19, linked to the absence of live audiences, and demonstrates how to exploit it for profit.

Findings

NBA moneyline markets became highly inefficient during COVID-19

Uniform betting on NBA underdogs yielded a 16.7% profit margin

Strategic betting could achieve a 26-fold return on investment

Abstract

We investigate the impact of the COVID-19 pandemic on the betting markets of professional and college sports. We find that during the pandemic, the moneyline betting markets of the National Basketball Association (NBA) became very inefficient. During this period, if one bet uniformly on underdog teams in the NBA, one could achieve a 16.7% profit margin. It is hypothesized that this inefficiency is due to the absence of live audiences during the NBA games. Such inefficiencies are not seen for any other sport. Much of the inefficiency comes from a small fraction of games with moneyline odds in the 233 to 400 range. We find that with clever strategies, one is able to achieve a 26-fold gain on an initial investment by betting on NBA underdogs during this time period.