from Amazon
Wednesday, January 13, 2010
Don’t bet on baseball
So shows Chris Moore (is that cdm?):
In 2008, Vegas came really close to being perfect. The variance between the actual outcome of all regular season games and Vegas’ prediction for those games was within the range that one can attribute to random chance. If we start by assuming that Vegas’ lines perfectly reflected the likelihood of each team winning each game, the variance between the predictions and the actual outcomes would be greater than it was in 2008 75 percent of the time.
That doesn’t mean that Vegas is 75% likely to be perfect. We’d have to go all Bayesian and start assuming silly things to figure out precisely how good Vegas really is. But think about that statistic: if Vegas were perfect, they still would have had a 75% chance of making a worse set of predictions than they did in 2008. So somehow, by hook or by crook, they made some ridiculously accurate predictions in 2008.
I have no idea what that means. I *think* it means that Vegas could have given itself much less favorable odds, and still have broken even. Regardless, it seems that the vig is perfectly set to allow even a bad bookie to make money.
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