Predicting NFL Point Spreads via Machine Learning

Background

In 2018, the US Supreme Court allowed widespread sports gambling beyond the state of Nevada. The Supreme Court ruled that each state should have the right to regulate sports betting. This led to a gold rush of states and companies into this huge lucrative market. Most US states now permit some types of sports betting. Some states are in-person only, but most now also allow online betting. As a result, US sports betting has exploded in recent years, as shown in Fig. 1 (The Economist, 2022).

Figure 1.

US Sports Betting (Billions of Dollars) (Source: Image from The Economist (2022))

Online sports betting is eclipsing in-person betting. For the 12 months ended December 2021, DraftKings reported $1.296 billion in revenue; it was more than double the $614 million it generated in 2020 (Tatevosian, 2022). States in the US are benefitting on the order of hundreds of millions of dollars each year from sports-betting taxes. Football is the most popular US sport for betting, and the NFL earns billions of dollars indirectly from sports betting (AGA, 2018). According to Macquarie Research (Schafer, 2022), about $1 billion of bets are placed weekly during the NFL season. The final quarter of the year during which most NFL games take place accounts for about 35% of yearly revenue for gambling companies. FanDuel currently leads the online market with about 50% market share in states where it’s operational, but several competitors are close behind, including DraftKings, Caesars Entertainment, and BetMGM.

Today, online sports gambling has even made its way onto college campuses. For example, as reported by The New York Times, Caesars Sportsbook struck a huge $8.4 million deal with Michigan State University last year (Louis, 2023). As further reported by The New York Times, and what is considered very troubling to some, is that so far eight universities have partnered with online sports books and about another twelve athletic departments and booster clubs have signed agreements with traditional casinos. As stated by Dave Ramsey on The Ramsey Show, universities are “selling out your own students who you’re supposed to be caring for.” Gambling is the second largest addiction in North America today, and this rapidly growing addiction can start with sports betting as a gateway (Louis, 2023).

There are many types of NFL team bets, and one can bet in person (such as a physical casino) or online. The most common and simple team bets are straight bets, including point spread, over/under, and money line. Other, more complicated bets include parlays, prop bets, teasers, and futures bets. One can also bet on players and other NFL-related matters. An odds display on your smartphone, on your computer screen, or in some type of print media would appear similar to that shown in Table 1; the bottom team is the home team, and the top team is the away or visiting team.