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How a Sportsbook Sets Its Odds

A sportsbook is a gambling establishment that accepts bets on various sporting events. It offers a variety of betting markets and competitive odds, first-rate customer service, transparent bonuses, and betting guides to attract new customers and encourage repeat business. A sportsbook also offers a variety of payment methods to meet consumer expectations.

Sportsbooks make money by setting a handicap that nearly guarantees them a return on every bet placed by the betting public. This handicap is the odds that are posted for a particular game or event, which reflect the probability of a specific outcome. Often, sportsbooks will move odds in moneyline bets, adjust totals in over/under and prop bets, and buy points to entice action on certain sides of the market.

To better understand how a sportsbook sets its odds, a research team at the University of Nevada conducted an empirical analysis of more than 5,000 NFL games from the previous season. Using statistical estimators, they estimated the magnitude of deviation between sportsbook point spreads and the median margin of victory for each match. Their results showed that, on average, sportsbooks underestimate the median by 1 to 3 points, with the largest error rate occurring when a home team is the favorite.

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