What's With the Home Underdogs in the N.F.L.?

In recent years, the federal government has taken various actions to make it harder to bet on sports over the internet.
That’s lucky for me, because when I used to bet on football, one of the key pieces of information I used was whether or not a team was a home underdog. For whatever reason, bettors don’t like to bet on home underdogs.
Recognizing this, bookies shade the point spreads toward the home underdogs. Because of the bettor bias, the bookies can set spreads so that home underdogs cover the spread more than half the time, but attract less than half the betting dollars. According to my estimates, home underdogs covered the spread almost 54 percent of the time over a 20-year period, but they still only attracted about 40 percent of the betting dollars in those games. As a consequence, these games are extremely profitable for the bookies: most of the money goes on the visiting favorite, who manages to cover the spread only 46 percent of the time. (For more on this, see an academic article I wrote on the subject.)
Even after I published that paper, the home-underdog bias remained alive and well. I nearly won an 800-person handicapping contest doing little more than picking home underdogs.
The last two years, however, have not been so kind to home underdogs. According to calculations made by Charles Monteleone, a graduate student at the Booth School of Business here at the University Chicago, home underdogs had a 44-45-1 record against the spread in 2007. That is not so bad, but it’s far from the historic performance. The real outlier was the 2008 season, during which home underdogs had a record against the spread of only 32-45-2!
Why this radical reversal? One possibility is that bettors finally caught on to the fact that home underdogs were a bargain, which in turn led the bookies to alter spreads so that they no longer favor the home underdogs. I think there is almost no chance that this is the correct explanation. Bettors have failed to recognize this bias for 20 years; there is no way gambling patterns could suddenly change this quickly.
The real explanation, I suspect, is that it was just bad luck — bad luck for the minority of bettors who play the home underdogs, but especially bad luck for the bookies. I wouldn’t be surprised if the poor performance of home underdogs destroyed a large chunk of the total profits for the bookmakers on the N.F.L. this year.
Home underdogs are of particular interest right now because, remarkably, in all four playoff games this weekend, the home team is the underdog. If I were a betting man (or more accurately, if I had an account I could bet on), I would be hammering the home underdogs this weekend.