In sports betting Las Vegas sports books establish winning margins
In sports betting, Las Vegas sports books establish winning margins for a team that is favored to win a game. An individual can place a wager on the game and will win if the team bet upon wins after accounting for the spread. For example, if Team A is favored by 5 points and wins the game by 7 points, then a bet on Team A is a winning bet. However, if Team A wins the game by only 3 points, then a bet on Team A is a losing bet. For NCAA Division I basketball games, a least-squares regression with explanatory variable home team Las Vegas spread, x, and response variable home team winning margin, y, is y-hat = 1.007x - 0.012. Source: Justin Wolfers. “Point Shaving: Corruption in NCAA Basketball”
(a) Predict the winning margin if the home team is favored by 3 points.
(b) Predict the winning margin (of the visiting team) if the visiting team is favored by 7 points (this is equivalent to the home team being favored by -7 points).
(c) Interpret the slope.
(d) Interpret the y-intercept.
(e) The coefﬁcient of determination is 0.39. Interpret this value.
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