NCAA Men's Basketball – March 22

Day 3 was another day of top-seeds or expected favorites winning … will the exception of the top seeded Villanova. This is a huge blow to the FiveThirtyEight predictions which had a big weight on Nova: a 16% likelihood of winning the tourney going into the round of 32 (12% going into the round of 64). Prediction market-based forecasts were half of that.

In the game-by-game predictions for Sunday, March 22, the market-based PredictWise forecasts are again similar to FiveThirtyEight today … But, keep on eye on Maryland v. West Virginia where  PredictWise's live predictions are ont he other side of the outcome.

NCAA Men's Basketball – March 21

There is only one lower seed favored to win on Day 3 of the tournament – Utah (5) is 64% over Georgetown (4) in the South. With about 75 probability on the favored teams we expect 2 of them to go down, with Notre Dame as the most likely. Number 1 seeds Villanova and Kentucky, as well as number 2 seed Arizona are all heavily favored in their games. The market-based predictions are earily similar to FiveThirtyEight today … What the predictions move live on PredictWise here.

NCAA Men's Basketball – March 19b

Below I compare the prediction market-based predictions on PredictWise with FiveThirtyEight’s statistical model and the New York Times’ Upshot innovative pari-mutuel betting game. First and foremost the three methods are extremely similar. In just 10 of 32 first round games are any of the three models more than 10 percentage points different.

1) PredictWise and Upshot both have 8 seed Oregon winning, slightly, but FiveThirtyEight has them at just 41%. PredictWise and FiveThirtyEight have 11 seed Texas winning, slightly, but Upshot has them at 42%.

2) All three methods have 10 Ohio State favored over VCU. Besides Texas, those are the only two double-digit teams favored. 11 seed Ole Miss is 40% to win and 10 seed Davidson is 43% to win; both strong upset potential.

NCAA Men's Basketball – March 19a

Here are the pre-tournament market-based predictions for the 2015.

This data is driven by a mix of Betfair (prediction market) and bookie data. Step 1: construct prices from the back, lay, and last transaction odds, in the Betfair order book or, when not available, the lowest odds to buy from a major bookie. For Betfair data we take the average of the cheapest cost to buy a marginal share and the highest price to sell a marginal share, unless the differential is too large or does not exist. Step 2: correct for historical bias and increased uncertainty in constructed prices near $0 or $1. We raise all of the constructed prices to a pre-set value depending on the domain. Step 3: normalized to equal 100% for any mutually exclusive set of outcomes.

NBA Playoffs

My local NBA team has left us, so I do not follow basketball as closely as I did in the past, but it is hard not be interested this year. The Heat are a huge news story and the playoffs will generate a buzz not felt in years. Below is the chart of how of the price of $1 contract on the Heat winning the NBA championship and, for comparison, the Lakers are on the chart as well. The first thing to notice is how dramatically high the price was for the Heat in the early part of the season and how far it has fallen. The second thing to notice is that it has actually fallen well below the Lakers as the season nears its end.

Below is a second chart, that shows the next three most probable teams. First, look at the two West teams, notice how they mirror each other (the Mavs, not shown, have held steady at a very consistent $0.04 to $0.05). Second, compare the Celtics and the Heat early in the season and the Bulls and the Heat late in the season and you can see that the two teams mirrored each other for parts of the season, while the third team was relatively stable.Yet, despite the that mirroring, the sum of West teams (Lakers, Spurs, Mavs, and Thunder) has been moving slowly upward and the East teams (Heat, Bulls, Celtics, and Magic) has been moving slowly downward.

What this all means is that the market is now assuming that winning the championship, once your team gets there, is basically a toss-up, while midseason the East champion was much more likely to win the finals. Still, the main driver of the indivdual team prices are a reflection of their relative strength within the conference … right now the Lakers are looking so strong, not because they are necessarily any better than the Heat, but they have a much easier path the NBA finals.