Brandes Inst. - Non-techinical lit review. If you aren't good at the maths, just read this one
Levitt (2004) - Explains why contrarians often bet on dogs
Dare (2006) - Explains why sports betting is a poor investment using Kelly criterion
Fair and Oster (2005) - The books know more than anyone else
Paul and Weinbach (2007) - Follow up to Levitt (2004) using "real" data
Woodland and Woodland (2000) - Weak evidence for betting against winning streaks
Sapra (2008) - Wager against last year's "out of nowhere" teams in the NFL
Paul and Weinbach (2008) - Early forward line movement for dogs is profitable in bases
Abstract for you NBA bettors:
Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook Behavior
Levitt (2004) suggested that sportsbooks do not set prices in the NFL to clear markets, as was commonly assumed, but set prices to maximize profits. This paper uses actual betting data from four sportsbooks to test the Levitt (2004) hypothesis in the NBA. For a sample of the 2004-05 to 2006-07 seasons, it is shown that favorites receive a disproportionate share of NBA pointspread bets. In addition, the percentage of bets the favorite receives increases with each additional point of the pointspread. In the totals market, it is shown that overs receive a much higher percentage of bets compared to unders and the percentage bet on the over increases with each point of the total. Unlike the NFL, however, taking a contrarian position and betting against public sentiment is not found to win more often than implied by efficiency.
My basic commentary on all of these articles is that the markets are slightly inefficient, as we've already hypothesized. A simple system is not going to cut it to beat the books, which all of these papers have shown. There obviously is something to thinly slicing lines, if you assume we have enough knowledge about the sports we wager on to find bait lines. I would also suggest that the Paul and Weinbach (2007) paper shows that the betting percentages we all use may have more value than we currently attribute to them. Combining the two strategies in an intelligent and as yet undiscovered way will likely yield the best results.
I'll be away most of the weekend, so feel free to tell me why I'm an idiot and I'll likely agree with you on Sunday night.