Bookmaker Margins and Favourite-Longshot Bias in Football Prediction Markets PDF Download
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Author: Dragan Sestovic
Publisher:
ISBN:
Category :
Languages : en
Pages : 27
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Book Description
In this article we discuss bookmaker margins embedded in odds for "1X2" bets in the European football betting markets operated by bookmakers. Bookmaker margins are adjustments applied to fair odds, for the purpose of ensuring profits and compensation for risks undertaken, and to cover overall operational costs. They are observable on a per match basis as the excess of the sum of the reciprocals of odds over one, which is popularly referred to as overround. In this article we study the margins from a risk point of view. We derive the expression for the expected variance of a portfolio of bets, in order to study risk-based determinants of margins. Risk of a portfolio of bets is shown to be particularly sensitive to the presence of low probability bets (longshots). We propose a new, risk-based measure for quantifying balancedness of a match. Using this measure along with the standard entropy measure, we investigate variations of overrounds between matches of different levels of balancedness. Our analysis shows that there is no a convincing empirical evidence that overall overrounds are dependent on the match balancedness. Similarly, the study of variations of overrounds by the levels of disagreement in probabilities between different bookmakers, does not show any significant interdependence. On the other hand, our study confirms the pervasiveness of a well known Favourite-Longshot Bias (FLB) in the European football betting markets. The odds have been more favourable for bets on favourites than for longshots. These conclusions suggest that margins are determined on a match-per-match basis. Long odds on longshots are being adjusted more aggressively downwards than short odds on favourites, while overall margins are being kept roughly at bookmaker-specific target levels. Empirical studies were performed using the historical data on 116,150 football matches, containing results and odds from 13 major bookmakers. The data set covers 19 major European football divisions during the last 17 years. Using this rich and recent data set, we also investigated the time evolution of overall margins, and variations of margins between the different bookmakers and football divisions.
Author: Dragan Sestovic
Publisher:
ISBN:
Category :
Languages : en
Pages : 27
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Book Description
In this article we discuss bookmaker margins embedded in odds for "1X2" bets in the European football betting markets operated by bookmakers. Bookmaker margins are adjustments applied to fair odds, for the purpose of ensuring profits and compensation for risks undertaken, and to cover overall operational costs. They are observable on a per match basis as the excess of the sum of the reciprocals of odds over one, which is popularly referred to as overround. In this article we study the margins from a risk point of view. We derive the expression for the expected variance of a portfolio of bets, in order to study risk-based determinants of margins. Risk of a portfolio of bets is shown to be particularly sensitive to the presence of low probability bets (longshots). We propose a new, risk-based measure for quantifying balancedness of a match. Using this measure along with the standard entropy measure, we investigate variations of overrounds between matches of different levels of balancedness. Our analysis shows that there is no a convincing empirical evidence that overall overrounds are dependent on the match balancedness. Similarly, the study of variations of overrounds by the levels of disagreement in probabilities between different bookmakers, does not show any significant interdependence. On the other hand, our study confirms the pervasiveness of a well known Favourite-Longshot Bias (FLB) in the European football betting markets. The odds have been more favourable for bets on favourites than for longshots. These conclusions suggest that margins are determined on a match-per-match basis. Long odds on longshots are being adjusted more aggressively downwards than short odds on favourites, while overall margins are being kept roughly at bookmaker-specific target levels. Empirical studies were performed using the historical data on 116,150 football matches, containing results and odds from 13 major bookmakers. The data set covers 19 major European football divisions during the last 17 years. Using this rich and recent data set, we also investigated the time evolution of overall margins, and variations of margins between the different bookmakers and football divisions.
Author: Tadgh Hegarty
Publisher:
ISBN:
Category : Efficient market theory
Languages : en
Pages : 0
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Book Description
If betting markets are efficient, then the expected loss rate on all bets on a game can be calculated from the quoted odds. Guides to sports betting tell bettors how to do this calculation of the predicted average loss rate. We show that if bookmakers set higher profit margins for bets with lower probabilities of winning (as implied by the evidence on favorite-longshot bias) then average loss rates across all bets will be higher than predicted by this widely-recommended calculation. We provide evidence from betting on soccer and tennis to illustrate that average realized loss rates on bets are consistently higher than predicted by the conventional calculation.
Author: Donald B. Hausch
Publisher: Elsevier
ISBN: 0080559956
Category : Business & Economics
Languages : en
Pages : 561
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Book Description
Its basic empirical research and investigation of pure theories of investment in the sports and lottery markets make this volume a winner. These markets are simpler to study than traditional financial markets, and their expected values and outcomes are uncomplicated. By means of new overviews of scholarship on the industry side of racetrack and other betting markets to betting exchanges and market efficiencies, contributors consider a variety of sports in countries around the world. The result is not only superior information about market forecasting, but macro- and micro-analyses that are relevant to other markets. Easily studied sports markets reveal features relevant for more complex traditional financial markets Significant coverage of sports from racing to jai alai New studies of betting exchanges and Internet wagering markets
Author: Enrique Dóal Pérez Frías
Publisher: Enrique Dóal Pérez Frías
ISBN:
Category : Games & Activities
Languages : en
Pages : 349
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Book Description
What variables are relevant to predict the future results of a football team? Are there any inefficiencies in the betting markets that can be exploited? How many games are necessary to correctly measure the level of a team or a footballer? Is it better to bet on a team that is on a winning streak or is it better to bet on a team that is on a losing streak? What is the probability that a team that has just been promoted will be relegated in the next few seasons? What is the optimal size and composition of a team squad? How are the best and worst clubs different? What are the best bookmakers? In this book the reader will find the answer to these and many other questions about the beautiful game, thanks to data mining techniques applied to a historical database of more than 200,000 football matches and a statistical approach explained in an easily accesible style.
Author: Plácido Rodríguez
Publisher: Edward Elgar Publishing
ISBN: 1785364553
Category : Business & Economics
Languages : en
Pages : 213
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Book Description
This unique book delves into a number of intriguing issues and addresses several pertinent questions including, should gambling markets be privatized? Is the ‘hot hand’ hypothesis real or a myth? Are the ‘many’ smarter than the ‘few’ in estimating betting odds? How are prices set in fixed odds betting markets? The book also explores the informational efficiency of betting markets and the prevalence of corruption and illegal betting in sports.
Author: Farshid Bröker
Publisher: GRIN Verlag
ISBN: 3656184038
Category : Business & Economics
Languages : en
Pages : 77
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Book Description
Master's Thesis from the year 2012 in the subject Economics - Micro-economics, grade: 1,3, Frankfurt School of Finance & Management, language: English, abstract: The online sports betting markets industry has been gaining in popularity worldwide during the last decade. The Internet gives punters faster access to their bookmaker and lets them easily compare the odds of many different bookmakers. Furthermore, many online gambling sites offer a wide range of different sports events and specialized bets for their customers. Nowadays it is not only possible to bet on the final outcome of a soccer match, but even on the half-time result or the amount of goals scored during the match. The betting exchange betfair makes it possible to bet against a certain outcome, meaning the punter can act as a bookmaker for a chosen event. Betting on outcomes of soccer matches is very interesting with regard to probability theory because it is based on a numerical code: 0 for a draw, 1 if the home team wins and 2 if the home team loses. Therefore many textbooks on combinatorics consider soccer bets to be a prime example for probability theory. H. Matthes and H. Küchenhoff claim that soccer bets are a great example for the so-called subjective probability, which they define as the degree of confidence with which an observer believes in the occurrence of a certain event based on the information he currently has. P(A) would be the maximum amount in EUR that he is willing to risk if he receives exactly EUR 1 on the occurrence of A. For a bookmaker this would mean that his odd for a certain event will not exceed 2 if he believes that the probability of its occurrence is 50%. Hence, odds that are offered by a bookmaker on the occurrence of a certain result reflect his individual estimation regarding the probability of the occurrence of the given result. Of course, bookmakers can be wrong. If it were possible to identify a pattern for their mistakes, this would help in exploiting them. Furt
Author: Donald B. Hausch
Publisher: World Scientific
ISBN: 9812819193
Category : Games & Activities
Languages : en
Pages : 679
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Book Description
A reprint of one of the classic volumes on racetrack efficiency, this book is the only one in its field that deals with the racetrack betting market in-depth, containing all the important historical papers on racetrack efficiency. As evidenced by the collection of articles, the understanding of racetrack betting is clearly drawn from, and has correspondingly returned something to, all the fields of psychology, economics, finance, statistics, mathematics and management science.
Author: Imant Daunhawer
Publisher:
ISBN:
Category :
Languages : en
Pages : 6
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Book Description
This research uses football online betting odds of a broad variety of matches and bookmakers to identify known biases in odds pricing, namely the favorite-longshot bias and the away-favorite bias. Furthermore, it tries to answer the question whether a naive strategy of betting against these biases can be profitable. Our findings are consistent with previous research, confirming the existence of the favorite-longshot bias, but turn out to be in contrast with regard to the away-favorite bias, for which there is little evidence in the data. Also, we find that a strategy of betting against the favorite-longshot bias can be marginally profitable, whereas bets in favor of it result in large losses on average.
Author: David A. Peel
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
It is shown that the individual fixed-odds betting market on UK football exhibits the same favourite-longshot bias as that found in horse-racing. The bias appears both in betting on results (home win, away win or draw) and in betting on specific scores, and there are certain trading rules which appear to be profitable. Poisson and Negative Binomial regressions are carried out to estimate the mean number of goals scored by a team in a match with given market odds for the various outcomes. Tables of odds for individual scores are derived and these appear to fit the actual outcomes far better than those of the bookmaker.
Author: Karl Whelan
Publisher:
ISBN:
Category : Gambling
Languages : en
Pages : 0
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Book Description
Research on sports betting markets has generally found a favorite-longshot bias, the empirical pattern for loss rates for bets on longshots to be higher than for favorites, which implies the odds do not reflect the underlying probabilities. The existing literature focuses largely on pari-mutuel betting but favorite-longshot bias is also evident in fixed-odds online betting markets of the type that are growing rapidly around the world. Explanations for this bias in previous work on pari-mutuel markets cannot explain why it would be a feature of competitive fixed-odds betting markets. We show how disagreement among gamblers and risk-aversion on the part of bookmakers in a competitive market can produce a pattern of favorite-longshot bias resembling the empirical evidence.
