Forecasting football match results: Are the many smarter than the few?

García, Jaume and Pérez, Levi and Rodríguez, Plácido (2016): Forecasting football match results: Are the many smarter than the few?

Abstract

An empirical analysis of Spanish football betting odds is carried out here to test whether football matches final result estimates by experts (bookmakers) differ (better/worse) from those by the ‘crowd’ (football pools bettors). Examination of implied probabilities for each of the possible outcomes evidences the existence of favourite long-shot bias in the betting market for Spanish football. A further study of the accuracy of probability forecasts concludes that experts seem to be better in forecasting football results than the ‘crowd’.

• Item Type: MPRA Paper
• Language: English
• Keywords: betting odds, forecasting, wisdom-of-crowds hypothesis, favourite long-shot bias
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism

References

Boulier, B. and H. Stekler (2003), “Predicting the Outcomes of National Football League Games”, International Journal of Forecasting, 19, 257-270.

Brier, G.W. (1950), “Verification of Weather Forecasts Expressed in terms of Probability”, Monthly Weather Review, 78, 1-3.

Cain, M., D. Law and D. Peel (2000), “The Favourite Long-Shot Bias and Market Efficiency in UK Football Betting”, Scottish Journal of Political Economy, 47, 25-36.

Cameron, A.C. and P.K. Trivedi (2005), Microeconometrics. Methods and Applications, Cambridge University Press, New York.

Cortis, D. (2015), “Expected Values and Variances in Bookmakers Payouts: A Theoretical Approach towards Setting Limits on Odds”, The Journal of Prediction Markets, 9, 1-14.

Forrest, D. and L. Pérez (2013), “The Football Pools”, in Vaughan, L. and D. Siegel (editors) The Oxford Handbook of the Economics of Gambling (pp. 147-162) Oxford University Press: USA.

Forrest, D., J. Goddard and R. Simmons (2005), “Odds-Setters as Forecasters: The Case of English Football”, International Journal of Forecasting, 21, 551-564.

Forrest, D. and R. Simmons (2000), “Forecasting Sport: The Behaviour and Performance Football Tipsters”, International Journal of Forecasting, 16, 317-331.

Forrest, D. and R. Simmons (2008), “Sentiment in Betting Market on Spanish Football”, Applied Economics, 40, 19-126.

Fundació Ernest Lluch and FC Barcelona (2013), L’impacte de la crisi al futbol. Estratègies adaptatives, 1ª Conferència Acadèmica Ernest Lluch Economia i Futbol. http://www.fundacioernestlluch.org/files/050-112722-LACRISIALFUTBOLmarca.pdf

García, J. and P. Rodríguez (2007), “The Demand for Football Pools in Spain: The Role of Price, Prizes and the Composition of the Coupon”, Journal of Sports Economics, 8, 334-354.

García, J., L. Pérez and P. Rodríguez (2008), “Football Pool Sales: How Important is a Football Club in the Top Divisions?”, International Journal of Sport Finance,3, 167-176.

Rossi, M. (2011), “Match Rigging and the Favourite Long-Shot Bias in the Italian Football Betting Market”, International Journal of Sport Finance, 6, 317-334.

Sauer, R.D. (1998), “The Economics of Wagering Markets”, Journal of Economic Literature, 36, 2021-2064.

Schnytzer, A. and G. Weinberg (2008), “Testing for Home Team and Favourite Biases in the Australian Rules Football Fixed-Odds and Point Spread Betting Markets”, Journal of Sports Economics, 9, 173-190.

Shin, H.S. (1991), “Optimal Odds against Insider Traders”, Economic Journal, 101, 1179-1185.

Shin, H.S. (1992), “Measuring the Incidence of Insider Trading in a Market for State-Contingent Claims”, Economic Journal, 102, 426-435.

Surowiecki, J. (2004), The Wisdom of Crowds, Doubleday: New York.

Thaler, R.H. and W.T. Ziemba (1988), “Anomalies-parimutuel betting markets: Racetrack and Lotteries”, Journal of Economic Perspectives, 2, 161-174.

Vaughan Williams, W.L. and D. Patton (1997), “Why is there a Favourite Long Shot Bias in British Racetrack Betting Markets”, Economic Journal, 107, 150-158.

Woodland, L.M. and B.M. Woodland (2011), “The Reverse Favorite-Longshot Bias in the National Hockey League: Do Bettors Still Score on Longshots?, Journal of Sports Economics, 12, 106-117.