Odds-On Winner: Why Betting on the Favourite isn’t Always Best

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Sports gambling is a fantastic field for any statistics or data freak. The whole industry is made possible thanks to probability equations that work out the likelihood of an event happening, such as a certain team winning, and by what margin.

It has been shown that the gamblers have an extremely strong bias towards betting on favourites when compared to outsiders with longer odds. This makes sense, as it has been proven that betting on shorter odd outcomes generates a higher return over time, with bets on a favourite generating over ten times more money than betting on something with 100-1 odds or higher.

Things Become More Interesting with Handicap Bets

Handicap bets, also known as spread bets, bring another element into the equation by introducing a deficit for a team to overcome in order to win, and this is when the role of the favourite becomes interesting.

For example, there are often very clear favourites with NRL odds, but this doesn’t necessarily mean the favourite is as likely to beat their opponents by the handicap deficit. Rugby is a very tricky game to predict due to high injury risks, heavy squad rotation and a variety of methods for teams to rack up points. Whilst in some cases it may be easy to predict a winner, it’s still very difficult to guess by what margin they’ll win, or if they’ll overcome the handicap deficit.

By picking a handicap bet on the underdog, it’s possible to use their handicap to win the bet overall, even if that team loses. For example, if a team has a positive handicap (such as +5) and they lose to a score of 30-28, the bet will pay out, as the handicap score is 30-33.

When deciding the value of the handicap to place on a team, bookmakers will typically calculate it in a way that gives the favourite close to 50/50 chance of beating the handicap, according to FiveThirtyEight. However, over two thirds of people still choose to back the favourites to beat the handicap.

Gamblers on Spread Bets Are More Prone to Cognitive Bias

In fact, the more confident someone was that their team would win, the more likely they were to back them beating a handicap despite having no empirical reason for doing so. This is a clear example of anchoring, or focalism.

Punters have a tendency to latch on to the information that a team is the favourite to win, and then also use this information to influence their decision in subsequent situations. In reality, the fact that a team is the favourite to win doesn’t help someone determine the potential distribution of points in a game, thus skewing their prediction, causing a bias to the favourite.

So if you’re thinking of going for the favourites and backing the Sydney Roosters as the best NRL team this year, you might be better off doing some research about less likely contenders.

 

Originally posted: http://fruitide.com/odds-on-winner-why-betting-on-the-favourite-isnt-always-best/