Back the Favourite Big to Win Big. Common-Betting-Wisdom turned on its head?
Common betting lore suggests that there is no value in backing low priced favourites since the market has already pushed the value down below a profitable level and that risking a lot of money to win a small amount is a waste of time. But in fact, there are a large number of articles, books and even university dissertations and theses that prove something very different. The academic research on this topic calls it the “Favourite-Longshot Bias”. If you want to know how to win with the favourites continue reading and check out 4 things you should know to earn more thanks to this.
What is the Favourite-Longshot Bias?
Basically, the Favourite-Longshot Bias means that longshots have less value than favourites. The Favourite-Longshot Bias can be seen in financial markets as well as in sports betting markets. In financial markets it is observed when investors opt for smaller investments in high risk/high return options such as penny stocks or new business venture capital instead of safer low risk/low return options such as government bonds or blue chip companies. They do this in the hope of making larger returns on their capital, but in fact they would do better by just following consensus and backing the popular choices. In sports betting this means that bookmakers shorten the odds of longshots much more than they shorten the odds of favourites. This means that there is a higher bookmaker margin on longshots and a lower bookmaker margin on favourites. That in turn means that your edge has to be even higher on longshots to overcome that larger bookmaker margin. And the good news for bettors is that your edge does not need to be as high to overcome the smaller margin on favourites. Even better news for bettors is that Betamin Builder has a number of “back the favourite” strategies that have been working and making profit for a long time and can be easily followed by signing up here.
Why are longshot odds worse value than favourites?
There are a number of reasons for this:
- Firstly, as mentioned previously, the bookmakers deliberately shorten the longshot odds by more than they do the favourite. They do this because longshots are, by their nature, more unpredictable than favourites. Longshots in football often have less consistency, may have had team changes due to injuries and have more unknown fringe players in the side, may be from a lower ranked league, may be from a league with much less media coverage and less information available to create models from, and so on. Favourites, on the other hand, usually have more consistency and pedigree, well-known players, lots of information available about them, and so on. Basically, if the longshot is more unpredictable, it is easier to price them wrong, and if bookmakers price them wrong, they will lose money, so they have to build in a bigger buffer for error. With favourites, they can be more confident of what the real odds should be, so they can be safe in only having a smaller bookmaker margin on those odds.
- Secondly, there is a tendency for bettors to seek bigger returns on higher odds with lower stakes. Casual bettors are already risk takers, and that risk taking personality leads them to be happier placing 10 euro bets on odds over 2.00 to double their money or more, rather than to win 3 euros on a 1.30 low odds “boring” bet. With the liability side of the longshot bet becoming larger than the favourite side, the bookmakers lower their longshot odds to reduce their liabilities. If people do bet on low odds favourites, they often use them in multiples, and that magnifies the bookmaker margin to even safer levels for them. It is rare for anyone to make multiples of longshots, so the odds must be shortened to protect the bookmaker when one of them wins. If you do bet on favourites, bet on singles. Multiples reduce the value of the bet by multiplying the bookmaker margin.
- Thirdly, the lack of information about longshots means that there is a higher chance of insider knowledge being used to make a big win and damage bookmaker profits. Therefore, again, the bookmakers lower their odds on longshots to protect themselves from that.
Where is the evidence?
“Explaining the Favorite–Long Shot Bias: Is it Risk-Love or Misperceptions?” by Eric Snowberg and Justin Wolfers.
This 24 page research paper published in the Journal of Political Economy (2010, vol. 118, no. 4) uses all horse races run in North America from 1992 to 2001, a massive data set of 5,610,380 races. I mention this one because the conclusion is most easily seen in this graph that shows that as odds increase, the negative ROI also increases.
On the left we see bets around the 1.25-1.50 range making an overall loss of -10% on each bet, but on the right the bets on odds of 50-100 have negative yields of 40-60%. There is a very large difference between the inbuilt bookmaker margin of 10% for favourites and 60% for longshots.
If you are interested in the academic side of this topic, then this paper “The Favorite-Longshot Bias: An Overview of the Main Explanations” by Marco Ottaviani and Peter Sørensen in Handbook of Sports and Lottery Markets (2008) provides an excellent summary of research so far and a long list of sources at the end for further reading.
Then, What Do We Do With This Information To Make Money?
This means that the bookmaker margin is smaller on favourites, so it only needs a smaller edge to make profit by backing favourites. But, you still have to bet on value odds. You cannot just bet on all favourites, we still need a working strategy to find value bets on favourites. Betamin Builder has several of these working now and can be followed by the click of a button. Let’s see some of them with their current results:
- “Pro-Home” by Betaminic User Luisbang has average odds of 1.36 and a yield of 6.38%. With about 25 bets per month it has made an average of 1.59 units profit per month. In total it has made 136 points profit and only went down -10 points on its worst losing run.
- “Colossus 03 Free Scoring Favourites” is a PRO Strategy on Betaminic that has average odds of 1.32 and a yield of 7.23%. It has about 19 picks per month and has made 113 points profit with only a -9 drop on its worst run.
- “Betting on favourite team with low odds” by Betaminic User Soccerbet has average odds of 1.49 and a yield of 5.41%. With about 32 bets per month it has made an average of 1.73 units profit per month. In total it has made near 157 points profit and has nearly 3,000 bets in its large data set to base those results on.
What if I just bet on Barcelona in every game they are the favourite?
It is important to back value bets and not just back strong favourites. We can use the Betamin Builder Tool to analyse past data and answer football questions like those in a few clicks. What would happen? You would lose money over the long term. Over 268 bets when Barcelona were favourites, the average odds were 1.36 and you would have lost 16.46 points, a yield of -6.14%. The bookmaker margin is smaller on favourites, but it is still there. So just blind baking a strong team will not win in the long run.
This shows the power of Betamin Builder, with access to over 6 years of data of over 100,000 matches including bookmaker odds, you can answer your “what if” questions easily.
Which soccer leagues are best to back favourites in?
With a simple search we can see that backing all favourites in all leagues with odds between 1.01 and 1.30 leads to a slim profit of 17 points and a positive yield of 0.48%. That is even more evidence for the Favourite-Longshot Bias being true.
But which leagues show the highest Profit? Portugal’s Primera Liga, Greece’s Super League, Croatia’s 1 HNL, Italy’s Serie A and Ireland’s Premier Division.
If we select just the top 5 leagues, we get a yield of 5.92%
But to just bet on these leagues would be a mistake, this is pure data mining. There is no theory behind the idea of backing the favourites in these 5 leagues. It just happens that they are at the top of the pile now. It is important to follow strategies with theories behind them. So that’s why we recommend these three strategies:
- “Colossus 03 Free Scoring Favourites” backs favourites in certain leagues which have been scoring well recently and have a good indication of getting the goals to overcome teams that just sit back and defend against big teams.
- “Pro-Home” backs only home favourites that have a high goal scoring average that are playing against an away team with a low scoring average.
- “Betting on favourite team with low odds” backs favourites where 2 out of the last 3 games for both sides have been over 2.5 goal matches.
All of these strategies pick value fixtures based on subjective odds and objective form based on a hypothesis behind the systems. It would take a lot of time to look through the form of all the teams in 54 top leagues around the world calculating current average goals scored data or checking if the last 3 games for both teams were over 2.5 goals, but Betamin Builder can do all that for you. All you have to do is follow the picks and make the bets. Sign up for free and start following these strategies now.
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