Monday 9 October 2017

Persisting Edges

Unknown writes:

I am a big fan of you blog and your systems and would like to thank you for sharing your knowledge but I have one question that keeps bugging me:
Why do your systems and edge based on relatively simple technical analysis still work if the market and players in it are so smart and efficient?
Buchdal's system based on favorite/longshot bias seems to be alive and well even after a decade of being practically in the open so why haven't the betting market adapted to it and killed its edge by now?
Really appreciate any help and your opinion and thank you in advance
Thanks for the compliment and the question.

There is no single market for sports betting, and my intent in mentioning some ideas here is to point readers towards those markets that are currently inefficient. 


The reason why some markets are inefficient can only be that the square money exceeds the sharp money. With sportsbooks risk averse, the lines for such matches are consequently incorrect.

Why these inefficiencies continue for sometimes many years is indeed very strange. Perhaps the liquidity isn't there to interest big players?

As relatively small as these markets might be compared to say the English Premier League, the markets I highlight should be more efficient, but clearly they are not.

Small Road 'Dogs in College Football should not be profitable in 14 of the last 17 seasons. In Conference games, they should not have an ROI of over 15% since 2005. 
Small Road 'Dogs in the NFL should not be profitable in 10 of the last 11 seasons. In Division games, they should not have an ROI of over 13% since 2005.

Home advantage is much talked about in sports, but in many, it is declining. Improved officiating and an increase in reviews have helped with this.

After years when backing Road favourites in College Football was throwing away your money, small Road Favourites were profitable in 2010 and four of the six season since, with an ROI of 7.5%. 

One can only assume that most money is unaware of the shift and continues to over-estimate home advantage. 

Backing hot favourites in MLB should not show a return of 8.9% for the last six seasons.

Here it's possible that after many years of a reverse-longshot bias in baseball, the majority of bettors are unaware that the tide has turned. Or perhaps they are worried the tide has crested and about to begin ebbing back to its long established norm. It well may, but at some point you have to make the move from watcher to swimmer. 

It's in the less popular sports are where inefficiencies are more likely to persist.

In my opinion, there's no point in the serious sports bettor looking at the Premier League and other top level football for value. It's delusional to think that in the long term you can beat the likes of Starlizard and its army of quants and informants.

So the systems I talk about here tend to be from the lower leagues of football, or from niche sports. At some point in the probably not too distant future, these edges will also be gone, but for now, enjoy them.

One exception is the Bundeslayga, which ironically is one example of a system that does appear to have lost its edge after several years of profit, but the surprise is not that the edge has gone, but that it lasted as long as it did.

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