Beating the bookies with their own numbers - and how the online sports betting market is rigged (1710.02824v2)

Abstract: The online sports gambling industry employs teams of data analysts to build forecast models that turn the odds at sports games in their favour. While several betting strategies have been proposed to beat bookmakers, from expert prediction models and arbitrage strategies to odds bias exploitation, their returns have been inconsistent and it remains to be shown that a betting strategy can outperform the online sports betting market. We designed a strategy to beat football bookmakers with their own numbers. Instead of building a forecasting model to compete with bookmakers predictions, we exploited the probability information implicit in the odds publicly available in the marketplace to find bets with mispriced odds. Our strategy proved profitable in a 10-year historical simulation using closing odds, a 6-month historical simulation using minute to minute odds, and a 5-month period during which we staked real money with the bookmakers (we made code, data and models publicly available). Our results demonstrate that the football betting market is inefficient - bookmakers can be consistently beaten across thousands of games in both simulated environments and real-life betting. We provide a detailed description of our betting experience to illustrate how the sports gambling industry compensates these market inefficiencies with discriminatory practices against successful clients.

• The paper's main contribution is a strategy that exploits deviations between bookmakers' consensus odds and fair odds to uncover profitable betting opportunities.
• It employs historical regression analysis on ten years of football match data, revealing ROI from 3.5% in simulations to 9.9% in dynamic betting environments.
• The study highlights structural market inefficiencies and bookmakers' restrictive practices that curb the profitability of successful bettors.

Analyzing "Beating the Bookies with Their Own Numbers: Efficiency and Inefficiencies in Online Sports Betting"

The paper "Beating the Bookies with Their Own Numbers" presents a rigorous investigation into exploiting inefficiencies in the online sports betting market, specifically targeting football games. This research introduces a novel strategy that leverages bookmakers' own odds to uncover mispricing opportunities and secure profitable returns, challenging the perceived efficiency of the sports betting market.

Methodology and Implementation

The authors bypass traditional methods of constructing competing predictive models by employing a strategy that capitalizes on the implicit probability information encapsulated in bookmakers' odds. This approach refrains from developing complex forecast models. Instead, it utilizes the existing consensus probabilities derived from widely available betting odds, seeking events where these odds deviate enough to create favorable wagering conditions.

The strategy's core revolves around comparing the bookmakers' odds against calculated fair odds, determining the potential for profitable betting. This is executed using a threshold determined by historical data regression analysis, which adjusts the consensus probability to account for bookmakers' commissions.

To validate their strategy, the authors conducted extensive simulations with historical data and real-life scenarios. They analyzed ten years of football match data, assessed betting outcomes using historical closing odds, and implemented both paper trading and real-money betting over several months.

Results

The analysis yielded significant findings:

• Over the 10-year historical data period, the strategy demonstrated a 3.5% return on investment, highlighting a clear mispricing inefficiency when contrasted with a negative return from a random betting strategy.
• Utilizing continuous odds data, the strategy achieved a 9.9% return, validating its performance in more dynamic and less predictable betting environments.
• When applied in real-life betting conditions, the strategy maintained consistency with a 6.2% return across paper and actual betting scenarios.

Notably, the research underscores that bookmakers' models indeed possess high predictive accuracy, yet exploitable inefficiencies remain due to competition among bookmakers and the requirement to balance their books amidst fluctuating betting patterns.

Implications and Market Dynamics

The paper's implications challenge the traditional view of market efficiency within online sports betting. The paper posits that the market inefficiencies revealed by the authors' strategy may not be purely speculative but rather structural, stemming from the operational methodologies of bookmakers.

A significant revelation from the paper is the industry's response to profitable betting. Bookmakers deploy restrictive practices such as imposing betting limits and account constraints on successful bettors, effectively curbing their earning potential and maintaining market status quo. These practices underline an implicit bias against profitable clients, raising ethical and regulatory considerations.

Future Perspectives

The research invites further exploration into the development of betting strategies that do not rely on competing with advanced predictive models but rather exploit market dynamics and client behavioral trends.

Potential advancements could focus on real-time data analysis and machine learning applications to enhance detection of mispricing opportunities, thus refining the strategy's effectiveness. Furthermore, regulatory bodies might examine the fairness of bookmakers' practices in limiting successful betting, pushing for a more equitable betting environment.

In conclusion, "Beating the Bookies with Their Own Numbers" presents a compelling and methodologically sound argument for the presence of inefficiencies in online sports betting, offering both theoretical insights and practical applications for bettors and researchers in the field.