If you’re steering clear of short-priced bets, you’re likely missing a lot of value, but it’s not as simple as always bet on the favourite
A quick search for betting on favourites on Google throws up hundreds of “fool-proof” systems for making money, which simply require your credit card details and a one-time payment of $100 to read about them. And one of the most common “systems” you will encounter is betting on favourites because here we find there is some truth behind the lies.
A lot of academic research has been done into the so-called favourite longshot bias in betting markets. All winning betting strategies are based on exploiting market inefficiencies, and when it comes to favourites, there appears to be rather a large one in place. Put simply, favourites are much closer to “true odds” than longshots.
One major study you will find quoted in lightly researched articles on favourite betting is by two American academics who examined the results of over 6 million horse races in America and found backing favourites lost at a rate of 5.5% while backing from 3/1-15/1 lost at 18% on average.
The good news for bookmakers there is no matter what people bet on they lose, but it’s a significant difference between favourites and longer odds bets. Favourites are priced up more accurately than longshots. It’s also been shown to apply to other markets with particular application to political and novelty markets where it seems the shorter the odds the greater the bias.
In the last 20 years, a number of research papers have been published to see if this applies to football with confusingly mixed results. Some say yes, some say no and some say both. If you were hoping that a simple “always bet on the favourite” strategy was your route to profit, then think again. But there are some key lessons:
What various academic and recreational research from bettors has found is betting on favourites generally allows you to lose more slowly. This isn’t a great long-term strategy, but as a starting point it at least demonstrates that betting the favourite is rarely a bad bet. As a starting point, losing at a slow rate is a damn sight better than most punters manage.
For some bettors, the nature of betting short-priced favourites seems counterintuitive to their notion of “value”. Risk reward is an odd concept, and betting £100 to win £20 on a 1.2 selection doesn’t seem hugely attractive to many, but research has shown this is often a better bet than £100 on a 1.8 shot in terms of expected long-term returns.
A good demonstration of this comes in rugby union, where New Zealand will often be priced at something absurdly unattractive like 1/80 to beat most sides outside the top six. But losses to those teams are extremely rare. In fact, the All Blacks have never lost to an international team that isn’t Australia, England, South Africa, France Wales or Argentina. Never. How well does your 1/80 look now?
The All Blacks are perennial favourites. Their 2015 World Cup-winning team is regarded by many as the greatest rugby team ever assembled
But if you are too cavalier with these stats, you can come unstuck as South Africa showed in the Rugby World Cup where they were 1/100 to beat Japan. The Springboks had similar stats to New Zealand, having only lost internationals to 8 teams in their history. The loss to the minnows of Japan was the biggest shock of the tournament, but it should be seen as an exception and not the rule.
There were warning signs including an improving Japanese side a South African side that lost all three of its games in the Rugby Championship including at home to Argentina. And the final and most important point is you can’t just trust blindly in backing short-priced favourites and expect to never be stung for a big loss now and again.
Take the 2015/16 Premier League as an example of how favourites perform on a long-term betting basis. The 2014/15 season threw up a rather conveniently even 100 wins from 150 games where the home side was under 2.0. In other words odds-on to win. This would have given a total profit of £4.85 to a £1 level stakes bet. Pretty good.
The following season, by early February, there were 50 winners from 91 games for a total loss of £13.75 to the same level £1 stakes. The 2013/14 season had 99 winners from 143 games for a season-long profit of £1.21. So it shows that an expected long-term trend can sometimes go wildly off track.
Bet Now
So what does all this tell us? Firstly, this is not an exact science and secondly that despite the 15/16 anomaly, there is a lot of value to be had in odds on favourites. It should encourage you to go and analyse the huge wealth of stats and betting data that exists for free on the internet and try and find your own conclusions.
Find a data source and play around with the results. Spot a pattern and develop a system that works for you by refining the data and using your own insight into what might make odds-on chances more or less likely to win. But don’t, whatever you do, fall into the trap of thinking a 1.20 bet doesn’t present value.
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