Favourite-Longshot Bias | Why Underdogs Are Overrated

Posted on by Toby @ Punter2Pro

The favourite-longshot bias is one of the best-known concepts in sports betting. It describes the tendency for longshots to be overpriced relative to their true chances of winning, while favourites generally offer better long-term value.

Understanding this bias helps bettors avoid overpaying for unlikely outcomes and explains why many professional bettors focus more heavily on shorter-priced selections.

 

Why Are Longshots Often Overrated?

It’s been widely established that, across many sports, longshot prices are disproportionately shorter relative to their fair prices than favourites.

There are three main reasons why I believe the favourite-longshot bias exists in sports betting:

1. Pricing Difficulties

In sports such as horse racing and greyhound racing, a longshot often represents a little-known or out-of-form runner that has not demonstrated much ability to win the race. The longshot is certainly not the focal point of the event. This poses a problem for bookmakers: how can they price this obscure entity without getting it terribly wrong?

When there is little reliable information available, sportsbooks often have to estimate the correct price rather than simply copying an efficient market. While betting exchanges and sharp sportsbooks can provide useful guidance, obscure events frequently have little liquidity or reliable pricing to reference. That uncertainty often results in cautious, defensive pricing.

Therefore the betting site has to make its own call as to where to set the odds. This often results in an extremely cautious, low-value price.

2. Risk Management

Sports bettors enjoy the excitement of the longshot. The average recreational gambler would sooner speculate on outsiders in the hope of receiving a large payout than back short-priced runners for smaller, more regular returns. Therefore, longer-priced runners are typically over-backed relative to their likelihood of actually winning.

Naturally, this increases the risk for bookmakers: if the longshot wins, they’ll need to pay out substantial winnings due to the disproportionate amounts staked at such high odds.

Bookmakers manage that risk by continually reducing the price as longshots attract more volume from bettors. While cutting the price reduces the average odds they’ll have to pay out on, it also makes the longshot increasingly less attractive as a betting proposition. That way, bettors are more likely to explore other options in the market.

3. Price Consciousness

Given that longshots tend to involve lesser-known entities, and that casual bettors often see them as a more exciting proposition than favourites, it’s all too easy for bookmakers to take advantage.

Sports bettors are generally more price conscious about what they know and understand. Even casual bettors often have an expectation of where the price of a favourite should be, based on previous results, observations or even historical prices. The same can’t be said for an obscure selection with little or nothing to go by. This lack of knowledge is easy to exploit.

Perhaps the biggest difference is that longshots are often backed simply because they offer the chance of a large payout. You don’t back a favourite to win big — therefore, you expect the price to be competitive. Essentially, bettors are often happier to accept sub-par odds on a longshot than on a favourite.

Think of it this way: an 80/1 bet offers a relatively similar level of excitement to a 90/1 bet, yet the odds are substantially different. Let’s suppose that 90/1 is the fair price. Would the average punter realise, or even care, that they’re getting poor value by taking 80/1 instead?

Bookmakers are aware that price consciousness is lacking at high odds and that the majority of punters neither have the means to price up longshots nor the inclination to shop around before placing their bets.

To date, it’s still disputed exactly why the favourite-longshot bias exists. However, the explanations above make the most sense given the typical behaviours of both bookmakers and sports bettors.

 

Can I Benefit From the Favourite-Longshot Bias?

Firstly, for the reasons covered in the previous section, it’s important to note that Betfair will regularly offer substantially higher odds on longshots than bookmakers. Switching to Betfair is a simple way of improving the value you take at high odds.

However, the existence of the favourite-longshot bias doesn’t necessarily mean you should only back favourites or base your strategy solely around them. Nor does it mean you should neglect longshots entirely. As always, assess every selection on its own merits.

Several betting strategies I’ve worked on targeted mid-market prices — not favourites or longshots specifically — for the following reasons:

  • Big shifts in the odds. Mid-market odds often move more substantially than short-priced favourites. For instance, it’s not uncommon for horse racing prices of 9.0 to shorten to 6.0 later in the day, creating opportunities to identify value betting opportunities or trade in and out of positions at a profit.
  • Price uncertainty. Mid-market odds aren’t as well-formed as favourites because they attract far less public attention and betting volume. An element of price uncertainty often exists, meaning value regularly arises during the lead-up to an event.
  • Decent liquidity. There’s generally more money available on mid-market selections than on those at extremely high odds, making it easier to get bets matched while still benefiting from worthwhile price movements.

Thus, mid-market odds often strike a good balance between liquidity and the potential to find value.

 

Key Takeaway

The favourite-longshot bias doesn’t mean favourites always represent value or that longshots should always be avoided. Instead, it highlights a well-documented tendency within betting markets: outsiders are often priced less efficiently than many bettors realise.

Understanding this bias can help you compare odds more critically, avoid paying unnecessary margins on speculative selections, and appreciate why many professional bettors focus on price rather than simply chasing the biggest potential payout.

If you’d like to explore the theory in more depth, the following resources provide further evidence and academic discussion of the favourite-longshot bias:

Toby @ Punter2Pro
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