How Efficient Are Sports Betting Markets? Can I Beat Them?

With any market, the more participants, the more efficient it becomes. The same applies to sports betting markets.

In order to become a profitable bettor, it’s important to be aware of the pros and cons of targeting both extremes of popular and obscure sports betting markets, and what conditions make them easiest to beat.

This post extends the answer I provided to the Trademate Sports blog for the question: How Difficult Is It To Beat The Sports Betting Markets?

 

Obscure Betting Markets (Inefficient)

Consider obscure sports markets that attract only a few bettors, where very little information circulates about the events. For example, low league Ice Hockey.

These types of markets are ‘clean’ in the sense that they aren’t clouded by rumours/gossip, public perceptions, or media biases. But on the other hand very few sources of knowledge — such as statistics, analyses, and news sources — exist to help form the basis of a solid opinion.

Bookmakers will speculate on obscure events by deciding where to set their lines, and how much risk they’re willing to take. Meanwhile sports traders might take a lone (and equally cagey) view on the situation. This usually means that there’s very little money on offer for bettors to place stakes.

Obscure markets are built on a very small set of opinions. There’s not much money shaping the odds, or driving them in any one direction. Thus the prices are unlikely to reflect the true probabilities of the event; the sign of an inefficient market.

As a bettor, an inefficient market can be positive (if the odds are too good to be true), or negative (if the odds are not as good as they ought to be). Contrary to popular belief a highly niche/obscure market doesn’t guarantee easy value. It just means you’ll face less competition for odds than hugely popular events where the money is constantly flowing.

 

Popular Betting Markets (Efficient)

Now consider highly popular sports markets, such as the 1×2 on big fixtures like ‘El Clasico’ (Real Madrid v Barcelona). There are literally thousands, if not millions, of different opinions that contribute to where the odds move in this market.

Bookmakers are forced to adjust their odds according to high demand. If the public heavily backs one outcome, then they’ll lower the odds on that selection and raise the odds on others to manage their exposure. This is one way that inaccurate odds are brought into line by the masses. Learn more from my post How Do Bookmakers Earn? 

Meanwhile the odds on the betting exchanges constantly fluctuate as thousands of participants (bettors, bookies, traders) enter the big market to take their view on the event. Whenever the odds represent exceptional value, they are snapped up immediately. Equally, bad odds are left dormant — nobody takes them.

What you’re left with — at both the bookies and exchanges — is an efficient market built around a “consensus” of diverse opinions. These opinions push the odds as close to accuracy as we ever get. This phenomenon is known as price discovery, which I explain in my post on the Wisdom of Crowds Theory.

While popular markets offer enough flow for bettors to get large stakes away, an efficient market is incredibly hard to beat. After all, there’s a vast amount of readily available information — such as data, news, and market behaviour– to base choices on. So naturally, competition for value is fierce.

 

How To Beat Betting Markets

The key to beating a sports betting markets (obscure, popular and everything in-between) is to either:

  • Be smarter than the market, or
  • Be faster at reacting to changes than other participants on that market.

Outsmarting the market implies that you hold some kind of specialist knowledge that gives you an advantage in detecting value (which most of us do not have). But being quicker than others can be achieved by simply having the right technology to detect slow-moving prices — without any knowledge of the sport required.

So the latter is much easier.


Finding Slow-Moving Prices

The betting exchanges are incredibly difficult to beat because the odds constantly move into line as new information becomes available. The markets are so efficient that it’s rumoured less than 1% of traders are profitable. So I do not advise that you start out by looking for slow-moving odds on the exchanges.

However, many bookmakers are slow to align their odds with more accurate prices available on the betting exchanges or “sharp” bookies (like Pinnacle). We call these inaccurate odds “soft”. Thus “soft” bookmakers provide ample value betting opportunities (price inefficiencies) for savvy punters to snap up as soon as they appear. This is how the majority of successful value bettors operate, and it’s the best approach for anyone new to value betting.

I highly recommend that you read my review of the Trademate Sports Value Bet Finder. This tool enables bettors to earn a consistent profit by detecting inaccurate prices at bookmakers.


Forming Your Own Pricing Model

Still keen to take on the markets yourself without using a Value Bet Finder?

Ask yourself: do I know more than the entire pool of opinions that went into forming the odds? What advantage do I have?

Invariably you’ll come to discover that your approach yields no advantage. As harsh as it sounds, your view is just one take on the market… and that’s unlikely to beat it over the long-term. That’s precisely why most punters find it so difficult to earn from sports betting.

To successfully take on the sports betting markets yourself, you’ll need to be smart, dedicated, willing to adapt to changes. You need to become more intelligent than the collective ‘crowd‘. This takes a highly methodical approach.

Nonetheless, if you are highly determined to create your own pricing model to identify value, then I can point you in the right direction:

 

Toby @ Punter2Pro
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