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1. ## OL's&CL's, Databases and efficient/inefficient markets

Hi all,

Im currently just learning some basic mechanics about sports betting and I come across quitte some questions regarding to:
opening-/closing lines, Efficient-/ineffecient markets and beating the closing line.
(I'm looking to bet on mostly european football 1x2.)

There is a pretty easy way to check how efficient the market is, or atleast I know of one way that I read about on this forum:

Bet in a certain competition all games were the opening line is higher then the closing line, and the result would be X. If X is a positive number you are most likely talking about a efficient market.
- wich sample size would i be looking for?
- How high does X+ have to be to be fairly certain about a efficient market? (in correlation with #bets I'm sure?!)

I havent come across a site where I can find historical data wich contains, for example, the pinny OL and CL's in a format that i can easily put in a model. I can do it manually, no problem, but it would take alot of time.

So lets say I have a model that I have believe is solid for soccer. Would I be right to think that in the efficient markets I should be able to beat the CL by X, while in a inneffecient market this:
A) wouldnt matter at all
B would be less relavant
C) should be the total opposite

While writing this i remeber Justin7 saying and i quote:
"Even in the smaller markets, I'd rather see consistent line movement in the correct direction."

Im wondering here because to me it seems how smaller the market (we were talkin about low/max-bets < 1k/agame) the less efficient/sharp these markets are. What am i missing here?

2. Originally Posted by PuffPaffy
There is a pretty easy way to check how efficient the market is, or atleast I know of one way that I read about on this forum:

Bet in a certain competition all games were the opening line is higher then the closing line, and the result would be X. If X is a positive number you are most likely talking about a efficient market.
This doesn't make sense, but anyway: If the market is efficient you will lose only due to overround (or commission if you are betting with an exchange). That's all you need to know.

Originally Posted by PuffPaffy
So lets say I have a model that I have believe is solid for soccer. Would I be right to think that in the efficient markets I should be able to beat the CL by X, while in a inneffecient market this:
A) wouldnt matter at all
B would be less relavant
C) should be the total opposite
Again, if the market is efficient then, by definition, your expected losses are only due to overround/commission and it doesn't matter what you bet.

3. If sportsbook X deals 30c lines and year after year you find that betting overs leads to losses of 5% and betting unders leads to losses of 0.1%, it matters what you bet but I would say the 'market' is still efficient.

4. Originally Posted by mathdotcom
If sportsbook X deals 30c lines and year after year you find that betting overs leads to losses of 5% and betting unders leads to losses of 0.1%, it matters what you bet but I would say the 'market' is still efficient.
Yes, I omitted that because the OP seemed confused enough. But especially in non-exchange European soccer markets the favorite-longshot bias you are referring to is definitely in effect, meaning you lose a lot more when you bet on non-favorites.

5. It's quitte a confusing subject for me and maybe my opening-post wasn't as clear as I hoped it would be. I'll try to clarify.

By (100%) efficient I mean no matter what you bet on a closing line, you'll only lose overround. Ofcourse no market is 100% efficient. But theoretically you could only beat a 98% (2% overround) efficient market by betting somewhere between de opening line and the closing line and be on the good side. Which would be the line that moves down after your bet.

My question would be, how much weight do I give line-movement in non-efficient markets? So in a 100% non-efficient market where every line movement is 100% random you'd just pick value and don't give a shit whether lines are moving in the direction your model predicts.

So it's more about markets that are fishy/small etc. How much weight do you give line-movement?

Btw,
Why would betting underdogs be less profitable? Value = value right?

6. So many rookie bettors on here trying to beat the most efficient markets and having circle jerks about the theory of efficient markets.

Who gives a shit if the baseball moneyline market is efficient or not?

All you need to know is there are much LESS efficient markets out there ding dong, light bulb anyone?

7. bigomar you still have the best avatar on sbr

8. Originally Posted by mathdotcom
bigomar you still have the best avatar on sbr
Thanks pal.

Still trying to figure out what this guy is asking, if not for us to just calculate historical market efficiency for him.

9. Originally Posted by PuffPaffy
It's quitte a confusing subject for me and maybe my opening-post wasn't as clear as I hoped it would be. I'll try to clarify.

By (100%) efficient I mean no matter what you bet on a closing line, you'll only lose overround. Ofcourse no market is 100% efficient. But theoretically you could only beat a 98% (2% overround) efficient market by betting somewhere between de opening line and the closing line and be on the good side. Which would be the line that moves down after your bet.

My question would be, how much weight do I give line-movement in non-efficient markets? So in a 100% non-efficient market where every line movement is 100% random you'd just pick value and don't give a shit whether lines are moving in the direction your model predicts.
I think you're still confused. A market can be efficient at any line, not only at the closing one. I think you're using established terminology erroneously, thus confusing everyone else as well. If you want to get help, stop using the term "efficiency" and explain exactly what you used to mean by that word.

Why would betting underdogs be less profitable? Value = value right?
Betting underdogs on non-handicap non-exchange markets is less profitable than favorites. This is called "favorite-longshot bias", even though it is non-explotable (as mathdotcom said, you still lose money if you beat the favorite).

10. Originally Posted by mathdotcom
So many rookie bettors on here trying to beat the most efficient markets and having circle jerks about the theory of efficient markets.

Who gives a shit if the baseball moneyline market is efficient or not?

All you need to know is there are much LESS efficient markets out there ding dong, light bulb anyone?
I have no idea why you think I'm trying to beat 'the most efficient markets'. Or do you think there's not much value to be found in 100+ football (soccer that is) leagues?

Anyway, I'm trying to figure out which of these leagues is the softest. And in doing this I came across a lot of discussion about BTCL. And in my opinion a 100% sharp/efficient market should result in a closing line where no Vbet can be found (Sorry HUY if you couldn't figure out what I meant by 'efficient' after that example). I just want to test for which leagues I don't need to beat the closing line.

Still have no idea what ur saying HUY about the favorite-longshot-bias. If you mean that underdog odds are generally worse because people like to bet underdogs that still gives me no reason at all not to bet on a underdog if I think the value is substantial.

11. Originally Posted by PuffPaffy
I have no idea why you think I'm trying to beat 'the most efficient markets'. Or do you think there's not much value to be found in 100+ football (soccer that is) leagues?

Anyway, I'm trying to figure out which of these leagues is the softest. And in doing this I came across a lot of discussion about BTCL. And in my opinion a 100% sharp/efficient market should result in a closing line where no Vbet can be found (Sorry HUY if you couldn't figure out what I meant by 'efficient' after that example). I just want to test for which leagues I don't need to beat the closing line.

Still have no idea what ur saying HUY about the favorite-longshot-bias. If you mean that underdog odds are generally worse because people like to bet underdogs that still gives me no reason at all not to bet on a underdog if I think the value is substantial.
I don't understand why you keep saying that an efficient market should result in a closing line where no value can be found. This is not enough. An efficient market is one where no value can be found, period.

And of course you should bet on underdogs when you think that there is value. The problem is that there is never value when the favorite-longshot bias is in effect, as you can bet the same selection elsewhere (exchanges) on better prices.

12. Ok, I guess I mean efficient bettor market right? With this in mind I was referring to CL's. So you mean by 'favorite-longshot bias is in affect' that if a lot of people bet the underdog, the odds go down and at some point there's no value in betting anymore? If so, this was a bit too obvious for me so that's why I mis-understood.

13. [QUOTE] So you mean by 'favorite-longshot bias is in affect' that if a lot of people bet the underdog, the odds go down and at some point there's no value in betting anymore? [/QUOTE]

No. Odds start out biased.

14. [QUOTE=HUY;15339178]
So you mean by 'favorite-longshot bias is in affect' that if a lot of people bet the underdog, the odds go down and at some point there's no value in betting anymore? [/QUOTE]

No. Odds start out biased.
Huy, when you say that the openers are biased, are you speaking in terms of a mathematical bias? An historical bias? Would you mind elaborating on what defines the bias of the odds.

15. Favorite-longshot bias (by definition) can really only happen widely in ML markets.

SBR
Bash 2012
Attendee 8/17/2012

16. Yay another efficient markets hypothesis thread I expect it to be as fruitful as the last 493

17. [QUOTE=chunk;15341996]
Originally Posted by HUY

Huy, when you say that the openers are biased, are you speaking in terms of a mathematical bias? An historical bias? Would you mind elaborating on what defines the bias of the odds.
As I said above, in non-exchange, non-handicap odds, you lose more when you bet the underdog than when you bet the favorite. This is the bias I am referring to.

18. Would you say that there may be any bias at all for major market odds?

19. Originally Posted by chunk
Would you say that there may be any bias at all for major market odds?
Yes, on most bookmakers there is.

20. The term favorite/longshot bias came out of horseracing. A long time ago.
In the following, the track takeout is adjusted out = novig line. using money line type odds, not point spread.

If you look at a lot of races, the win odds on a horse accurately estimate the probability of the horse winning the race.
Look at 1000 horses that go off at 2-1 odds. This implies the horse has a probabilty of winning of .33 - win 33% of the time.
Out of the 1000 horses at 2-1, about 33% should actually win. People checked this over huge number of races and found that this is true.

Horse race win odds are an efficient - accurate estimate of the probability of the horse winning.

This was very accurate at odds in the middle ranges, but was less accurate for extreme favorites and longshots. Horses at very low odds won more often than they "should" and longshots won less often.

If you bet on an extreme favorite, the horse would win more often than it should based on the payoff (odds) you would get. You could make a profit by just betting on extreme favorites(if no track takeout). You would lose more than you "should" if you bet on longshots.

Even though there was a lot of money bet on the favorite, it was not enough based on the horses "true" chances of winning.

Extreme favorites were underbet and longshots were overbet based on their "true" chances of winning.

The theory is that people don't like the bets where they would bet a lot to win a little - extreme favorites. They like bets where they bet a little to win a lot - big longshots. People don't want to bet \$1 to win \$0.10. They like to bet \$1 to win \$100.

This is the usual meaning for favorite/longshot bias.

This doesn't really apply directly to pointspread type betting. There may be some sort of favorite/longshot bias in pointspread betting but it could be the opposite of horseracing.

SBR
Bash 2012
Attendee 8/17/2012

21. Originally Posted by mathdotcom
Yay another efficient markets hypothesis thread I expect it to be as fruitful as the last 493
It's not whether you fall, it's whether you stand back up.

22. Originally Posted by Peregrine Stoop
It's not whether you fall, it's whether you stand back up.
Keep it up with that attitude, it'll get you far. You might even get to the paralympics.

23. I am not sure if X is any indication of how efficient a market is. I can argue that the bigger the X is, the less efficient a market is. Am I too off base here?

To me, the most telling evidence of an efficient market is high limit combined with low vig. Although assumption of a 100% efficient market can be really really safely dismissed.

24. Originally Posted by wrongturn
I am not sure if X is any indication of how efficient a market is. I can argue that the bigger the X is, the less efficient a market is. Am I too off base here?

To me, the most telling evidence of an efficient market is high limit combined with low vig. Although assumption of a 100% efficient market can be really really safely dismissed.
Correct in practice. And that's all that matters.

Most people in these efficient markets threads are unemployed theorizers that haven't made a bet in their lives so who cares what they say.