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Is Sports Betting Worth A Gamble?

World Cup is now heading to its latter stage of the tournament, and without the participation of the Netherlands in this tournament, World Cup still has managed to draw significant attention from football fans across the country. When your team is not participating in the tournament, then one of the most common ways to enjoy every moment of the game is to involve in betting. Betting in recent years has evolved so much such that not only die-hard players are willing to put their money into the service, but also many others who are just as enthusiastic in football as the die-hard players. The number of betting accounts has increased ten-fold in Britain only in a span of five years. How has the industry of betting become so attractive, and, does betting (in sports, in particular) help you to get money?

Betting has dated back to ancient times, as people did not want to be only the mere spectators of a competition. Instead, in order to keep themselves engaged in it, there must be some forms of involvement in the event. Back in the days, “competition” was mostly understood as the combat between two athletes; the only question is who would be the winner of that fight. The betting slowly evolves in a way such that an intermediary (now officially called as the “broker” or the “bookmaker”) would organize such bets so that they could find two players with opposing opinions on who would win and are willing to bet at a similar amount of money. Only when the horseraces became a popular demand for betting at around the 19th century did the first ever professional broker came into existence. They organized a platform in which people would process bets and prize payout for everyone. They only kept the profit and a small commission fee from the betting players.

When the statistical data in sports began to prosper, especially in baseball, the bookmarkers started to import these pieces of information into their computation in order to improve the odds in such a manner that it attracts more players. In the context of football, some of the information that gets changed during the pace of play. The parameters that can be adjusted vary from expected goals to the number of yellow cards given in the game. However, this odd can never achieve optimality, since odds represent collected information from the past, but not the incidents that are bounded to happen in the future. Taking stakes in the future is eventually what betting is all about!

Besides the traditional bets, in which you would simply predict the outcome of a certain game before it begins, the diversity of betting methods has grown exponentially over the years. The most prevalent feature, “in-game” betting, allows us not only to bet on the outcome of a certain game but also bet on the possibility of an event that happens to occur during the middle of the game, and even on multiple time intervals of the game (especially for football and cricket). Despite its relatively short existence, in-game betting has now accounted for about 60% of all money wagered on sports bets. This is the result of self-learning algorithms where they are able to collect a massive amount of data and process it in a relatively short amount of time, and different odds can be created based on that newly collected information. This creates not only more betting scenarios but also keep the fans to stay in the game and thus allowing for even further in-game bets. For the brokers whom would be proud of getting more money through in-game bets, such development in technology has also allowed betting to virtually eliminate the element of luck. With the abundance of data available on disposal, and as complex as it has been ever before, this is, of course, is bounded to happen. However, on the contrary, it would be extremely difficult to quantify the effect of an (unexpected) occurrence that has little relevance to data, numbers, or statistics. One may ask how the layoff of the coach of Spain immediately before the beginning of World Cup affects the probability of them to win the championship, or how Ramadan would affect the performance of Muslim football players at the tournament. The latter question might be easier to answer since there have been quite numerous occasions where players have to play professional football during times of Ramadan. The former might be just too difficult to predict.

Are the odds true?

However, statisticians, as proven throughout history, have not always been right in predicting the future (and who would have anyway?). No models are perfect, even if companies might have claimed that their models are immune to errors. Many different brokers use different models, and because of that, different odds arise in an identical game between brokers. There is also little justice to agree with the model whenever an identical are run multiple times, the outcomes usually turn out to be different on separate trials.

Betting is also somewhat analogous to other investments. One of the most fundamental foundations of asset investment is the efficient market hypothesis. The theory stipulates that no one would earn long-run profits on a certain investment because of complete information and arbitrage is not supposed to happen. Similarly, the efficient market hypothesis, in this case, would tell you that there would be no long-term profits from betting, since all information is started to be incorporated into each bet, and the wagers should reflect those pieces of information. However, since the wagers do not accurately present the true odds per the hypothesis, and usually the unusual bets are underrated, the most profitable strategy for many “experienced” players are to bet for those unusual ones to reap lucrative returns. However, betting on risk is not always ideal, and as many financial investments would too, there must be some “calculated” risk to betting, so there should be “risky” bets that are much more favorable compared to others.

Although, if you remember Paul the Octopus from eight years ago, it made some of the most tremendous feats in football match prediction. It barely had to understand football and the teams behind it, yet somehow it managed to predict 12 out of 14 matches correctly between the European Championship in 2008 and World Cup 2010. Rarely do we see such an accomplished feat by a betting player, let alone a creature who has zero knowledge of what football is about. Would it be miraculous if Paul the Prophet would live to this date?


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