European betting market efficiency and the frequency of draws in association football

Abstract

This study attempts to investigate and scrutinise the betting market efficiency of the top eleven leagues in Europe for eight respective seasons starting from the campaign of 2005-06 till the season of 2012-13. An analysis of the ‘1X2’ market and the ‘Over/Under 2.5 goals’ market, using the average odds, is made in an effort to search for any market inefficiencies. This will be made possible by establishing the returns of several odds categories for the general markets, for instance the whole ‘1X2’ market, and likewise independent outcomes of each market, such as a ‘home win’. Bettor prejudices such as the famous favourite-longshot bias, a preference for overs, and a bias towards bets capable of doubling one’s incomes are identified within the market. In addition, a strategy using the maximum odds in the market proves that the market is not efficient as profits are realisable. Furthermore, the outcome of draws is examined through the same eleven European leagues and seven editions of the World Cup in an attempt to establish any relationship between the frequency of the draw and different stages of the competition under investigation. It is confirmed that the draw is a purely random manifestation yet slight traces of a pattern between the four quarters in every league can be identified. Additionally, although 20-30% of the games per campaign are expected to finish in a draw every year, Spain and Holland exhibit a constantly lower percentage of draws, whilst France and Italy experience a higher ratio than the average. The World Cup analysis shows that draws are more common in finals than in group stages, whilst changes in the competition’s regulations, such as the competition structure and the number of teams to qualify per group also have an effect on the percentage of matches ending draw.