The efficiency of the Bundesliga 1 sports gambling market (2013)

This paper aims to investigate the efficiency of the Bundesliga 1 online sports betting market by using odds quoted by 10 online bookmakers and 12 match statistics for the 2012-2013 and 2011-2012 seasons. The home underdog bias, longshot favorite bias and the efficiency of the bookmakers’ odds as forecast are examined. No evidence for a home underdog bias is demonstrated. The results show that one can generate a profit by systematically picking out odds inferior to a 1.21 odds threshold utilizing best odds, but not utilizing mean odds. This amounts to backing overwhelmingly favorites whose probability of winning exceeds 90%. This tentatively indicates a favorite longshot bias. Moreover, it is shown that bookmakers’ odds for the Bundesliga 1 season 2012-2013 are efficient forecasts for the outcome, which can be improved by including the amount of fouls the home team committed in their last match. A betting strategy based on this model with trimmed tails generates a profit across both seasons. The results are robust across both seasons and transaction costs reduce profitability but only for small stake bets.