Beating​ ​the​ ​bookies​ ​with​ ​their​ ​own​ ​numbers​ ​-​ ​and​ ​how​ ​the

online​ ​sports​ ​betting​ ​market​ ​is​ ​rigged

Lisandro​ ​Kaunitz​1,2*​,​ ​Shenjun​ ​Zhong​3*​​ ​and​ ​Javier​ ​Kreiner​4*

1-​ ​Research​ ​Center​ ​for​ ​Advanced​ ​Science​ ​and​ ​Technology,​ ​The​ ​University​ ​of​ ​Tokyo,​ ​Tokyo,

Japan.

2-​ ​Progress​ ​Technologies​ ​Inc.,​ ​Tokyo,​ ​Japan.

3-​ ​Monash​ ​Biomedical​ ​Imaging​ ​Center,​ ​Monash​ ​University,​ ​Melbourne,​ ​Australia.

4-​ ​Data​ ​Science​ ​department,​ ​CargoX,​ ​Sao​ ​Paulo,​ ​Brazil

Corresponding​ ​authors:​ ​Lisandro​ ​Kaunitz​ ​/​ ​Javier​ ​Kreiner

E-mail:​ ​[email protected]​​ ​/​ ​[email protected]
 Abstract

The online sports gambling industry employs teams of data analysts to build forecast models that
turn the odds at sports games in their favour. While several betting strategies have been
proposed to beat bookmakers, from expert prediction models and arbitrage strategies to odds
bias exploitation, their returns have been inconsistent and it remains to be shown that a betting
strategy can outperform the online sports betting market. We designed a strategy to beat football
bookmakers with their own numbers. Instead of building a forecasting model to compete with
bookmakers predictions, we exploited the probability information implicit in the odds publicly
available in the marketplace to find bets with mispriced odds. Our strategy proved profitable in a
10-year historical simulation using closing odds, a 6-month historical simulation using minute to
minute odds, and a 5-month period during which we staked real money with the bookmakers1.
Our results demonstrate that the football betting market is inefficient ‒ bookmakers can be
consistently beaten across thousands of games in both simulated environments and real-life
betting. We provide a detailed description of our betting experience to illustrate how the sports
gambling industry compensates these market inefficiencies with discriminatory practices against
successful​ ​clients.

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​ ​Code,​ ​data​ ​and​ ​models​ ​are​ ​publicly​ ​available:​ ​https://github.com/Lisandro79/BeatTheBookie
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Introduction

“In​ ​the​ ​midst​ ​of​ ​chaos,​ ​there​ ​is​ ​also​ ​opportunity.”

―​ ​Sun​ ​Tzu​,​ ​The​ ​Art​ ​of​ ​War

In recent years, the emergence of web technologies, product platforms and TV broadcast rights

transformed the online gambling industry into a worldwide $452 billion business2. Clients of the

online sports betting industry dream of “beating the bookies” and, most often, find in the

adrenaline and excitement of their risky gambling activities an escape from the boredom of

everyday life ​(Blaszczynski, McConaghy, & Frankova, 1990; Lee, Chae, Lee, & Kim, 2007;

Loroz, 2004; Platz & Millar, 2001)​. To maximize profit, bookmakers employ teams of data

scientists to analyze decades of sports data and develop highly accurate models for predicting the

outcome of sports events ​(Cantinotti, Ladouceur, & Jacques, 2004; García, Pérez, & Rodríguez,

2016)​. Although several strategies have been proposed to compete with bookmakers’ models,

from expert predictions ​(Forrest, Goddard, & Simmons, 2005)​, probability models based on

Power scores, Elo ratings and/or Maher-Poisson approaches ​(Dixon & Coles, 1997; Maher,

1982; Vlastakis, Dotsis, & Markellos, 2008) and prediction markets ​(Spann & Skiera, 2009) to

arbitrage strategies and odds bias exploitation ​(Ashiya, 2015; A. C. Constantinou, Fenton, &

Neil, 2013; A. Constantinou & Fenton, 2013; Franck, Verbeek, & Nüesch, 2009)​, to our

knowledge there is no precedent in the scientific literature that they consistently outperform the

market and show sustained profit over years and across football leagues around the world ​(A.

Constantinou & Fenton, 2013; Deschamps & Gergaud, 2012; Kain & Logan, 2014; Spann &

Skiera,​ ​2009;​ ​Vlastakis​ ​et​ ​al.,​ ​2008;​ ​Vlastakis,​ ​Dotsis,​ ​&​ ​Markellos,​ ​2009)​.

​ ​www.statista.com
2

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Can a betting strategy outperform the sports betting market? Although bookmakers’ profitable

business (along with their modelling advantage and control of odds pricing) seems to suggest the

opposite, we aimed to demonstrate that bookmakers can be beaten with their own numbers. We

developed a betting strategy for the football market that exploited the implicit information

contained in the bookmakers’ aggregate odds (Kuypers 2000; Cortis 2016; Cortis, Hales, and

Bezzina 2013) to systematically take advantage of mispriced events. Our betting system differed

from previous betting strategies in that, instead of trying to build a model to compete with

bookmakers’ forecasting expertise, we used their publicly available odds as a proxy of the true

probability of a game outcome. With these proxies we searched for mispricing opportunities, i.e.,

games with odds offered above the estimated fair value (see glossary in Box 1). Our strategy

returned sustained profits over years of simulated betting with historical data, and months of

paper trading and betting with actual money. These results suggest that the football betting

market is inefficient. Bookmakers, however, deploy a special set of practical rules to compensate

for these inefficiencies. A few weeks after we started trading with actual money some

bookmakers began to severely limit our accounts, forcing us to stop our betting strategy. We

thus demonstrate that (i) bookmakers can be beaten consistently over months/years of betting

with a single strategy, in both simulated environments and in real-life betting situations and (ii)

the online sports betting system is rigged against successful bettors through discriminatory

practices.

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Methods

“Who​ ​wishes​ ​to​ ​fight​ ​must​ ​first​ ​count​ ​the​ ​cost.”

―​ ​Sun​ ​Tzu​,​ ​The​ ​Art​ ​of​ ​War

Betting​ ​strategy

For a bet to be “fair”, i.e., for the expected value of a bet to be zero, the odds paid by the

bookmaker must be the inverse of the underlying probability of the result. Once bookmakers

build an accurate model that estimates the underlying probability of the result of a game, they

offer odds that are below the fair value. The mechanism operates similarly to the roulette at the

casino. For example, when a customer places a bet on red in an American roulette, there is a

18/38 chance of doubling the wager (18 green numbers, 18 red numbers, plus 0 and 00, which

are green). Under these conditions, the fair value for the bet is 2.111 but the house pays only 2

and, therefore, the house pays below fair value. This is the ‘tax’ or commission charged by the

bookmaker, in this case, for every dollar bet at the roulette, the house expects to earn $ (2/38),

or​ ​5.3c.

In order to calculate the odds that, statistically, will allow bookmakers to earn a desired

percentage of the total money bet at sport games, they need accurate models to estimate the

probability of each event. There are many different factors that can be incorporated into a model

to predict the probability of the outcome of a football game, for instance: the results of the last ​n

games for the two teams, the record of successful games at home or away for those teams, the

number of goals scored and conceded by each team during the previous games, player injuries

before the game and even the expected weather conditions on the day of the match ​(Dixon &

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Coles, 1997; Langseth, 2013; Maher, 1982)​. If we consider the scope of these variables the task

of developing accurate models to predict the outcome of thousands of games across football

leagues around the world becomes an extremely complex challenge. In recent years, however,

teams of professional analysts have improved the outcomes of their prediction models with

increasingly sophisticated statistical analysis and large amounts of data in variety of forms

(Gandar,​ ​Zuber,​ ​&​ ​Lamb,​ ​2001)​.

To quantify the predictive power of bookmakers’ models we conducted a historical analysis of

football game outcomes. We collected the historical closing odds of football games from January

2005 to June 2015 from online sports portals available on the Internet. For this analysis we used

data from 32 bookmakers: 'Interwetten', 'bwin', 'bet-at-home', 'Unibet', 'Stan James', ‘'Expekt',

'10Bet', 'William Hill', 'bet365', 'Pinnacle Sports', 'DOXXbet', 'Betsafe', 'Betway', '888sport',

'Ladbrokes', 'Betclic', 'Sportingbet', 'myBet', 'Betsson', '188BET', 'Jetbull', 'Paddy Power', 'Tipico',

'Coral', 'SBOBET', 'BetVictor', '12BET', 'Titanbet', 'Youwin', 'ComeOn', 'Betadonis', and

'Betfair'. In total, we analyzed 479,440 games from 818 leagues and divisions across the world.

To measure the accuracy of bookmakers in estimating a game’s final result probabilities we

calculated​ ​the​ ​consensus​ ​probability​ ​as​ ​follows:

pcons = 1/ mean(Ω) ​ ​ ​ ​ ​ ​ ​ ​(Eq.​ ​1)

where Ω is a set containing the odds across bookmakers for a given event and a given game

result (home team win, draw, away team win), whenever there were more than 3 odds available

for that result (in some games only a subset of bookmakers offered odds; the number of odds we

employed for analysis varied from a minimum of 3 to a maximum of 32). In this way, we

calculated the consensus probability of a home team win, a draw, or an away team win for each

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of the 479,440 games (in total 3 x 479,440 consensus probabilities). Then, we binned the data

according to the consensus probability from 0 to 1 in steps of 0.0125 (i.e., 80 bins). Within each

bin we calculated: 1) the mean consensus probabilities across games at closing time (the final

odds provided by bookmakers before the start of the match); and 2) the mean accuracy in the

prediction of the football game result (i.e., the proportion of games ending in home team victory,

draw or away team victory for that bin; see Figure 1). We used a minimum of 100 games for each

bin. With these data we ran a preliminary analysis and observed that the consensus probability is

a good predictor of the underlying probability of an outcome (see Results section). Based on

these results, we decided to build our betting strategy on this evidence that bookmakers already

possess​ ​highly​ ​accurate​ ​models​ ​to​ ​predict​ ​the​ ​results​ ​of​ ​football​ ​games.

A strategy intended to beat the bookmakers at predicting the outcome of sports games requires a

more accurate model than the ones bookmakers have developed over many years of data

collection and analysis. Instead of trying to create such a model, we decided to use the

bookmakers’ own probability estimates of the outcomes to find mispricing opportunities. ​More

specifically, we searched for opportunities where some odds offered were above their estimated

fair value. Sometimes bookmakers offer odds above fair value either to compete to attract clients

or to maintain a balanced book to avoid getting overly exposed to risk. For example, when too

many clients bet on an outcome ( e.g. home team victory) bookmakers can increase the odds for

the corresponding counterpart ( e.g. away team victory), in order to attract more gamblers to bet

on it and decrease their exposure to the overbooked outcome. This means that bookmakers

might offer odds with a lower implied probability than the actual probability of a result. This is

the​ ​key​ ​factor​ ​that​ ​we​ ​exploited​ ​in​ ​our​ ​strategy.

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We​ ​based​ ​our​ ​strategy​ ​on​ ​the​ ​estimated​ ​payoff​ ​of​ ​each​ ​bet.​ ​The​ ​expected​ ​payoff​ ​of​ ​betting​ ​$1​ ​is:

E (Π) = preal (outcome materializes) × payof f (outcome materializes)

+ P real (outcome does not materialize) × payof f (outcome does not materialize)

(Eq.​ ​2)

E (Π) = preal × (ω − 1) + (1 − preal ) × (− 1) = preal × ω − 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​(Eq.​ ​3)

Where Π is the payoff of the bet (a random variable), preal ​is the actual underlying probability

that the outcome materializes, and ω are the odds paid by the bookmaker in case that the

outcome​ ​comes​ ​about.

We​ ​performed​ ​a​ ​preliminary​ ​data​ ​analysis​ ​and​ ​found​ ​that:

preal ≃ pcons − α ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​(Eq.​ ​4)

Where pcons is the consensus probability as calculated above and α is an adjustment term that

allows us to include the intercept we estimated in a regression analysis on outcomes of games for

“Home”, “Draw” and “Away”. The estimated α was 0.034, 0.057 and 0.037 for home victory,

draw​ ​and​ ​away​ ​victory,​ ​respectively​ ​(see​ ​results​ ​section).

Then:

E (Π) ≃ (pcons − α) × ω − 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​(Eq.​ ​5)

Under these conditions, we should place a bet when the expected payoff is greater than 0, i.e.,

when:

ω > 1/ (pcons − α) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​(Eq.​ ​6)

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We followed this line of reasoning to define our betting strategy, and decided to place a bet

whenever​ ​the​ ​maximum​ ​odds​ ​offered​ ​for​ ​a​ ​given​ ​result​ ​fulfilled​ ​the​ ​following​ ​inequality:

max(Ω) > 1 / (pcons − 0.05) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​(Eq.​ ​7)

The expected value of each bet increases with the α parameter, while the number of games

available for betting decreases. This occurs because the condition becomes more stringent and

less bookmakers offer odds with such high margins. To select an appropriate value for the α

parameter we analyzed the performance of the simulation strategy by varying the value of α

from 0.01 to 0.1. We found that an α of 0.05 produced the optimal payoff with the largest

amount of games (an α of 0.06, for example, was equally profitable but we decided to use an α

of 0.05 because it provided twice as many games to bet in, which might be useful in a strategy

that​ ​increases​ ​the​ ​amount​ ​staked​ ​as​ ​a​ ​function​ ​of​ ​the​ ​earnings).

In summary, we based our betting strategy on the assumption that odds published by

bookmakers allow us to obtain a highly accurate estimate of the actual probability of the

outcome of an event (by taking the inverse of the mean odds across bookmakers minus a

constant that allows for the bookmaker’s commission). Thus, our betting strategy consisted of

placing bets whenever the odds offered by some bookmaker deviated from the average and were

above fair value, i.e., when the expected payoff of placing the bet was positive. Importantly, the

task of identifying the odds that satisfied the threshold in (Eq. 7) did not require a model with

higher​ ​accuracy​ ​than​ ​the​ ​bookmakers’​ ​models.

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Strategy​ ​implementation

Our betting strategy was implemented as a real time system, and deployed on a virtual machine

hosted on the cloud. The system continuously collected data from online sports betting portals

and provided the web service that made a dashboard available, where the recommended bets and

the betting history were shown (Supplementary Figure 1). The virtual machine was used to run a

program that searched for the odds of every football game from 5 hours before the onset of the

game. For each game, the program continuously collected odds across 32 bookmakers and

calculated whether the maximum offered odds complied with our strategy’s condition for placing

a bet - i.e., maximum odds fulfilling, Eq. (7). Whenever the program found a situation in which

this happened, it displayed the information about the game, bookmaker and odds on the

dashboard (Supplementary Figure 1), so that the users (including us) could see the list of bets

recommended by the system and place a bet of fixed amount with the bookmaker. To keep the

amount of money placed on each independent game constant, once a bet was placed for a game

at​ ​some​ ​bookmaker,​ ​that​ ​game​ ​was​ ​not​ ​considered​ ​for​ ​further​ ​analysis.

Results

“Victorious​ ​warriors​ ​win​ ​first​ ​and​ ​then​ ​go​ ​to​ ​war​ ​….​ ​The​ ​greatest​ ​victory​ ​is​ ​that​ ​which​ ​requires​ ​no​ ​battle.”

―​ ​Sun​ ​Tzu​,​ ​The​ ​Art​ ​of​ ​War

Analysis​ ​to​ ​define​ ​the​ ​betting​ ​strategy

To select the appropriate strategy we first performed a descriptive statistical analysis of the

relationship between the bookmakers’ predictions and the actual probability of the outcome of

football games. A linear regression analysis showed a strong correlation between the

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bookmakers’ consensus probability and the results of the game for home victory (R​2​= 0.999),

draw (R​2​= 0.995) and away victory (R​2​= 0.998). The slopes and intercepts of the regression line

were 1.003 and -0.034 for a home victory, 1.081 and -0.057 for draw, and 1.012 and -0.037 for an

away victory, respectively. ​These results suggest that the consensus probability is an extremely

accurate proxy (up to a constant intercept) of the actual probability of occurrence of each event

(home victory, dray, away victory; note that the slopes of the three regression lines are very close

to 1). Based on these results, we decided to build our betting strategy on the evidence that

bookmakers​ ​already​ ​possess​ ​highly​ ​accurate​ ​models​ ​to​ ​predict​ ​the​ ​results​ ​of​ ​football​ ​games.

Strategy​ ​Outcome

We tested our betting strategy by analyzing the odds and results of 479,440 football games played

in 818 leagues during a ten-year period, from 2005 to 2015. We began our analysis by applying

our betting strategy to the closing odds of each game (i.e., the odds values offered by

bookmakers at the start of the game3). We simulated placing bets when the closing odds of a

bookmaker complied with Eq. (7) at the closing time of the odds. With this approach, our

betting strategy reached an accuracy of 44.4% and yielded a 3.5% return over the analysis period.

For example, for an imaginary stake of $50 per bet, this corresponds to an equivalent profit of

$98,865 across 56,435 bets (Table 1, Figure 2A). We performed a bootstrap analysis to assess

whether our returns were above chance level. We repeatedly simulated a strategy that chooses a

random sample of games and, for each game in the sample, randomly selects to bet for home,

draw or away (with a prior probability equal to that of our strategy, see below) and places wagers

3
​ ​In​ ​practice,​ ​closing​ ​odds​ ​are​ ​a​ ​particular​ ​case​ ​of​ ​odds​ ​because​ ​they​ ​reflect​ ​the​ ​latest​ ​odds​ ​that​ ​were
available​ ​for​ ​clients​ ​to​ ​bet.​ ​We​ ​note,​ ​however,​ ​that​ ​these​ ​odds​ ​values​ ​are​ ​not​ ​a​ ​perfect​ ​estimate​ ​of​ ​a
system​ ​that​ ​could​ ​be​ ​used​ ​in​ ​real​ ​life​ ​because​ ​bookmakers​ ​close​ ​their​ ​odds​ ​shortly​ ​before​ ​the​ ​start​ ​of​ ​the
game.

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at the maximum odds offered across bookmakers. In each run of the simulation we A) randomly

sampled 56,435 games (the same amount of games that were selected by our betting strategy)

from the complete set of games in the historical series, B) selected a random outcome on which

to bet with a probability of 0.595 for home victory, 0.021 for draw and 0.384 for away victory

(these are the proportions of home, draw and away games that were selected by our strategy) and

C) calculated the return of placing the bet. We repeated the procedure 2000 times (sampling with

replacement) to obtain a distribution of returns (Figure 2A). The random strategy yielded an

accuracy of 38.9%, an average return of -3.32% and an average loss of $93,563 (STD=$17,778),

further confirming that Eq. 7 successfully selects bets with a positive expected payoff above

chance level. The return of our strategy was 10.82 standard deviations above the mean return of

the random bet strategy. The probability of obtaining a return greater than or equal to $98,865 in

56,435​ ​bets​ ​using​ ​a​ ​random​ ​bet​ ​strategy​ ​is​ ​less​ ​than​ ​1​ ​in​ ​a​ ​billion.

We observed that the final accuracy was higher for our strategy (44.4%) than for the random bet

strategy (38.9%). Correspondingly, our strategy selected odds with a mean value of 2.30

(STD=0.99) and the random bet strategy selected odds with a mean value of 3.10 (STD= 2.42).

The discrepancy in the accuracy between strategies originated from the selection of events: our

strategy picked up games with lower odds values and higher probability of occurrence than the

games selected by the random bet strategy. We confirmed this finding with an analysis of the

mean closing odds across bookmakers for each strategy. As shown above, the mean closing odds

across bookmakers is a precise estimate of the true probability of occurrence of an event (Figure

1). The expected accuracy (as predicted by the inverse of the mean closing odds across

bookmakers) precisely estimates the final accuracy in each strategy. We calculated the expected

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accuracy of the strategy using Eq. 4. For each bet of the strategy we calculate

i
pcons = 1/ mean(Ω) − α ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​(Eq.​ ​8)

where α is equal to 0.034, 0.057 and 0.037 for home win, draw and away bets respectively (and

where the intercept α comes from the regression analysis performed in the first paragraph of

the Results section), and i indexes the bet. We then calculated the average estimated probability:

i
E (accuracy) ≃ mean( pcons ). The expected accuracy for our strategy was 45.9%, and the actual

accuracy was 44.4%, while the expected accuracy for the random bet strategy was 38.9% and its

actual accuracy 38.9%. Although the mean closing odds values differed between strategies, the

final accuracies of both strategies closely matched the expected accuracy according to Eq. 8. This

confirms that the the probability information implicit in the mean closing odds across

bookmakers represents a powerful predictor for the true outcome of football games (as shown in

our​ ​historical​ ​analysis).

Following the success of our initial analysis, and considering that in real life individuals cannot

place bets at the closing time of odds, we decided to conduct a more realistic simulation in which

we placed bets at odds available from 1 to 5 hours before the beginning of each game. To this

end, we wrote scripts to continuously collect odds from multiple sources on the Internet. While

the historical closing odds for football games can be easily retrieved online, we could not find

any source of data containing the time series of odds movements before the beginning of each

game. To obtain these times series we wrote a new set of scripts to gather information in real

time for upcoming games as they became available online. In total, we were able to obtain data

from 31,074 games, from the 1st of September 2015 to the 29th of February 2016. Using these

times series data, we placed bets according to our betting strategy at any time starting 5 hours

before the beginning of a game until 1 hour before the start of the game. Under these simulated

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conditions, our strategy selected odds with a mean value of 2.32 (STD=0.99.), had an accuracy of

47.6% and yielded a 9.9% return; i.e., if every bet placed was $50 our strategy would have

generated $34,932 in profit across 6,994 bets (Table 1, Figure 2B). In contrast, the distribution of

returns of the random bet strategy selected odds with a mean value of 3.29 (STD=2.96), had and

accuracy of 38.4% and would have generated, for bets of $50, a return of 0.2% and an average

profit of $825 (STD=$7,106). Similarly as shown above, the expected accuracy wa 46.5% for our

strategy and 37.7% for the random bet strategy, which closely matched the actual accuracies of

both strategies. The return of our strategy was 4.80 standard deviations above the mean of the

random bet strategy. The probability of obtaining a profit greater than or equal to $34,932 in

6,994​ ​bets​ ​with​ ​a​ ​random​ ​bet​ ​strategy​ ​is​ ​less​ ​than​ ​1​ ​in​ ​a​ ​million.

Once we determined that our betting strategy was successful with the historical closing odds and

with the analysis of odds series movements from 5 hours to 1 hour before the game start, we

decided to test our betting strategy under more realistic betting conditions. To this end we

employed a technique called “paper trading”, a simulated trading process in which bettors can

“practice” placing bets without committing real money. We used the information displayed on

the dashboard to check the bookmakers’ accounts, verify that the possibility to lay a bet at the

advantageous odds was available, and subsequently mark the bet as laid on the dashboard. Paper

trading allowed us to empirically check whether the odds were available at the bookmakers at the

time of placing a bet. We had to test the discrepancy between the information that bookmakers

showed on their websites and the information that was displayed on our dashboard. Often, there

was a time delay between the moment when bookmakers made their odds available online and

the time it took for our scripts to show that information on the dashboard. We observed that

around 30% of the odds that were displayed on the dashboard had already been changed at the

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bookmakers’ sites. The delay in the update of the odds created a sample bias in the games we

were betting on: in contrast to previous analysis in which every game was used for the

simulation, now a subset of these games was not included at the time of placing bets. To test

how this delay could affect our results, we ran again our strategy simulation, now randomly

discarding 30% of the games. We observed that, despite the missing bets, the strategy remained

profitable. We decided to continue with our betting strategy, and after three months of paper

trading our strategy obtained an accuracy of 44.4% and a return of 5.5%, earning $1,128.50

across​ ​407​ ​bets​ ​for​ ​the​ ​case​ ​of​ ​$50​ ​bets​ ​(Table​ ​1,​ ​Figure​ ​3).

At this point we decided to place bets with real money. All the procedures were identical to the

paper trading exercise, with the exception that the human operator actually placed $50 bets at the

bookmakers’ online platforms after checking the odds on the dashboard. Our final results show

the profit we obtained in 5 months of betting money for real. During that period we obtained an

accuracy of 47.% and a profit of $957.50 across 265 bets, equivalent to a 8.5% return (Table 1,

Figure3). Combined, paper trading and real betting had an accuracy of 45.5% and yielded a profit

of $2,086 in 672 bets, equivalent to a return of 6.2%. We compared the results of our strategy

with the results of a random bet strategy, identical to that employed for the time series odds

(figure 2B) but this time considering games from April 2015 to July 2015 (the period used for

paper trading and real betting). The random strategy yielded an accuracy of 38.7%, an average

return of -0.7% and an average loss of $670 (STD=$2047). The return of our strategy after 672

games was 1.34 standard deviations above the mean of the random bet strategy and the

probability of obtaining a profit of $2,086 or higher in 672 bets with a random betting strategy is

1 in 11. This probability corresponds to a p value of 0.089, under the null hypothesis that the

return of our strategy comes from a distribution of final returns obtained with a random bet

14
strategy. A p-value of 0.05 is often considered as the standard threshold for statistical

significance. The p-value we obtained from the analysis of the return of our strategy was

expected given the evolution of the returns obtained in our historical simulations: with an

increase in the number of games our strategy increases its return and separation from the

distribution of returns of the random bet strategy (as seen with the historical analysis of closing

odds and odds movements series). The reader might notice that during a similar time period the

simulated strategy bet on approximately ten times more games. The reason for this is that we did

not have a dedicated operator betting on all available opportunities 24 hours a day and as a result

we missed many of the bets that appeared on the dashboard. Nevertheless, our paper trading and

actual​ ​betting​ ​activity​ ​confirmed​ ​the​ ​profitability​ ​of​ ​the​ ​strategy.

Although we played according to the sports betting industry rules, a few months after we began

to place bets with actual money bookmakers started to severely limit our accounts. We had some

of our bets limited in the stake amount we could lay and bookmakers sometimes required

“manual inspection” of our wagers before accepting them. In most cases, bookmakers denied us

the opportunity to bet or suggested a value lower than our fixed bet of $50 (Figure 4). Under

these circumstances we could not continue with our betting strategy. The limits imposed by

bookmakers not only shrunk our potential profit but also created a sampling bias in the choice of

games which was not taken into account in our previous analysis. In our simulations, when we

analyzed the effects of randomly discarding a proportion of the games, the returns were not

affected. However, the selection of games where bookmakers limited our stakes was unlikely to

be purely random, which could negatively impact the strategy’s performance. For these reasons,

15
and because bookmakers’ restrictions turned the betting experience increasingly difficult, we

decided​ ​to​ ​end​ ​our​ ​betting​ ​experiment4.

Discussion

“One​ ​may​ ​know​ ​how​ ​to​ ​conquer​ ​without​ ​being​ ​able​ ​to​ ​do​ ​it.”

―​ ​Sun​ ​Tzu​,​ ​The​ ​Art​ ​of​ ​War

We developed a betting strategy for the online betting football market. In contrast to strategies

that build prediction models to compete with the forecasts of bookmakers’ models, our strategy

was developed under the assumption that the average of the odds across bookmakers reflects an

accurate estimate of the probability of the outcome of a game. Instead of competing against

bookmakers’ forecasting models, we used the prediction information contained in the aggregate

odds to bet on mispriced events. Our strategy proved successful and returned profit with

historical data, paper trading and real betting over months and across football leagues around the

world.

Betting strategies based on expert or tipster analysis attempt to beat bookmakers by constructing

more accurate forecasting models than those of bookmakers ​(Boulier, Stekler, & Amundson,

2006; A. Constantinou & Fenton, 2013; Daunhawer, Schoch, & Kosub, 2017; Deschamps &

Gergaud, 2012; Vlastakis et al., 2009)​. Our analysis shows, however, that the implicit information

contained in the average odds across bookmakers provides a highly accurate model to predict the

outcomes of football games ​(Boulier et al., 2006; Forrest et al., 2005; Spann & Skiera, 2003)​.

4
​ ​As​ ​of​ ​the​ ​date​ ​of​ ​writing​ ​this​ ​paper​ ​(August​ ​2017),​ ​one​ ​of​ ​the​ ​bookmakers​ ​we​ ​had​ ​accounts​ ​with,
“Doxxbet”,​ ​ ​closed​ ​its​ ​website​ ​to​ ​clients.​ ​We​ ​are​ ​not​ ​able​ ​to​ ​withdraw​ ​the​ ​money​ ​(90​ ​euro)​ ​from​ ​them.
Their​ ​support​ ​teams​ ​do​ ​not​ ​respond​ ​to​ ​our​ ​emails.

16
There are many cases where the aggregate predictions of a group of individuals produce more

accurate predictions than those of each individual separately, a phenomenon often referred to as

the wisdom of crowds ​(Navajas, Niella, Garbulsky, Bahrami, & Sigman, 2017)​. This idea is often

applied in practice, for example in applications such as ensemble learning in machine learning

algorithms ​(Géron, 2017)​. Similarly, in the football market, each bookmaker can be considered a

predictor, and the average odds as the aggregate information across predictors. These predictions

also include the preferences and opinions of the punters regarding the probability of the

outcome, because they exert pressure on the price of the odds through their collective betting

(bookmakers often alter odds based on demand level to keep a balanced book, e.g. when they

increase the odds for a favourite when a disproportionate amount of punters place money on the

underdog). As bookmakers already posses excellent predictive models to estimate the outcomes

of football games, competing with them at forecasting game outcomes becomes a challenging

task. Not surprisingly, previous attempts to beat the football market with expert strategies

showed inconsistent returns ​(Boulier et al., 2006; A. Constantinou & Fenton, 2013; Daunhawer

et al., 2017; Deschamps & Gergaud, 2012; Forrest et al., 2005; Kain & Logan, 2014; Vlastakis et

al., 2008, 2009)​. In comparison, our strategy showed positive and sustained returns over years of

betting with historical data and over months of betting actual money across leagues in the

football​ ​market.

Through our experiments we demonstrated the existence of a betting strategy that consistently

generates profit. Some scholars consider that the existence of one such strategy is inconsistent

with the putative “efficiency” of the betting market ​(A. Constantinou & Fenton, 2013;

Deschamps & Gergaud, 2012; Vlastakis et al., 2009)​. If, on the contrary, a strategy like ours

generates profit consistently either by outperforming bookmakers’ predictions or by exploiting

17
market flaws then the betting market is necessarily “inefficient”. Our results suggest that the

online football betting market is inefficient because our strategy was able to obtain sustained

profits over years with historical data and over months of paper trading and actual betting. In

practice, however, the inefficiency of the football betting market was compensated by the

bookmakers’ restrictive practices. A few months after we began placing bets with real money

bookmakers limited our accounts, which forced us to stop our betting completely. Although our

betting activities were legal and were conducted according to the bookmakers’ rules, our bet

stakes were nevertheless restricted. Our case illustrates some of the discriminatory practices of

the online sports betting market ‒ the sports betting industry has the freedom to publicize and

offer odds to their clients, but those clients are expected to lose and, if they are successful, they

can be restricted from betting. In comparison, the limits to the accounts imposed in the online

gambling industry constitute illegal practices in other industries, or are even unlawful in general.

For example, advertising goods or services with intent not to sell them as advertised, or

advertising goods or services with no intent to supply reasonably expectable demand but with

the intention to lure the client to buy another product (a practice, often called “bait” or “bait and

switch” advertising) is considered false advertising and carries pecuniary penalties in the UK,

Australia and the United States of America5. Most countries have laws regulating advertising in

the gambling industry, but some of these laws have been relaxed in recent years (e.g. the

Gambling Act 2005 in the UK allowed the sports gambling industry to start advertising online

and on TV) and they vary from country to country. Our study sets a precedent of the

discriminatory practices against successful bettors in the online sports gambling industry: the

5
​ ​Consumer​ ​Protection​ ​from​ ​Unfair​ ​Trading​ ​Regulations​ ​(2008)​ ​Guidance,​ ​Interim:​ ​Guidance​ ​on​ ​the​ ​UK​ ​Implementation
of​ ​the​ ​Unfair​ ​Commercial​ ​Practices​ ​Directive
(​https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284442/oft1008.pdf​)
Australia:​ ​COMPETITION​ ​AND​ ​CONSUMER​ ​ACT​ ​2010​ ​-​ ​SCHEDULE​ ​2
(​http://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html​)
US:​ ​FTC​ ​Guides​ ​Against​ ​Bait​ ​Advertising,​ ​Section​ ​238.
18
online football market is rigged because bookmakers discriminate against successful clients. We

advocate for governments to take action into further regulating the sports betting industry, either

by forcing bookmakers to publicly admit that successful clients will be banned from betting or

by​ ​denying​ ​bookmakers​ ​the​ ​chance​ ​to​ ​discriminate​ ​against​ ​them.

Acknowledgements

We are very grateful to Katia Giacomozzi, who performed the bulk of the task of placing actual

bets and dealing with bookmakers’ accounts. This work could not have been possible without

her hard work and enthusiastic contribution. We are also very grateful to Ben Fulcher, Adrian

Carter and Alessio Fracasso for their comments on an earlier version of the manuscript.

Lisandro Kaunitz was supported by a fellowship from the Japanese Society for the Promotion of

Science​ ​(JSPS​ ​P15048).

19
Figures​ ​and​ ​Tables

Table​ ​1.​​ ​Results​ ​obtained​ ​with​ ​historical​ ​data,​ ​paper​ ​trading​ ​conditions​ ​and​ ​real​ ​betting.

Dates Profit Return Number​ ​of Accuracy

(U$D) bets

Historical 01/01/2005 98,865 3.5​ ​% 56,435 44.4%

Closing to
odds 30/06/2015

Continuous 01/09/2015 34,932 9.9​ ​% 6,994 47.6%

odds to
29/02/2016

Paper 06/03/2016 1,128.5 5.5​ ​% 407 44.5​ ​%

trading to
19/04/2016

Actual 23/04/2016 957.5 8.5​ ​% 265 47.2​ ​%

betting to
18/09/2016

20
Figure 1​. Bookmakers prediction power. A historical analysis of 10 years of football games
shows the tight relationship between the bookmakers’ predictions and the actual outcome of
football games. The probability estimated by bookmakers (as reflected by the inverse of the
mean closing odds across bookmakers) is highly correlated with the true probability of the
outcomes of football games for home team victory (black dots), draw (magenta dots) and away
team victory (blue dots). We analyzed 479,440 games from 818 leagues and divisions across the
world during the period 2005-2015. Data was binned according to the estimated probabilities,
from​ ​0​ ​to​ ​1​ ​in​ ​steps​ ​of​ ​0.0125,​ ​and​ ​with​ ​a​ ​minimum​ ​of​ ​100​ ​observations​ ​per​ ​bin.

21
A

22
Figures 2​. Two analysis with historical data demonstrate the effectiveness of our betting
strategy. A- We applied our strategy to the closing odds of 479,440 games and obtained a return
of 3.5% in 56,435 bets. To assess the probability of obtaining a return greater than or equal to
3.5% by chance we performed a bootstrap analysis to estimate the distribution of returns for a
“Random Bet Strategy”. By placing bets at the highest offered odds at random games the
“Random bet Strategy” yielded, on average, a return of -3.32%. In comparison, the return of our
strategy was 10.82 standard deviations above the mean of the distribution of returns of the
random bet strategy. The probability of obtaining a return greater than or equal to ours with a
random bet strategy across 56,435 games is less than 1 in a billion. Data in this panel comes from
a 10-year database (2005-2015) of football games. The figure shows the potential total return
assuming a constant $50 stake per bet. B) We applied the same bootstrap analysis as in A), but
now to the time series of odds movements during the period [-5 -1] hours before the start of the
games. The random bet strategy yielded an average return of 0.2%. In comparison, the return of
our strategy was 9.9%, 4.80 standard deviations above the mean of the distribution of returns of
the random bet strategy. The probability of obtaining a return greater than or equal to ours with
a random strategy that bets on the maximum odds across 31,074 games is less than 1 in a million.
Data in this panel comes from a 6-month database of football games (September 2015 - March
2016).

Figure 3. Our betting strategy generated profit with paper trading and in a real-life betting
(placing real stakes with bookmakers). We obtained a return of 5.5% for “paper trading” (blue
23
line) and a return of 8.5% for real betting (see Table 1 for a detailed analysis) over a 5-month
period of betting. Considering both paper trading and real betting we made a profit of $2,086 in
672​ ​bets,​ ​a​ ​return​ ​of​ ​6.2%.​ ​This​ ​was​ ​achieved​ ​by​ ​placing​ ​$50​ ​on​ ​each​ ​bet.

Figure 4. ​Bookmakers discriminate against successful clients. Betting limits set on some of our
stakes. The figure shows examples of such limits imposed on our accounts by four Bookmakers.
A- William Hill betting slip showing (​www.sports.williamhill.com/bet/en-gb​) a 2,428.33 yen
limit on our bet (at the time this bet took place 5000 yen were equivalent to $50). B- Interwetten
(​www.interwetten.com​) imposing a maximum bet of $11.11 C- Sportingbet
(​http://www.sportingbet.com/​) setting a maximum limit of $1.25 and D- Betway
(​www.betway.com​)​ ​limiting​ ​our​ ​stakes​ ​to​ ​$10.45.

24
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27
Supplementary​ ​Materials

Box​ ​1.​ ​Glossary

Bookmaker The bookmaker (or “bookie”), refers to the company that provides an
odds market for betting and offers to pay a price for each possible
outcome​ ​of​ ​a​ ​sporting​ ​event.

Event This term denotes a specific match between two teams or individuals.
For example: Ath. Bilbao vs Barcelona, Thursday, January 5, 21:15
GMT.

Market A betting market is a type of betting proposition with two or more

possible outcomes. The result of the match (home win, away win, or
draw), the number of goals scored (two or less goals, three or more), or
the time of the first goal are a few examples of different markets for a
single​ ​sporting​ ​event.

Stake The​ ​amount​ ​of​ ​money​ ​wagered​ ​in​ ​a​ ​single​ ​bet.

Odds The odds of a result refer to the payoff to be received if the chosen
result materializes. In this paper we use the European notation, where
the odds are equal to the currency units to be received for each
currency unit wagered. For example, if an outcome offers odds of 2
means that for each dollar wagered the house will pay 2 back, giving a
profit​ ​of​ ​1​ ​dollar​ ​per​ ​dollar​ ​invested.

Fair​ ​odds Fair odds for an outcome are the ones that result in a zero expected
payoff. For example, if the probability of the outcome is ½ , the fair
odds would be 2, because E(payoff) = ½ x (2 - 1) + ½ x (-1) = 0. In
general for the odds of an outcome to be fair, they should be the
inverse​ ​of​ ​the​ ​probability​ ​of​ ​the​ ​outcome.

28
Result/Outcome The actual outcome of an event. E.g. in a 1x2 soccer bet, local win,
draw, and away win are the three possible results. If the result that
comes about coincides with the chosen result of a bet, the gambler
wins​ ​the​ ​odds​ ​times​ ​the​ ​stake,​ ​otherwise​ ​he​ ​loses​ ​the​ ​whole​ ​stake.

Profit The amount of additional money the bettor receives on top of his stake
if he chooses the result that actually happens. For example, if the odds
are 2 and the stake is 10 dollars, the gambler receives 20 dollars in total
from​ ​the​ ​bookie,​ ​and​ ​the​ ​profit​ ​is​ ​10​ ​dollars.

Yield A measure of the profitability of a series of bets, it is calculated as the

sum of the profits made from all the bets placed divided by the sum of
the money staked in all bets, usually expressed as a percentage. For
example, if after 10 bets of $1 each there is a net profit of $1.50, the
yield​ ​is​ ​(1.5/10)​ ​=​ ​0.15=15%.

29
Supplementary Figure 1. A) Screenshot of the online dashboard displaying the games that were selected
for betting. The dashboard displayed the names of both teams, league name, bet value at which to place
the bet for the strategy to work and the time remaining until the start of the game. B) A second tab in the
Dashboard was used to keep track of the bets list. There the dashboard displayed the names of the
participating teams, football league, the result that was backed by the bet (1: home team to win, 2: away
team to win), final result of the game, odds value for the bet, the bookmaker that was used for each bet,
the amount of money placed on each bet (we employed U$D 50 throughout), the result of the bet (1: bet
won; -1: bet lost) and the profit obtained from each bet. Some of the games used for paper trading are
displayed​ ​in​ ​this​ ​figure.

30