Weak Form Efficiency in Sports Betting Markets

Betting on sports is increasingly popular, and legal in the United States. Many states have moved to legalize sports betting both in-person and on-line. In this paper we evaluate the sports betting market and assess its efficiency in the financial sense. Using a large dataset of betting odds and outcomes across a wide range of sports over an extended period, we evaluate the weak-form efficiency of the sports betting market. While we find some minor technical inefficiencies, overall, the markets are generally efficient, and no odds-based betting strategy will yield statistically significant long-term profits. But some bets are better than others. Slight underdog bets in professional and collegiate football and the UFC have had positive returns over an extended time frame, though they do not clear a statistical significance test. On the other hand, we find some bets clearly under perform. Longshot bets in college basketball are among the worst bets and longshot biases can be shown to exist in collegiate football and basketball as well as baseball.