Parimutuel Betting on the Esports Duels: Reverse Favourite-Longshot Bias and Its Determinants
17 Pages Posted: 28 Jun 2019
Date Written: June 26, 2019
We analyse betting behaviour patterns of the visitors of the specialized betting website dedicated to the popular eSports game Counter-Strike: Global Offensive. The reverse favourite-longshot bias is found both in the in-sample and out-of-sample datasets. This phenomenon is rather unusual for parimutuel betting markets because favourite-longshot bias is more common. We define simple betting strategies based on the bets on underdogs and show that these strategies make a sufficiently large positive profit, which is a sign of market inefficiency. Next, we investigate determinants of the reverse favourite-longshot bias. We hypothesize that popular teams attract more unsophisticated gamblers which adds to the stronger reverse favourite-longshot bias in matches with such teams. Geographical proximity is found to be a significant factor that increases the bias, whereas the effect of internet popularity measured by the number of team players' followers on Twitter surprisingly follows the U-shape curve.
Keywords: eSports; betting; market inefficiency; favourite-longshot bias
JEL Classification: Z23, G14
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