Favourite-Longshot Bias in Betting

Favourite-Longshot Bias Explained

It is an important point to note that bookmakers tend to make less margin from bets that are odds-on (less than 1/1) compared to prices that are odds against (bigger than 1/1). This is best illustrated using an example:

The true 100% lines odds on an event happening are 1/3 (=75%) so the bookmaker offers a price of 1/4 on this. Should a customer back this selection 100 different times with a stake of €1 on each then he will expect to win 75 times out of the 100 with a return of €1.25 on each winning bet giving an expected return of €93.75. This results in an expected profit for the bookmaker of €6.25 from a stake of €100.

Similarly the true 100% lines odds on an event happening are 4/1 (=20%) so the bookmaker offers a price of 3/1 on this. Should a customer back this selection 100 different times with a stake of €1 on each then he will expect to win 20 times out of the 100 with a return of €4 on each winning bet giving an expected total return of €80. This results in an expected profit for the bookmaker of €20 from a stake of €100.

Conclusion

This indicates that there is more margin built into the odds against prices in general making it increasingly difficult to make it profitable at these prices.