One of the things that fascinates me about sports betting markets is how all the money is attracted as if by some mysterious force on to the favourite.
Now you might say that by definition this is inevitable – after all, this is why the favourite is indeed the favourite! – but I must clarify my question…. Specifically, why has so little money been placed, ahead of tonight’s Euro 2012 semi-final, in the form of lay bets on an Italian win, or indeed lay bets on the draw, whereas so much money has been backed on Germany winning?
For surely, the two are really the same thing expressed in a different way?
As I write (an hour before kick-off), over £6 million has been matched on the Germany versus Italy match odds market. Of which about 80% has been staked on Germany to win, 10% on Italy and 10% on the draw.
The unmatched monies are split in roughly the same proportion. Clearly most of the interest is in the possibility of German victory.
As a result, the odds on Germany are moving painfully slowly this evening. Which means the market isn’t much fun if you’re a trader.
If I were now to trade a German win, it’s very unlikely that I would be able to secure more than one or two ticks of profit. Markets that are this liquid in fact become, paradoxically, illiquid to traders. There is so much unmatched money the prices never move, thereby restricting our ability to make a profit (unless, I suppose, we’re prepared to stake absolutely enormous sums).
Now, as suggested above, an obvious solution to this problem is not to bet on Germany at all, but rather to lay both Italy and the draw. The prices for both these outcomes are moving much more freely, and my bets on them would therefore be effectively leveraged to a greater degree.
Given that this is such an obvious strategy, why do so few people do it?
The only answer I can find is that people simply love backing favourites. And they do so simply because other people do it.
There is something inherently more comfortable about backing a favourite to win, than laying an outsider to lose. And I propose that it is something to do with the herd instinct.
Are you prepared to fly solo?
I asked a good (non-punting) friend of mine this afternoon who he would bet on if I gave him a free bet of £20 on the Germany versus Italy match.
Big surprise – he said he would put it on Germany to win.
When I pointed out that Italy have never lost to Germany in a competitive match, and indeed have a 100% success rate against them, with 7 wins out of 7, he was unmoved.
When I added that Italy come into this game having just performed superbly against England – in contrast to Germany who conceded twice to unfancied Greece! – his position did not change.
His main reason?
Germany are the favourites, and therefore the natural team to bet on. They are the magnet for the gold in his pocket, as everyone else is doing it, and it doesn’t feel quite so foolish to be wrong when the whole herd is of the same mind.
To contemplate a bet on Italy – even a lay bet – would be to operate outside the herd.
And betting on favourites is all about joining the consensus. 
My advice for tonight’s game?
- If you want to trade a German win beforehand, do so via backs and lays on Italy and the draw – as you will get significantly more leverage for your investment.
- As to the match outcome, I have no fixed idea. But I have backed the draw, as I expect it to remain tight in the first half, as above all, no one wants to lose. Then I will aim to trade out by laying after 30 minutes or so. Though if the match is surprisingly open, I may trade out before this.
Enjoy the game.
Lucy x
Well, my hunch that Italy weren’t exactly outsiders was proved right. That makes 8 wins out of 8 against Germany in competitive matches. They were never underdogs, and didn’t play like it.
The herd instinct is a weird phenomenon, but, re-reading my own article at the end of the evening, I sense that I didn’t follow through on my own half-stated view that Italy were realistic contenders. After all, I still went for the draw! So maybe the herd instinct partly affected me too??
It is so hard to be a contrarian, in spite of all the lessons we repeatedly learn! Hence the pull of the favourite, in spite of the evidence before our eyes.
I actually traded out of my draw after Balotelli’s opening goal – but fortunately at a zero outcome, as the odds for the tie just didn’t move! Clearly, the myth of the unbeatable Germans still reigned even after they’d gone behind (in spite of stuff like history), and the market was pencilling in a German equaliser.
In my defence, maybe the picture was also complicated by the enigma that is Mario Balotelli. How can you legislate for erratic genius? And can he do it against Spain on Sunday? Clearly this fan site expects him to!
A really brilliant game. And a lesson learnt (AGAIN!) about being brave enough to stand outside the herd.
Lucy x
great post lucy and it looks even better in hindsight, i layed the draw myself and had a very nervy wait for half time.
Gooner,
Thanks for the kind remarks.
I’ve only watched about a third of the games in the tournament, but it was the best one I’ve seen. Really looking forward to the final now!
But how to trade it??! Will have to think about that one!… Thoughts??
Lucy x
the final will be very tight imo, looking back at international finals not many have scored more than 2.5 goals with most being decided by a single goal.
i personally will be dutching 0-0, 1-0 & 0-1 and i might take a punt at half time draw
Gooner
I definitely agree it will probably be a close game, not unlike the group match between the two teams.
Still not sure how I will play it – though I have secured lay odds on the match draw below 3, by means of an inverted middle, so have traded myself to a risk-free tenner in the event of a tie after 90 minutes. I won’t have to pay commission on my winnings either.
Lx
hi:-) in my opinion the odd’s for the germany’s win were terribly wrong, i made a good profit laying at 1.96 and backing in a spread betting site italy to score 1 or more goals..that was a match between a team with a strong defence and a team with a defence not well organized and vulnerable to counter attack, like seen against greece. and as lucy said above they never win against italy in competitive matches..the problem is their way to play football that is perfect for the italian way to play..
now the odds for the final seems to be correct, the italian players probably are tired,if this is true i expect at least a very difficult second half for italy, if not it will be a very tight match.
a curiosity..in the last 24 years italy reach a final every 6 years, and won the second world title 44 years after the first..this final is 44 years after the first( and only till now) european title…for those who believe in kabbala:-)
Roberto,
I think you’re right, and your perspective, from Rome, is certainly relevant.
Betfair is strongly influenced by Anglo-Saxon sentiment, where there remains a certain inferiority complex towards the German football team, on account (in my view) of their repeated successes against England. This factor simply doesn’t come into it when you talk about Italy v Germany, as of course the Germans have had no luck at all against your country.
Interestingly, Kabbala notwithstanding!, Italy also have a remarkable record against Spain….
Though I agree that this one is almost impossible to call.
Lx