What is the favourite – longshot bias?

You might have heard about the favourite – longshot bias. It’s a well-recognised phenomenon in betting.

In basic terms, it refers to the tendency for punters to over-value longshot chances in betting markets. Therefore longshot chances tend to be over-bet, and their odds shorter than they truly should be… while favourites tend to be under-bet and thus longer than they should be.

The favourite – longshot bias also happens because bookies take advantage of this fact and make roughies shorter prices than they should be. They also offer better odds on the favourites to be more competitive at the pointy end of the market and get more money in the bag. Bookmaking without turnover equals not much profit.

In simple terms? That $2.20 favourite in the next race is really – according to the long-term stats – a $2.30 shot. And that $101 outsider? It’s probably more like a $501 shot in reality.

Twice in two races a @Neil_Mulholland longshot picks the pocket of an odds-on favourite at @FontwellPark! 20/1 shot Carolines Charm and @samtwiston turn over 2/11 market-leader Ennistown following @jamesbe19813630‘s earlier win on 16/1 outsider Fr Humphrey… pic.twitter.com/dvwZ7tXBtU

— At The Races (@AtTheRaces) August 29, 2019

Let’s look at an example.

The Favourite – Longshot Bias in action

There’s an upcoming cricket match, with the true head-to-head chances are as follows:

Australia              70%

England               30%

Total                    100%

Now, we know how to convert those percentages into odds – you just divide them into 1. So the true odds on the match-up are:

Australia              $1.43

England               $3.33

But a bookmaker needs to make a profit, so he doesn’t just offer that 100% market… he might add, for example, 3% margin onto each for a total market percentage of 106%

Australia              73%

England               33%

Total                    106%

So the prices he puts up?

Australia              $1.37

England               $3.03

(In the case of the bookmaker, they also round these prices off… we’ve just left them at the exact figures to illustrate the numbers)

So provided punters bet proportionately, he’ll make a 6% profit.

Bookies, however, recognise the existence of the favourite – longshot bias, and know that punters will (in a proportional sense) back England more than they should. So instead of adding 3% to each of the outcomes, he adds his total of 6% unequally. He puts more into the longshot, because he knows he can offer poorer odds and still take money on it… because mugs love a longshot! For example:

Australia              72%

England               34%

Total                    106%

Prices:

Australia              $1.39

England               $2.94

Does the ATP tennis betting market have a favourite-longshot bias? https://t.co/2s4FqCPq84

— Pinnacle (@PinnacleSports) July 8, 2018

The Favourite – Longshot Bias: so what?

As you can see, the value you get over time from longshots is less than it should be – and not purely because of the overall market percentage. The favourite-longshot bias shows that bookmakers don’t apply market percentage evenly across the outcomes, so you can’t expect the total market percentage to tell you exactly how much you’re going to lose – it depends on who you’re backing in the match, or race.

It’s another factor that you have to overcome as a punter, on top of the total market percentage that bookies add on.

So why do punters love longshots?

That’s what we’re really talking about here… punters love longshots and back them too much, ensuring their prices are shorter than they should be. And it’s the opposite with favourites.

So why do we do this? One of Australia’s most successful ever punters, David Walsh, has an opinion on this.

“If you back a favourite in a horse race you might lose 2 or 3%. If you back a longshot you might lose 40%. That (backing longshots) is preferred for two reasons,” says David Walsh

“The first is for boasting rights because if you happen to get a winner it’s very useful and I believe that plays a big part, especially with men who exert this bias more than women.

“The second is non-linear utility. 1x $100 might be worth a lot more to you than 200x $1. Because $1 has no apparent purchasing value to you, whereas $100 does.”

Can you overcome favourite – longshot bias?

You can, but you need to be very wary of price and ensure you’re only betting to value on any one given bet.

Like any profitable betting, knowing what is value, and only betting to that, is absolutely key