Betting on a buzz: Mispricing and inefficiency in online sportsbooks

Citation

Ramirez P, Reade JJ & Singleton C (2023) Betting on a buzz: Mispricing and inefficiency in online sportsbooks. International Journal of Forecasting, 39 (3), pp. 1413-1423. https://doi.org/10.1016/j.ijforecast.2022.07.011

Abstract
Bookmakers sell claims to bettors that depend on the outcomes of professional sports events. Like other financial assets, the wisdom of crowds could help sellers to price these claims more efficiently. We use the Wikipedia profile page views of professional tennis players involved in over 10,000 singles matches to construct a buzz factor. This measures the difference between players in their pre-match page views relative to the usual number of views they received over the previous year. The buzz factor significantly predicts mispricing by bookmakers. Using this fact to forecast match outcomes, we demonstrate that a strategy of betting on players who received more pre-match buzz than their opponents can generate substantial profits. These results imply that sportsbooks could price outcomes more efficiently by listening to the buzz.

Keywords
Wisdom of crowds; Betting markets; Efficient Market Hypothesis; Forecast efficiency; Professional tennis

Journal
International Journal of Forecasting: Volume 39, Issue 3