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The odds did tighten up after Leicester won the Premier League though. You couldn't get 5000-1 on say Watford winning in 2016-17, the best odds IIRC were more l

The odds did tighten up after Leicester won the Premier League though. You couldn't get 5000-1 on say Watford winning in 2016-17, the best odds IIRC were more like 500-1. It seemed like bookies really did adjust their expectations or their risk appetite for long-tail events in this market. And they were probably correct to do so.

octodog 3y ago
Or, cynically, their original odds were right but they have taken the opportunity to reduce payouts because punters now consider that event more likely and thus would accept less.
flakeoil 3y ago
Are those two events/teams comparable so that one could expect the same type of odds? I'm not much into betting, but will not the odds change also based on how people are betting. So if many people started to bet on the unexpected result, due to for example that the unexpected Leicester team won last time, wouldn't odds tighten up automatically?
- dmurray 3y ago
  > Are those two events/teams comparable so that one could expect the same type of odds? Yes IMO. It might be more rigorous to say: before 2016 there were always a handful of teams priced at 5000-1, after 2016 there were not. The league didn't objectively get more competitive. > So if many people started to bet on the unexpected result, due to for example that the unexpected Leicester team won last time, wouldn't odds tighten up automatically Definitely possible, and would explain the effect regardless of whether the punters were smart money Nicholas Taleb types who spotted that black swans were systematically underpriced, or gamblers dreaming of another Leicester payday.
TheCoelacanth 3y ago
It's less of an indication of bookies' predictions and more of an indicator of bettors' predictions. A bookie isn't trying to gamble on the outcome; they're trying to get the bets to all balance out so that no matter what the outcome they take in enough money from the losers to pay the winners with some profit leftover. As more people bet on a specific outcome, they will lower the odds to make sure that the pool of money taken in is still big enough to pay out if that outcome happens.

octodog 3y ago

Or, cynically, their original odds were right but they have taken the opportunity to reduce payouts because punters now consider that event more likely and thus would accept less.

flakeoil 3y ago

Are those two events/teams comparable so that one could expect the same type of odds? I'm not much into betting, but will not the odds change also based on how people are betting. So if many people started to bet on the unexpected result, due to for example that the unexpected Leicester team won last time, wouldn't odds tighten up automatically?

dmurray 3y ago
> Are those two events/teams comparable so that one could expect the same type of odds? Yes IMO. It might be more rigorous to say: before 2016 there were always a handful of teams priced at 5000-1, after 2016 there were not. The league didn't objectively get more competitive. > So if many people started to bet on the unexpected result, due to for example that the unexpected Leicester team won last time, wouldn't odds tighten up automatically Definitely possible, and would explain the effect regardless of whether the punters were smart money Nicholas Taleb types who spotted that black swans were systematically underpriced, or gamblers dreaming of another Leicester payday.

TheCoelacanth 3y ago

It's less of an indication of bookies' predictions and more of an indicator of bettors' predictions. A bookie isn't trying to gamble on the outcome; they're trying to get the bets to all balance out so that no matter what the outcome they take in enough money from the losers to pay the winners with some profit leftover. As more people bet on a specific outcome, they will lower the odds to make sure that the pool of money taken in is still big enough to pay out if that outcome happens.