Parimutuel Betting on the Esports Duels: Reverse Favourite-Longshot Bias and Its Determinants

17 Pages Posted: 28 Jun 2019

See all articles by Dmitry Dagaev

Dmitry Dagaev

National Research University Higher School of Economics

Egor Stoyan

National Research University Higher School of Economics

Date Written: June 26, 2019

Abstract

We analyse betting behaviour patterns of the visitors of the specialized betting website dedicated to the popular eSports game Counter-Strike: Global Offensive. The reverse favourite-longshot bias is found both in the in-sample and out-of-sample datasets. This phenomenon is rather unusual for parimutuel betting markets because favourite-longshot bias is more common. We define simple betting strategies based on the bets on underdogs and show that these strategies make a sufficiently large positive profit, which is a sign of market inefficiency. Next, we investigate determinants of the reverse favourite-longshot bias. We hypothesize that popular teams attract more unsophisticated gamblers which adds to the stronger reverse favourite-longshot bias in matches with such teams. Geographical proximity is found to be a significant factor that increases the bias, whereas the effect of internet popularity measured by the number of team players' followers on Twitter surprisingly follows the U-shape curve.

Keywords: eSports; betting; market inefficiency; favourite-longshot bias

JEL Classification: Z23, G14

Suggested Citation

Dagaev, Dmitry and Stoyan, Egor, Parimutuel Betting on the Esports Duels: Reverse Favourite-Longshot Bias and Its Determinants (June 26, 2019). Higher School of Economics Research Paper No. WP BRP 216/EC/2019. Available at SSRN: https://ssrn.com/abstract=3410961 or http://dx.doi.org/10.2139/ssrn.3410961

Dmitry Dagaev (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Egor Stoyan

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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