Betting Without Beta

93 Pages Posted: 17 May 2021 Last revised: 2 May 2022

See all articles by Tobias J. Moskowitz

Tobias J. Moskowitz

AQR Capital; Yale University, Yale SOM; National Bureau of Economic Research (NBER)

Kaushik Vasudevan

Yale University

Date Written: May 2, 2022


Sports betting markets offer a novel test distinguishing the roles of preferences and beliefs in asset prices. Analyzing two contracts on the same outcome – one where payoff risk varies with expected outcome (Moneyline) and one where it does not (Spread) – we find that preferences for lottery-like payoffs, rather than incorrect beliefs, drive the lower returns to betting on risky underdogs versus safe favorites. Drawing parallels to low-risk anomalies in financial markets, we find the magnitude of pricing effects matches those in options and equity markets, with a model of lottery preferences providing a unifying explanation.

Suggested Citation

Moskowitz, Tobias J. and Moskowitz, Tobias J. and Vasudevan, Kaushik, Betting Without Beta (May 2, 2022). Available at SSRN: or

Tobias J. Moskowitz

AQR Capital ( email )

Greenwich, CT
United States

Yale University, Yale SOM ( email )

New Haven, CT 06520
United States


National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kaushik Vasudevan (Contact Author)

Yale University ( email )

165 Whitney Avenue
New Haven, CT 06511
United States


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