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

Mitchell E. Daniels, Jr School of Business, Purdue 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 )

493 College St
New Haven, CT CT 06520
United States


National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kaushik Vasudevan (Contact Author)

Mitchell E. Daniels, Jr School of Business, Purdue University ( email )

403 Mitch Daniels Blvd.
West Lafayette, IN 47907
United States

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