I remember someone telling me years ago that in what was then the emerging era of online betting, there was an easy and certain way to make money, Bet on international competitions only, and arbitrage the distortions in the market resulting from the emotions of each team’s home fans.
So, for example, imagine England are playing Italy at football. Bet on England with an Italian bookie, and on Italy with a British one. I can’t remember how, or where, you’re supposed to bet on a draw, but I do remember that the emotion factored in to the available odds means you’ll make a profit whichever team wins.
Yes, OK, this is all a bit hazy, but I now have some evidence to support it. For reasons I won’t bore you with, I recently found myself one of a group of about 25 taking part in a Rugby World Cup sweepstake – and I should say that all but about three of us were middle-aged male actuaries, who you might have thought would be a cautious and level-headed bunch not overly prone to outpourings of nationalistic emotion.
The aim of the sweepstake was to pick the first four, in finishing order. At this point, I do have to murmur modestly that I did in fact win, with the first three right and in the right order (no, I didn’t spot Argentina – who did?). But my point (or at least my other point, alongside the point that I won) is the reason why everyone else lost: the reason is that out of about 25 of us, all but three picked England as one of the final four. In fact, of course, we didn’t even make it out of the Group stage and into the final eight.
Which goes to show that the “emotional distortions” I was talking about are absolutely for real, even among a research sample made up almost entirely of actuaries.
England are in fact playing Italy at football this weekend. If this blog helps you make any money, a note of thanks would be welcome.