Parimutuel Betting on the eSports Duels: Evidence of the Reverse Favourite-Longshot Bias

Student: Stoyan Egor

Supervisor: Konstantin Sonin

Educational Programme: Joint HSE-NES Undergraduate Program in Economics (Bachelor)

Final Grade: 8

Year of Graduation: 2020

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, which is rather unusual for parimutuel betting markets, where 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 both on the in-sample and out-of-sample datasets, which is a sign of market inefficiency. In matches with popular underdogs the sentiment bias decreases the market inefficiency caused by the reverse favourite- longshot bias. At the same time, the role of the geographical location of teams in the reverse favourite-longshot bias is only marginal.

Full text (added May 30, 2020)

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