One area where economics plays a big role is in sports and match betting. You might not see it as a typical economics topic, but it is. Gambling on sports is a massive global industry worth millions. It includes everything from betting on dog and horse races to using online platforms. You can bet on how many goals will be scored or which players will be drafted next. Betting on sports is really about modeling and probability. By using economics, we can learn how match betting works. This is particularly useful for users on platforms like 22Bet.
Odds and the Efficient Market Hypothesis
When you place a bet on a sports outcome, the bookmaker gives you odds. This number shows how much you’ll win if your bet is successful. It’s based on their estimate of your chances of winning. For a likely event, the odds pay out little. But for an unexpected turn, you’ll earn more. Setting odds is a key job for a bookmaker. The odds need to attract bettors but shouldn’t be too generous. This balance helps the bookmaker avoid losing money.
Economics comes into play with the efficient market hypothesis. This theory says that markets find their own efficient balance. So, the price of goods and services reflects their actual worth.
These are examples of a new approach called behavioral economics. Richard Thaler and others advocate for it. This field connects ideas from both economics and psychology.
The costs and benefits of gambling
For some people, gambling becomes very addictive. It can be a destructive force in their lives.
There is a tension between two views on sports betting. One sees it like trading stocks or any investment. The other view is more protective, arguing that gambling can be harmful. So, it suggests people should not have unrestricted access to it. In his 2013 paper on gambling in Great Britain, David Forrest noted that many think of gambling as “exceptional.” He said this mindset could lead to bad and harmful gambling choices if there are no limits.
The economics of match-fixing
A final point of interest when looking at the role of economics in sports betting is that of match-fixing.
Economic theory points out that the issue isn’t only young men becoming famous. It also involves their difficulties with impulse control. In his 2015 paper on match-fixing, Bibhas Saha says there are hidden economic reasons to cheat. He splits cheating behaviors into two types. The first is “cheating to win,” like sneaking notes into an exam. The second is “cheating to lose,” such as a student who fails on purpose. She avoids her field of study. Her family, yet, wants her to keep going. Match-fixing is different. Here, the goal isn’t for the player to lose. Instead, it’s for them to underperform. This cheating method is tough to detect. This is especially true in team sports, where each player has a limited impact on the match’s outcome.
One way to spot this complex cheating is by examining data from betting sites. Christine Deutscher and her team did this in their 2017 review of match-fixing in the German Bundesliga. Betfair data showed that some referees had matches with a lot more bets. This might hint at improper behavior. From an economic view, match-fixing might not be a moral issue. It can also be seen as a smart financial choice for sports professionals. Detecting match-fixing by team officials is tough. Yet, analyzing large data sets might be our best way to spot cheating in team sports right now.