0
$\begingroup$

In betting models, the price offered by the market is often ignored until the end. However, it seems like the price is a valuable piece of information that cannot be overlooked. Consider a hypothetical 2-horse race that pays double or nothing. Suppose that the market odds (X) and my model predictions (Y) are correlated, as shown in the following table:

+-----------+---------------+
|           |       X       |
|           +-------+-------+
|           | wrong | right |
+---+-------+-------+-------+
|   | wrong |  1/4  |  1/8  |
| Y +-------+-------+-------+
|   | right |  1/8  |  1/2  |
+---+-------+-------+-------+

I should bet when my model and the market agree. However, when the models agree, the market's price matches my prediction, and therefore, I don't bet in that case. Instead I only place a bet when my model disagrees with the market. It would be more beneficial to include the market price as an input to my model. I am curious to know whether this approach is widely used or if there is a better way to address this issue in betting models.

$\endgroup$
1
  • $\begingroup$ Hi: Welcome to this SE. my guess is that it is not clear to people reading above how "market odds" can be right or wrong ? $\endgroup$
    – mark leeds
    Mar 7, 2023 at 20:05

0

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Browse other questions tagged or ask your own question.