There are many betting pools for the outcome of the World Cup. The enthusiasm in England is so high, I can’t imagine they haven’t overbid the price of an England win. My best guess is to short England.
But then the enthusiam is probably equally high in other countries. I wonder if there is enough slack in the betting markets around the world that there are opportunities for arbitraging the bets internationally…. The betting lines are different, but I don’t know enough about these markets to know whether the odds are different enough to compensate for the transaction costs in placing myriad bets with different agencies.
Here’s the BBC link for one the pool that got me interested in this topic. [h/t to Brian Ferguson].
Interestingly, Tradesports.com has England as the second-highest favourite among the bettors, behind Brazil. In contrast, a projection reported in The Observer last weekend ranked the English team only 9th in expected probability of winning the world cup; it also ranked the French team second, saying it is much stronger than people were giving them credit for, and that Brazil, despite being the strong favourite, is perhaps not such a strong favourite as many make them out to be. That prediction, based on expected goals for and expected goals against, gave Brazil only a 13% chance of winning the World Cup this year. [The article is titled, “P(n) = λne-λ over n! is the formula for World Cup success”]
Decision Technology, a firm of prediction experts who claim to be the best in the business, has invented a computer program that boasts a better record than any bookmaker, pundit or sports tipster. While most bookmakers rank England as second favourites behind Brazil to land football’s greatest prize, Dectech ranks Sven-Goran Eriksson’s side [i.e. England] ninth in the list it has produced to estimate the chance each of the 32 teams has of lifting the trophy. Brazil have the highest probability at 13.1 per cent.
In a statement that will not readily make the first line of a new football chant, Dr Henry Stott, firm director and visiting fellow at Warwick University, said: ‘Our modelling technique involves maximum likelihood estimation and a kind of rational probabilistic analysis to predict what the outcome of a match will be.’
The computer has studied the scorelines of 4,500 games between 200 countries since 2002 and come up with forecasts for every match at the initial group stage.
‘England have an easy group and so an 80 per cent chance of reaching the knockout stages. After that the games against tough opposition such as Germany and Argentina come thick and fast. That’s why we have made them only ninth favourites to win. With or without Wayne Rooney,’ said Stott.
If the system is as accurate as its inventors claim – it has correctly called 53 per cent of Premiership matches since 2002, better than anyone else – fans can stop relying on hunches, advice from friends and listening, for example, to newspaper tipsters, who score a measly 43 per cent.
Stott says anyone seeking to make a profit on events in Germany should back France, Holland or the Czech Republic, whose chances, he says, have been underestimated.
According to Stott and his colleagues, a combination of science and mathematics shows that, after Brazil, the next nearest favourites are France, who did not score a goal at the last World Cup, Germany, who [sic] even Germans admit are an unexceptional team, and Holland.
Digression: Recently Ms. Eclectic and I wanted to buy some English flags to hang in the window of our flat and saw some we liked in a storefront, so we went in to buy them. It turned out the storefront was a betting parlour, and we had to place five-quid bets each in order to receive a “free” flag.
Believing that England and Germany had been overpriced here in England, she bet on Brazil and I chose the Czech Republic to win the World Cup.