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Markets & strategy

Cross-Sport Lessons — Landscape Note (Area D)

Summary + sample · full document is 1,725 words

Summary

What other betting markets and sports modelling traditions have already solved that football can copy. Most of the foundational machinery in modern sports analytics did not originate in football, and reusing solved problems is cheaper than reinventing them.

Sample

Horse racing — the original quantitative betting market

Birthplace of most of what we now call sports betting analytics. Lessons:

  • Kelly criterion (Kelly, 1956): originated in information theory but first widely applied in horse racing. The optimal-growth bet sizing rule — a foundation of every disciplined betting framework. Edge → fractional Kelly → bankroll growth. (See betting-framework.md for application detail.)
  • Overround stripping: parimutuel and fixed-odds racing markets generated decades of research on how to recover fair probabilities from quoted prices. The Shin model (overround as protection against insider trading) was tested first on racing data.
  • Favourite-longshot bias: documented across hundreds of racing markets globally. Longshots are systematically over-bet relative to their true probabilities; favourites under-bet. Hausch, Lo & Ziemba's Efficiency of Racetrack Betting Markets (1994) is the canonical reference. The bias appears (smaller, but present) in football 1X2 longshots.

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