Wednesday, July 26, 2006

Does a soccer team playing well have a better chance of winning?

A study of mine a few years ago found an unexpected result: even after a starting pitcher gives up three or more runs in the first inning, he returns to form for the rest of the game, pitching to the level of his overall ability. From just the first inning, you’d expect that he doesn’t have his stuff that day, and that he’d continue to pitch poorly, but he doesn’t. Just because the opposition dominates him for a short period doesn’t mean they will continue to dominate him. In effect, this kind of in-game “momentum” does not exist.

Is the same true in soccer?

I would argue that the answer is yes – based on a closer look at the data in a recent economics
study by Ricard Gil and Steven Levitt.

(Levitt is the co-author of the bestselling book
Freakonomics (my review), and it was through an entry on his blog that I learned of his study.)

The paper looked at data from the online gambling site intrade.com. Intrade allows bettors to make bets with each other even while the game is on. The odds, of course, will change as events unfold in the game, and are determined by supply and demand, like prices in the stock market.

Gil and Levitt found that the betting market is very efficient, in the following ways:

  • When a goal was scored, the price of a bet on the winning team increased immediately;
  • Even in retrospect, it would have been difficult, to the point of nearly impossible, to profit by following any specific betting strategy;
  • When a mathematical opportunity arose for making a certain profit (for instance, better-than-even odds of team A winning combined with better-than-even odds of team A not winning), alert bettors seized the opportunity in less than fifteen seconds;
  • And market makers, who offer to take both sides of the bet at different odds hoping to make money on the difference, actually lost money overall, as sophisticated bettors took advantage of mispriced bets.

All this suggests that the intrade market correctly captures the chances of winning at any given time.

Which brings us back to the momentum issue.

In their chart on page 19, Gil and Levitt show that the intrade odds, and therefore the game probabilities, are constant in the fifteen minutes before a goal is scored.

Now, in any game, one team will be playing better than the other, even dominating the game. You would expect it to be that team that eventually scores the goal. But even though bettors are watching the game and can see which team is playing better, they did not bid up the odds of the dominating team winning before the goal was scored!

That is, suppose team A and team B initially have equal odds of winning. Team A comes out flying in the first half, dominating the play and getting several good shots on goal. After 15 minutes, they finally score a goal, making it 1-0. When they score, the odds immediately adjust. But in the 15 minutes preceding the goal, while team A was dominating, its odds did not change. You could have bet A at the same odds as before the game even started.

This very strongly suggests that dominating the play does not tell us anything about the chances of eventual victory. It means that domination is “random,” that either team may dominate at any time, and that teams dominating one minute are equally likely to be dominated the next.

Put another way: if you can’t predict the next fifteen minutes from the previous fifteen minutes, it means that teams don’t appear to have “on days” and “off days.” They just play to the level of their ability, and the appearance of domination is, like the “
hot hand” in basketball, simply an illusion.

I’m surprised by this. But I’m even more impressed that bettors on intrade already knew it. The workings of markets are truly amazing.


7 Comments:

At Wednesday, July 26, 2006 10:31:00 PM, Blogger Tangotiger said...

Phil,

Great commentary. I am somewhat surprised by the results. Fascinating, though!

 
At Monday, August 07, 2006 1:41:00 PM, Anonymous Anonymous said...

This comment has been removed by a blog administrator.

 
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At Tuesday, March 06, 2007 10:22:00 AM, Anonymous Anonymous said...

The study is wrong as the odds do change prior to the "hot" team scoring - perhaps not with that bookie in that tourno, but generally they do.

 
At Thursday, September 20, 2007 7:34:00 AM, Anonymous Anonymous said...

You guys have got to check out www.thefootballreview.co.uk if you are into this stuff.

They are doing loads of new research into soccer.

 
At Friday, November 02, 2007 1:27:00 PM, Blogger Steve said...

as the market in question (football betting) has enterned the online market, surely it will become much harder for the UK betting corporations to maintain their efficiency.


Despite the evidence suggesting domination has nothing to do with the eventual outcome, i do believe that if fans can place a bet on football from a mobile phone in the stands on a team who is about to take the sixth successive corner/free kick then this could ultimately prove unfavourable for the bookies!

 
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