SKM 2023 – scientific programme

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 23: Economic Models

SOE 23.1: Talk

Friday, March 31, 2023, 11:00–11:15, ZEU 260

Stochastics in action: how to generate profit by exploiting the inefficiencies of the soccer betting market — •Ralph Stömmer — Private researcher, Ottobrunn, Germany

In economy, markets are denoted as efficient when it is impossible to systematically generate profits which outperform the average. In the past years, the concept has been tested in other domains such as the growing sports betting market. Surprisingly, despite its large size and its level of maturity, sports betting shows traits of inefficiency. The anomalies indicate the existence of strategies which slightly shift betting from a game of chance towards a game of skill.

This presentation shows an example for an inefficiency detected in the German soccer betting TOTO 13er Wette, which is operated by state-run lottery agencies. Gamblers have to guess the outcome (win, draw, loss) of 13 soccer matches listed on a lottery tip. Applying stochastic methods, a recipe is presented to determine tendencies for single match outcomes, currently resulting in hit rates > 47,7%. More important, the recipe provides the number of lottery tips required to achieve a specific number of strikes (number of correct match forecasts per lottery tip) for a given level of safety (for instance 99,9%). As additional benefit, a useful approximation is derived with Stirling*s formula to cope with large numbers in hypergeometric distributions, valid under certain constraints.

Overall, the strategy does lead to price expectations exceeding the aggregated lottery fees, resulting in consistent profits.