What is the Favourite-Longshot Bias?

The favourite-longshot bias is an empirical phenomenon in betting markets where bets placed at longer odds (longshots) produce worse returns than bets placed at shorter odds (favourites). In other words, when you back a favourite, you typically lose less money over time than when you back a longshot, despite the longshot offering higher potential payouts.

This bias manifests through unequal margin allocation by bookmakers. Rather than applying a consistent margin across all odds, bookmakers apply smaller margins to favourites and larger margins to longshots. This creates a systematic pattern: while betting on favourites loses approximately 5-8% of your stake over the long run, betting on longshots can lose 30-50% or more.

How Does It Manifest in Betting Markets?

The favourite-longshot bias appears as a clear pattern in actual odds versus "true" or fair odds. Consider this example:

• A true even-money favourite (50% implied probability) might be offered at 1.90 instead of 2.00
• A true 20% longshot (5.00 fair odds) might be offered at 3.50 or lower

The favourite loses only 5% of value, while the longshot loses 30%. This unequal treatment is the core of the bias.

The pattern is unmistakable: the longer the odds, the larger the margin, and the worse your expected return.

Where Did the Favourite-Longshot Bias Come From?

Historical Discovery in 1949

The favourite-longshot bias was first documented scientifically by R.M. Griffith in 1949 in his landmark study of horse racing markets. Griffith analyzed decades of horse racing data and discovered that this pattern was not random or temporary—it was a consistent, measurable phenomenon.

His research showed that if you had bet $1 on every favourite in horse racing over a long period, you would lose approximately 5-8% of your total stake. However, if you had bet $1 on every longshot, you would lose 30-40% or more. This wasn't due to favourites being better predictors; it was purely a function of how odds were priced.

Griffith's discovery was remarkable because it revealed a systematic, exploitable pattern in what should theoretically be an efficient market. His work became foundational to understanding betting market behaviour.

How Has It Evolved Over 74 Years?

Since Griffith's initial discovery in 1949, the favourite-longshot bias has proven to be one of the most persistent economic phenomena ever documented. Over seven decades of research across multiple sports, markets, and betting systems, the bias has remained remarkably stable.

The bias has been confirmed in:

• Horse racing (strongest manifestation, -40% to -50% loss rate on longshots)
• Football betting (moderate-to-strong bias)
• Tennis (moderate-to-strong bias)
• Basketball (moderate bias)
• Baseball (moderate bias)
• Prediction markets (weaker or sometimes reversed)

What's particularly striking is that despite widespread awareness of the bias among professional bettors and academic researchers, it persists. This persistence has led researchers to question whether it's truly a "bias" or an inevitable consequence of how betting markets function.

Modern research (2020-2023) has introduced new explanations and perspectives, including context effects and bookmaker risk management strategies, suggesting that the phenomenon is more nuanced than originally thought.

Why Does the Favourite-Longshot Bias Happen?

Researchers have proposed four main explanations for why this bias exists and persists.

Explanation 1: Probability Overestimation

The probability overestimation hypothesis suggests that bettors systematically overestimate the likelihood of rare events occurring. This is a well-documented cognitive bias in psychology and behavioral economics.

When you see odds of 20-to-1, your brain struggles to accurately conceptualize what a 5% probability really means. Instead, you might think, "Well, it could happen—stranger things have occurred!" This leads to overvaluing longshots relative to their actual probability.

Conversely, with favourites, bettors are more accurate in their probability assessment. A favourite at 1.20 (80% implied probability) feels about right to most people, so there's less systematic overestimation.

This explanation is intuitive and has experimental support. However, it doesn't fully explain why the bias persists among professional bettors and in markets where participants should know better.

Explanation 2: Risk-Loving Behavior

The risk-loving preference hypothesis suggests that some bettors have a genuine preference for high-variance, low-probability outcomes. This isn't necessarily irrational—it's a matter of utility preferences.

Some bettors derive more pleasure from the possibility of a large win than from a steady, predictable return. A £1,000 bet at 20-to-1 odds offers the thrilling possibility of a £20,000 win, even if the expected value is negative. This "entertainment value" or "hope value" has real utility for these bettors.

The bias exists because these risk-loving bettors are willing to accept worse odds on longshots in exchange for the psychological reward of a potential large win. Bookmakers, recognizing this demand, adjust their odds accordingly.

This explanation is behaviorally plausible and explains why the bias persists—it's not inefficiency, it's preference satisfaction.

Explanation 3: Context Effects (Latest Research)

Recent research by Meyer and Hundtofte (2023) introduces a novel perspective: context effects. This research suggests that how a bet is presented matters as much as the underlying probability.

When you evaluate a bet in isolation, focusing on the large potential payoff (e.g., "I could win £20,000"), that large number becomes salient and affects your decision-making. The low probability (5%) is less psychologically salient than the large payoff.

Crucially, this research shows that the bias largely disappears when bets are evaluated together or when the presentation emphasizes probability rather than payoff. This suggests that the bias isn't purely about probability overestimation or risk preferences—it's about how information is presented and processed.

This explanation has important implications for market design and consumer protection, as it suggests that presenting odds differently could reduce the bias without changing the underlying odds themselves.

Explanation 4: Bookmaker Risk Management

A less discussed but increasingly recognized explanation focuses on the supply side: bookmakers' risk management strategies. Rather than viewing the bias purely as a demand-side phenomenon (bettors making poor decisions), this perspective recognizes that bookmakers actively manage their risk exposure.

Bookmakers face uncertain demand for different outcomes. They use odds to manage their liability and balance their book. When demand for a longshot is high, they can afford to compress the odds (apply a larger margin) because demand is strong. When demand for a favourite is relatively elastic (bettors might shop around), bookmakers must keep the margin smaller to remain competitive.

Additionally, bookmakers face real risk in setting odds. Longshots have higher variance, making them riskier to take action on. Bookmakers may rationally demand a higher margin for this additional risk, regardless of bettors' behaviour.

This explanation suggests that the favourite-longshot bias might not be a market inefficiency at all—it could be a rational outcome of supply and demand dynamics in a market with heterogeneous beliefs and asymmetric risk.

How Does Favourite-Longshot Bias Vary Across Sports?

The favourite-longshot bias is not uniform across all sports and betting markets. Its strength varies significantly.

Strongest in Horse Racing

The favourite-longshot bias is most pronounced in horse racing, where loss rates on longshots can reach -40% to -50%. This is partly because horse racing uses parimutuel betting systems in many jurisdictions, where the odds are mechanically determined by the betting pool rather than set by a bookmaker.

In parimutuel systems, all bets on a particular outcome share in the total pool minus the track's take. This creates a mechanical bias: if many people bet on a longshot, the odds shorten dramatically for those who bet late, but the early bettors who drove demand get better odds. This creates inefficiencies that favour favourites.

Additionally, horse racing has a long history and large betting volumes, which means more data for researchers to analyze and more opportunities for the bias to persist.

Significant in Football and Tennis

Football and tennis betting show moderate-to-strong favourite-longshot bias, though not as extreme as horse racing. These sports use fixed-odds betting, where bookmakers set the odds in advance.

In football, the bias is particularly strong for draw bets (which are often longshots) and for extreme underdogs. In tennis, the bias appears across all odds ranges but is strongest for longer odds.

The bias in these sports reflects a combination of all four explanations: bettors overestimate rare events, some prefer the risk profile of longshots, presentation effects influence decisions, and bookmakers rationally adjust margins based on demand and risk.

Weaker or Reversed in Other Markets

Prediction markets and some efficient bookmakers show weaker or sometimes reversed favourite-longshot bias. This is because:

1. Prediction market participants are often sophisticated traders motivated by profit, not entertainment
2. Efficient bookmakers actively manage their odds to prevent exploitable patterns
3. Regulatory environments in some jurisdictions require fairer odds

In these markets, the bias may be much smaller or even disappear, suggesting that it's not inevitable but rather a product of specific market conditions.

What Are the Practical Implications for Bettors?

How Can You Exploit the Favourite-Longshot Bias?

Understanding the favourite-longshot bias opens several strategic opportunities:

1. Focus on Favourites The most straightforward approach is to concentrate your betting on favourites, particularly heavy favourites where the margin is smallest. While you'll still lose money over time (due to the bookmaker's margin), you'll lose less than if you bet on longshots.

2. Hunt for Value in Longshots Paradoxically, the bias also creates opportunities. Some longshots are so overpriced that even with the bias factored in, they occasionally offer value. The key is rigorous probability assessment. If you can accurately estimate that a 10-to-1 longshot has a 12% true probability (not the 9% implied by the odds), you've found value.

3. Avoid the Extreme Longshots The bias is strongest at the extreme end. Bets at 50-to-1, 100-to-1, or higher are typically heavily overpriced. Unless you have exceptional predictive ability, these should be avoided entirely.

4. Compare Across Bookmakers Different bookmakers apply different margins. Some are more aggressive on longshots than others. By comparing odds across multiple bookmakers, you can find the best prices and sometimes identify longshots that offer better value at one bookmaker than another.

5. Use Statistical Models Professional bettors use statistical models to estimate true probabilities independent of market odds. By comparing model predictions to bookmaker odds, they can identify mispriced bets at any odds level, not just longshots.

How Can You Avoid Losing to This Bias?

For casual bettors, the key is awareness:

1. Understand Your Expected Loss Recognize that the favourite-longshot bias means your expected loss rate depends on where you're betting. Betting on favourites loses ~5-8%; betting on longshots loses ~30-50%. Choose accordingly.

2. Set Realistic Expectations Don't expect to beat the favourite-longshot bias through luck or intuition. If you're betting without a systematic approach, you'll experience these loss rates.

3. Avoid Emotional Betting on Longshots The appeal of longshots is emotional—the hope of a big win. Be aware of this when deciding whether to bet. Ask yourself: "Am I betting because I think this is likely, or because I like the potential payout?"

4. Use Betting Exchanges Betting exchanges (peer-to-peer betting platforms) sometimes offer better odds than traditional bookmakers because they don't apply as large margins. However, they charge commission instead.

5. Track Your Results Keep detailed records of your bets. Calculate your actual loss rate. If it's worse than the favourite-longshot bias would predict, you may have additional problems (overestimating your predictive ability, emotional betting, poor bankroll management).

Is the Favourite-Longshot Bias Really a Bias?

This question has become increasingly contested in recent research.

The "Not a Bias" Argument

Some economists and researchers argue that the favourite-longshot bias isn't a "bias" at all—it's a rational outcome of market dynamics.

Consider a market where different bettors have different beliefs about probabilities. Some believe a longshot is 8% likely; others believe it's 12%. Bookmakers set odds based on the aggregate demand from all bettors. If demand for the longshot is high (because some bettors think it's 12% likely), the bookmaker can offer worse odds while still attracting bets.

Additionally, bookmakers rationally demand higher margins for riskier bets (longshots have higher variance). This is economically sensible—they're charging for the additional risk they're taking on.

From this perspective, the favourite-longshot bias isn't evidence of market inefficiency or bettors making systematic mistakes. It's the natural result of heterogeneous beliefs and rational risk management.

The Inefficiency Perspective

Other researchers maintain that the favourite-longshot bias is evidence of market inefficiency and systematic bettor error.

Their argument: if bettors were perfectly rational, the bias wouldn't persist. The fact that it's been documented for 74 years across multiple markets suggests something systematic is wrong—either bettors are systematically overestimating rare events, or bookmakers are exploiting this tendency.

Furthermore, the bias is larger in markets with less sophisticated participants (casual bettors) and smaller in markets with more sophisticated participants (prediction markets), suggesting that bettor sophistication matters.

The truth likely lies between these positions: the favourite-longshot bias is partly a rational response to market structure and risk, and partly evidence of systematic bettor errors in probability assessment.

What Do You Need to Know About Related Terms?

How is Favourite-Longshot Bias Different from Implied Probability?

Implied probability is the probability of an outcome as calculated from the bookmaker's odds. For example, odds of 3.00 imply a probability of 33.3% (1 ÷ 3.00).

The favourite-longshot bias describes a pattern in how implied probabilities differ from true probabilities. Specifically, implied probabilities for longshots are systematically lower than their true probabilities, while implied probabilities for favourites are closer to their true probabilities.

In other words: implied probability is a calculation tool; favourite-longshot bias is a pattern in how that calculation relates to reality.

How Does Bookmaker Margin Relate to This Bias?

The bookmaker margin (also called overround or vig) is the percentage edge the bookmaker builds into their odds. It's how bookmakers guarantee a profit regardless of the outcome.

The favourite-longshot bias is fundamentally about unequal margin allocation. Rather than applying a consistent margin across all odds (e.g., 5% on all bets), bookmakers apply smaller margins to favourites and larger margins to longshots.

This unequal allocation is the mechanism through which the bias manifests. Understanding this relationship is key to understanding why the bias exists and how to exploit it.

Frequently Asked Questions

What exactly is the favourite-longshot bias? It's the empirical pattern where bets on longshots lose more money than bets on favourites over time. Longshots lose 30-50% of your stake; favourites lose 5-8%. This happens because bookmakers apply larger margins to longer odds.

Who discovered the favourite-longshot bias? R.M. Griffith discovered it in 1949 through analysis of horse racing data. His research showed the pattern was consistent and measurable across large datasets.

Why do longshots lose more than favourites? Four main reasons: (1) bettors overestimate rare event probabilities, (2) some bettors prefer the risk profile of longshots, (3) how bets are presented affects decisions, and (4) bookmakers rationally charge higher margins for riskier bets.

Is the favourite-longshot bias the same as probability overestimation? No. Probability overestimation is one proposed explanation for the bias, but not the only one. Risk preferences, context effects, and bookmaker risk management also contribute.

Does the favourite-longshot bias exist in all sports? No. It's strongest in horse racing and strong in football and tennis. It's weaker or absent in prediction markets and efficient bookmakers. The strength varies by market structure and participant sophistication.

Can I make money by exploiting the favourite-longshot bias? Potentially, but it's difficult. You would need to identify specific longshots that are less overpriced than the average longshot—requiring superior probability assessment. Most casual bettors can't do this consistently.

What's the best strategy if I understand the favourite-longshot bias? The simplest strategy is to concentrate on favourites where the margin is smallest, and avoid extreme longshots where the margin is largest. This doesn't guarantee profit, but it reduces your expected loss rate.

Has the favourite-longshot bias disappeared in modern betting markets? No. Despite 74 years of research and widespread awareness, it persists. This suggests it's not a simple error that education can fix, but rather a feature of how betting markets function.

Is the favourite-longshot bias evidence that betting markets are inefficient? This is debated. Some researchers see it as evidence of inefficiency and bettor error. Others argue it's a rational outcome of market structure and heterogeneous beliefs. The truth likely involves both factors.

How does the favourite-longshot bias relate to bookmaker margins? The bias is caused by unequal margin allocation. Bookmakers apply smaller margins to favourites and larger margins to longshots, creating the systematic pattern of worse returns on longshots.

Can betting exchanges eliminate the favourite-longshot bias? Betting exchanges sometimes offer better odds because they don't apply traditional margins (they charge commission instead). However, the bias can still emerge from how bettors price outcomes on the exchange.

What's the difference between the favourite-longshot bias and value betting? The favourite-longshot bias describes a general pattern in odds. Value betting is a strategy where you identify specific bets where the odds are better than they should be, regardless of whether they're favourites or longshots.

Why does the favourite-longshot bias persist if everyone knows about it? Because the bias isn't purely a result of ignorance. It reflects genuine bettors' preferences for longshots, how information is presented, and rational bookmaker risk management. Knowing about it doesn't automatically eliminate it.

How strong is the favourite-longshot bias in modern online betting? It varies by bookmaker. Efficient online bookmakers with sophisticated risk management may show weaker bias than traditional bookmakers. However, the bias persists in most mainstream betting markets.

What's the relationship between the favourite-longshot bias and the Kelly Criterion? The Kelly Criterion is a bankroll management formula that assumes you know true probabilities. If you use Kelly betting without accounting for the favourite-longshot bias, you may overestimate the value of longshots and overbets them.

Related Terms

• Longshot — A bet with longer odds and lower implied probability
• Favourite — A bet with shorter odds and higher implied probability
• True Odds — The actual probability of an outcome expressed as odds
• Implied Probability — The probability calculated from bookmaker odds
• Bookmaker Margin — The percentage edge bookmakers build into odds
• Value Betting — Betting on outcomes where odds are better than they should be
• Expected Value — The average return from a bet over many repetitions
• Overround — The total margin across all outcomes in a market