Sports Betting Guide
Wisdom of the Crowd in sports betting
Predictive ability is one of the most important skills when it comes to betting on sports. While making an accurate prediction might be hard at times, turning to the wisdom of the crowd appears to be practical, and what is more, quite accurate. Read on.
If you are familiar with betting, then you already know the importance of making accurate predictions. If you are tired of spending hours looking for value bets across the top online bookmakers, we would like to invite you to our free betting tips section to check out some of the sharpest selections on the market.
Have you ever thought about the way our predictions work? Making an accurate prediction requires a lot of skill & knowledge about the field (sport), the outcomes of the events of which you are trying to predict. Since people’s opinion is hugely involved in the shaping of practically any sports betting market, we can easily assume that taking the opinion of a large enough group of people will generate a relatively accurate prediction. That being said, it has been quite a while since the phenomenon was originally described by the anthropologist Sir Francis Galton. The whole idea behind the theory states that the amount of over- & underestimation from the surveyed group will be equal enough to cancel each other out to make quite a close call.
Unfortunately, this method does not guarantee you guessing the results with 100% accuracy. However, it should always have a really close prediction.
Back in the day, Galton noticed an interesting scene at the livestock fair where visitors were trying to estimate the exact weight of the butchered meat. He later found that while all the guesses were off, their cumulative median was only 0.8% off the actual answer. The idea was quickly picked up by other researchers & was found applicable to practically any possible scenario.
How to use Wisdom of the Crowd in betting
While sounding like some complicated scientific phenomenon, Wisdom of the Crowd has actually been around online sports betting for a long while. Top online bookmakers found the way of using the collective guess in their favour, which is nothing else but market validation. People themselves actually shape the market by betting on either of its sides after the opening odds are released. That explains why finding value or bookmakers’ mistake closer to the start of the given event make less sense. Professional sharp punters never place their bet towards the market closure. Instead, they go against the market earlier while the odds are still raw and have not been affected by the less experienced & knowledgeable recreational bettors.
As the market gets validated by more people, it becomes more liquid, meaning it gets more efficient & accurate. The same idea stands behind the collective guess. However, unlike validating the market where you are given the starting point in the form of the opening odds, collective guessing is based more on personal & common sense thinking. What is more, the factor of knowledge & skill difference also plays its part, especially during the market validation process. However, it has already been estimated when certain groups of punters place their wagers!
While such betting profile diversity is generally good for the market, that is far not always the case. Recreational punters who tend to bet more towards the start of the event (e.g. football match kickoff) base their decision almost entirely on somewhat arbitrary factors rather than mathematical calculations or proper risk assessment. The risk of betting this way & collecting guesses from such people is likely to be affected by some of the most common behavioural biases. That being said, whenever this betting style gets loose & personal feelings step ahead of the cold-headed judgment, bettors tend to stake more on favourites; thus, affecting the market & shifting it the wrong way.
Staying away from being biased is not the only threat of the Wisdom of the Crowd. The aforementioned collective poor thinking behind such bets is called the information cascade, which appears to be more impactful than you might think. A good example of that could be the 2018 World Cup Germany team, who were favoured by the majority of the top online betting operators to lift the trophy. Such backing was quite reasonable at first sight, considering Germany were defending champions, ranked second by FIFA & had the reputation of the team that consistently makes it further into the tournament. Nevertheless, a more detailed look at the German squad was stating otherwise. The poor overall form & weak performance prior to the tournament, on top of the absence of the previous World Cup squad’s stars like Phillip Lahm, Bastian Schweinsteiger and Miroslav Klose, led Germany to a shocking group stage elimination. This example is also tightly connected with the Areola Effect phenomenon, which is better explained in one of our previous sports betting guides. It would also be worth mentioning that information cascades.
One of the most crucial features of information cascades is that it often results in feedback loops due to the nature of every consecutive decision continuously being made off the original one that drove the price down. The bottom line is, the more complex the question you are trying to guess and/or the less knowledgeable is your pool, the less reliable & accurate your collective wisdom will be. Thus, being able to avoid getting biased by information cascades will present you with the opportunity to efficiently make accurate sports betting predictions.
While the Wisdom of the Crowd theory has found its wide implementation in sports betting, there are plenty of factors, besides the aforementioned biases, that can tell you whether you not you should trust the crowd. Generally speaking, the market is moving & shaping through motivation. While the main goal of betting is to stay profitable, there are plenty of ways different market players achieve that objective. Odds speculation and other common mechanisms can easily steer the market in an unnatural direction, which completely eliminates trust in the predictive ability of the crowd. Having said that, we recommend shifting the focus more towards niche or less popular betting markets that lack excessive attention from the bookmakers & big bettors; thus, leaving tons of opportunities for finding value!
We hope this sports betting guide found you useful. Bettingwell would also like to welcome you to check out our exclusive sports betting guide library, where you can find lots of useful information about how to beat your online bookie, how to read markets & more.