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Working paper

Parimutuel Betting on the eSports Duels: Reverse Favourite-Longshot Bias and its Determinants

Dagaev D., Stoyan E.
We analyse betting behaviour patterns of the visitors of the specialized betting website dedicated to the popular eSports game Counter-Strike: Global Offensive. The reverse favourite-longshot bias is found both in the in-sample and out-of-sample datasets. This phenomenon is rather unusual for parimutuel betting markets because favourite-longshot bias is more common. We define simple betting strategies based on the bets on underdogs and show that these strategies make a sufficiently large positive profit, which is a sign of market inefficiency. Next, we investigate determinants of the reverse favourite-longshot bias. We hypothesize that popular teams attract more unsophisticated gamblers which adds to the stronger reverse favourite-longshot bias in matches with such teams. Geographical proximity is found to be a significant factor that increases the bias, whereas the effect of internet popularity measured by the number of team players' followers on Twitter surprisingly follows the U-shape curve.