Soccer punters - Who bets and which bias is produced

Master's Thesis from the year 2012 in the subject Economics - Micro-economics, grade: 1,3, Frankfurt School of Finance & Management, language: English, abstract: The online sports betting markets industry has been gaining in popularity worldwide
during the last decade. The Internet gives punters faster access to their bookmaker and
lets them easily compare the odds of many different bookmakers. Furthermore, many
online gambling sites offer a wide range of different sports events and specialized bets
for their customers. Nowadays it is not only possible to bet on the final outcome of a
soccer match, but even on the half-time result or the amount of goals scored during the
match.
The betting exchange betfair makes it possible to bet against a certain outcome,
meaning the punter can act as a bookmaker for a chosen event.
Betting on outcomes of soccer matches is very interesting with regard to probability
theory because it is based on a numerical code: 0 for a draw, 1 if the home team wins
and 2 if the home team loses. Therefore many textbooks on combinatorics consider
soccer bets to be a prime example for probability theory. H. Matthes and H.
Küchenhoff claim that soccer bets are a great example for the so-called subjective
probability, which they define as the degree of confidence with which an observer
believes in the occurrence of a certain event based on the information he currently has.
P(A) would be the maximum amount in EUR that he is willing to risk if he receives
exactly EUR 1 on the occurrence of A. For a bookmaker this would mean that his odd
for a certain event will not exceed 2 if he believes that the probability of its occurrence
is 50%. Hence, odds that are offered by a bookmaker on the occurrence of a certain
result reflect his individual estimation regarding the probability of the occurrence of the
given result. Of course, bookmakers can be wrong. If it were possible to identify a
pattern for their mistakes, this would help in exploiting them. Furthermore, due to the
growing competition in the sports betting market, the punter is able to choose between a
large number of bookmakers if he wants to bet on a certain outcome of an event. If the
variation between the odds of all bookmakers who offer bets on a certain event were
large enough, the punter might have the probability to earn risk-free money by betting on all possible outcomes of this event and choosing the bookmaker that offers the
highest odds for each individual outcome. This thesis will show that there are inefficiencies in the soccer betting markets that can be exploited by punters.[...]