Recently, the MIT business school (Sloan) had a conference on Sports Analytics — which included a session on “Sports Gambling: The Source of Sports Innovation?”
ESPN’s Chad Millman, one of SportsInsights’ contacts, talked about contrarian value and sports betting. Here are some excerpts from the conference website.
Gambling has been instrumental in the evolution and direction of sports businesses. The Sports Gambling Panel will examine how sports gambling actually precedes movement in sports at various levels.
When facing a heavily-favored opponent, an underdog must be willing to assume greater-than-average risk. In statistical language, one would say that an underdog must be willing to adopt a strategy whose outcome has a larger-than-average variance. The difficult question is how much risk a team should be willing to accept. This is equivalent to asking how much the team should be willing to sacrifice from its mean score in order to increase the score’s variance.
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