When do betting odds best represent the actual outcomes? Predicting NHL results based on moneyline odds movement

The sports betting market has grown quickly over the past the few decades mostly due to the digitalization of the business. The bookmakers have moved online from the physical locations. The market has thus globalized, and the competition has increased, forcing the bookmakers to produce more accurate estimates about the events to keep up with the competition. This study investigates the accuracy of NHL moneyline betting odds, in predicting the actual outcomes of games throughout the time that the betting events are open. The dataset covers three full seasons from 2015 to 2018. The odds are collected at 5 different time points for each game and the differences in the predictive power of time points is analyzed. Then, the odds and their movement is investigated further to see if there are profitable betting strategies to be found based solely on information about odds movement. The tests related to the prediction accuracy of the odds reveal that there are no statistically significant differences between the prediction accuracy for different time points. Aggregate results are rather consistent though in showing that before the day of the game, the estimates implied by the odds aren’t quite as accurate as they are during the game day. The regression tests further indicate that when the implied probability of a selection grows, the objective probability grows at a higher rate, meaning that there’s a Favorite-Longshot Bias in the market. This means that betting on a more likely outcome yields better returns on average. The tests for finding profitable betting strategies further enforce the notion of Favorite-Longshot Bias and subsequently all of the consistently profitable betting strategies, that are found, involve only betting on favorites. The data about the odds movement between time points and splitting the teams to favorites and underdogs reveals that betting on favorite teams who have had their odds rising in a given time point interval, yields a profit for 80% of t