Rugby Quarb System

[Wumpking]

This system will focus on identifying 'Quasi-arbitrages' or 'Quarbs' in fixed odds rugby union matches and exploiting these as hopefully profitable betting opportunities.

In essence, a Quarb occurs where one bookmaker is offering prices out of line with their competitors but not so far apart from the others as too cause an arbitrage. The theory of Quarbs was first outlined in the work of Paton and Vaughan Williams (2002) in 'Quarbs' and Efficiency in Spread Betting: can you beat the book? This theory was further developed and applied to fixed odds betting by Smith, Paton and Vaughan Williams (2005) in Information Efficiency in Financial and Betting Markets. The system also draws upon other weak form information inefficiency theories, particularly the ‘favourite-longshot bias’, whereby low probability outcomes are overvalued and high probability outcomes are undervalued. Other forumites, particularly mcgin, have analysed the ‘favourite-longshot bias’ in rugby - see for example http://www.punterslounge.com/forum/showthread.php?t=38441 Indeed, this system owes much to mcgin’s work outlined in this thread and is based on his original paper/real life trial so many thanks mcgin - :notworthy The rules of the Rugby Quarb System are as follows:

• Only home sides in rugby union matches, both domestic and international, will be considered for betting purposes. This is because there is a strong home bias in rugby (e.g. 68.5% of games played over the last 3 seasons in the Magners League were won by the home side). Furthermore, the draw outcome has limited impact (e.g. only 2.1% of games played again in the Magners League over the same period were drawn).
• Only mean odds of 1.50 or less will be considered from an analysis of at least 8-10 bookmakers’ prices (normally using the Odds Comparison website). The underlying assumption of the system is that the consensus market price is a good indicator of ‘true’ probability. In this respect, the subjective probability of the home side winning a match will be at least 66.7%.
• Where a bookmaker’s price is out of line with the mean by at least 5% or more (or 7% for Betfair to take into account commission), a Quarb or betting opportunity is considered to occur.
• Stakes are based on the Kelly criteria with an added modification to limit risk and are calculated by the following formulae: Current Total Bank x % Difference between Mean Odds and Best Odds x Subjective Probability of Winning (as derived from the mean odds).

I tested this system on all Rugby Union games during Feb – May 2007 and had a strike rate of 85.4% and yield of 16.9%, hence this will be a real life system and will start with a bank of £1,000.

Would appreciate any input / suggestions for improvement from other forumites.

[Wumpking]

Re: Rugby Quarb System

Match No.	Date	Tournament	Home Team	Best Odds	Worst Odds	Av Odds	Av Odds +5%	Selection
1	31/08/2007	Magners League	Cardiff Blues	1.61	1.50	1.55	1.63	No Bet