The Favorite-Longshot Bias Explained

The Favorite-Longshot Bias is a concept that any serious bettor should know. If I’m honest, I had been betting for quite a few years before I discovered this… I had no idea about it, and it’s something really important. Basically it can save you a lot of money if you are very prone to betting on the underdgos, be it in Tennis, Football or any other sport.

Definition of Favorite-Longshot Bias

The Favorite–Longshot Bias (FLB) is a persistent phenomenon in sports betting where the odds offered on favorites provide a higher expected return (less money lost over time) compared to the odds on "longshots" (outsiders), which offer very poor expected value. That is, bettors systematically overvalue longshots (underdogs with low chances of winning) and undervalue favorites (competitors with high chances of winning).

What does ‘overvalue longshots and undervalue favorites’ mean? It means that the odds on longshots, or big underdogs, are lower than they should be in a balanced market, while the odds on the favorites (mainly the strong ones) are set at levels that do not imply a large loss for the bettor nor a large profit for the bookmaker

In simple terms:

• Betting on Favorites: Usually carries a small expected loss (roughly around -1-2%).
• Betting on Longshots: Carries a disproportionately large expected loss (often exceeding -10% or even -15%).

This happens because bookmakers do not apply their profit margin (the "vig") equally across all outcomes. Instead, they load the majority of the margin onto the longshots, shortening their odds far below their actual statistical probability.

Of course, this effect only occurs with bookmakers, not on exchanges, where players bet against each other and therefore there is no house margin.

Why Does It Happen?

There are 3 main complementary factors why the FLB exists: irrational bettor psychology, inelastic demand and how bookmakers exploit it, and bookmaker risk management.

1. Irrational Bettor Psychology

This perspective places the responsibility on recreational bettors, who exhibit cognitive biases that drive the FLB.

These bettors have a "lottery ticket" mentality. They prefer risking a small amount to win a life-changing sum, even if the mathematical value is terrible.

That is, they tend to perceive low-probability events (e.g., a 1% chance) as more likely than they actually are (e.g., perceiving it as a 5% chance). In other words, if they are offered a 15.0 price on a player to beat Sinner or Alcaraz, for example, they will take it, even if the fair price is 20.0.

Their internal thinking is... a reward of x15 is so high that… who cares if I could get 20 instead. x15 is already a great reward!

They rely on intuition rather than math. Because they "over-bet" on longshots regardless of the price, bookmakers can offer worse odds without reducing demand (we'll treat this below).

2. Inelastic Demand and how bookmakers exploit it

This is a view based on how bookmakers take the opportunity created by the low sensitivity of customers to price changes.

Elastic Demand (Favorites/Sharps): Professional bettors ("Sharps") typically bet on favorites or near-even markets. They are highly price-sensitive; if the odds are poor, they simply won't bet. To attract this high-volume liquidity, bookmakers must keep margins low and prices competitive on favorites.

Inelastic Demand (Longshots/Recreational): Recreational bettors are generally price-insensitive. If they want to bet on a massive underdog, they care less about the specific price difference (e.g., whether the odds are 20.0 or 18.0) and more about the potential payout.

The Strategy: Bookmakers exploit this inelasticity. They charge a "premium" (higher margin) on longshots because they know recreational bettors will pay it anyway. The demand is inelastic, so they take advantage of this.

3. Bookmaker Risk Management

Even disregarding bettor bias, bookmakers have rational incentives to shorten longshot odds for several reasons:

Managing Volatility: Accepting bets on high odds creates high variance. If a longshot wins, the payout is massive, hurting the bookmaker's short-term cash flow. Shortening the odds acts as insurance against this variance.

Protection Against Errors: It is mathematically more difficult to calculate the precise probability of a rare event (e.g., is the true chance 1% or 1.5%?). If a bookmaker misprices a longshot, the liability is huge. By keeping longshot odds artificially low, they build a safety buffer against their own modelling errors.

Conclusion

The Favorite–Longshot Bias is not caused by one single factor. It is a market equilibrium resulting from recreational bettors who willingly "pay" for the excitement of high-odds betting (inelastic demand) and bookmakers exploiting it and rationally to minimise their liability and maximise profits from that specific segment of customers.

For a bettor, consistently betting on longshots is a path to disaster. You can do it occasionally when you have a strong conviction about the value, but as a general strategy, overusing longshots will almost certainly lead to failure.

I’ll be publishing an article soon about the numbers that prove the FLB in tennis.