randomness | (Reply)

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So the thing about futures traders is that they're in there because they think the market is not 100% efficient, and they want to take advantage of any inefficiencies they can find. In sports, the obvious inefficiency is that individuals have inflated ideas of the capabilities of particular teams; this is probably more true of the Red Sox than anyone else and is reflected by the odds being only 40:1 rather than the 62:1 you'd expect from historical evidence. Bookies suffer from the same inefficiency since their job is not to reflect the actual chances but to set the odds such that no matter what happens they can pay out. If 90% of everyone is betting the same way on a coin toss, the bookie has to adjust the odds so he won't get burned.