Is the Soccer Betting Market Efficient? A Cross-Country Investigation Using the Fibonacci Strategy

The sports betting industry is one of the fastest growing industries in the world and therefore the literature on sports betting has gained momentum in the last two decades. The literature mainly focuses on testing the efficiency of the sports betting market. The prediction of game outcomes or comparing the odds of bookmakers by predicted odds and the search for betting strategies which yield significant positive returns have been the core of the market efficiency tests. This study, instead of making any predictions or generating odds to be compared by bookmakers’ odds, implements the Fibonacci sequence on draws as a betting rule for 8 European soccer leagues for the seasons from 2005/2006 to 2008/2009. As the odds offered by bookmakers are narrowly distributed, implementing the Fibonacci strategy for 8 soccer leagues of Europe for 4 seasons yields positive return for all cases and also controlling with simulated data the strategy is found to be in most circumstances profitable. The results indicate that the bookmakers are inefficient in terms of predicting the draws and the soccer betting markets are inefficient. Therefore, the betters could exploit this inefficiency by following Fibonacci strategy assuming they have enough financial liquidity. Furthermore, we calculate the capital needed to pursue the strategy resorting to the Value at Risk (VaR) methodology and reveal that the VaR is only 143€ (assuming that the first bet is 1€) at 95% confidence level.