Home advantage in professional soccer and betting market efficiency: The role of spectator crowds

Abstract

Fan support has often been considered to be a main driver of the home advantage in sports. Using the "natural experiment" of ghost games during the COVID-19 pandemic in German professional soccer and a dataset of 6,120 matches ranging over the seasons 2011/2012 to 2020/2021, we test this claim. Indeed, applying a difference-in-differences setup, we identify a reduction in the home performancethough with much heterogeneity across leagues and teams.We, moreover, observe the home advantage to recover over time. In analysing whether betting markets anticipated this drop in the home advantage and its recovery, we test the efficient market hypothesis. In the short-run, betting odds do not properly reflect the effect of ghost games regarding changes in the home advantage but they suitably account for it in the long-run. Also, league heterogeneity is efficiently captured in the odds. Based on these findings, we show how simple, short-run betting strategies could have exploited the discussed phenomenon. Our findings also have implications for agents' behavior on financial markets in the presence of unforeseen and unfamiliar shocks.

The Wisdom of No Crowds: The Reaction of Betting Markets to Lockdown Soccer Games

“…Meier et al (2021) argue temporary inefficiencies existed for early lockdown matches, concluding that in the short run, betting markets were not efficient. Fischer and Haucap (2021) suggest that the strength of the home advantage effect changed over the course of the lockdown period but that betting markets did not adjust their pricing of this element, also suggesting a possible inefficiency.…”

Are Betting Markets Inefficient? Evidence From Simulations and Real Data

“…With the initially vanishing home advantage during COVID-19, the research covers betting markets’ (non)response to such changes. Papers by (Fischer & Haucap, 2022; Meier et al, 2021; Winkelmann et al, 2021) record temporal inefficiencies in betting markets as bookmakers did not adjust the winning chances by home teams accordingly.…”

Foreign players, team production, and technical efficiency: Evidence from European soccer

“…A recent stream of literature has started to go beyond and analyze scoring efficiency (e.g.,Villa & Lozano, 2016), social efficiency in terms of the capacity to attract people to the stadium(Özaydin & Donduran, 2020) or efficiency in soccer betting markets (e.g.,Fischer & Haucap, 2022).…”