Have you heard the old saying: Buy the rumor, sell the news? Using the well-known stock market’s saying, we will show why sometimes sports betting odds change before sports news hit the headlines. And after the news story is published, the odds shorten so much, that the popular tip of the day is not a value bet anymore!
It is commonplace in stock markets a price fluctuation to happen as a reaction to ongoing events before the news appear in the media. That is exactly what is also happening in sports betting. However, the truth is that there can be a minor delay in odds reaction, which we can exploit to make money with the help of news, before or even during the long-term betting markets (i.e. betting on elections, next team’s manager, league’s winner, etc.). Things obviously speed up in case of much more short-term betting events, such as tonight’s football game.
The news and especially rumors strongly influence odds movements. A very simple example is a football game, where let’s say one day before the start of the game, there is news online and offline, reporting an injury of the home team’s basic goalkeeper. Therefore, it is expected that several tipsters – especially if the game was already popular – to write about this game, suggesting betting against the team competing with the substitute goalkeeper. No, that is not rocket science. Yet, the difficult part is to have access to the information early on!
Tipsters bet their money according to their predictions (yes, some actually do that!), along with several of their wealthy followers, who manage vast amounts of money. By betting all this money on the away win, they would have already led the odds a bit higher for the home team and quite lower for the visiting team.
Now come the everyday bettors who search online for football tips. It is impossible for them to miss the story, as it circulates in all well-known forums and websites. These bettors are expected normally to follow that tip, betting on the away team. Away odds are now driven further lower, putting pressure to whoever wants to lay the away win!
This time though is not so much the high stakes that move the odds but the betting volume – as “big whales” have already entered the market prior to the news going public.
Say, for example, that 5 players have already bet €10,000 on the away win. Now, imagine the impact of thousands of small bets, ranging from €10 to €50, on the same betting odds! This huge number of small bets could have even greater influence on the odds movement.
A few minutes or hours after the first headlines hit the news, the odds in favor of the home team have gone up quite a lot, reflecting the story that has appeared earlier as rumor. As a result, whoever delayed to bet, is more likely offered odds that are now fully adjusted by the news story. Given the odds have reacted to the news, chances are it is not a value bet anymore.
But what would happen if rumors about the goalkeeper’s injury were posted in sports forums before any news site?
Some readers may not believe the rumor if it is not confirmed by the news. Still, others would actually risk their money buying the rumor as they say in stock market.
If the story is not verified by the news, they could trade out losing a little money, since the odds will remain unchanged. On the contrary, if the rumor is indeed confirmed, the profit would be much bigger as we saw above.
But could they also beat those bettors who had access to this information even before the rumor spread (like team members, stuff, etc.)?
Maybe they can, maybe not. There are always players and investors in financial markets who have access to information before the rest of the world. It is impossible to outperform those people who bet the so-called smart money.
If, however, we acknowledge smart money’s betting activity on the markets, we could capitalize on this information to get a piece of the pie.
On the other hand, we do not need to be constantly in front of a screen waiting for rumors to appear. It suffices to check at regular intervals sports websites and forums for rumors and news. If you read about a rumor, chances are that you could take advantage of a significant odds movement. Given it’s not news yet, the profit potential is substantially increased compared to betting after the rumor becomes news!
Timing is also important as we have seen earlier. If the news story just went online, there is a profit margin to exploit, albeit small.
The best method, however, remains the combination of capitalizing on rumors and following the smart money. If we come across a rumor, while at the same time we notice the odds starting to misbehave, there is no doubt that the rumor will evolve into news. Traders, start your engines!