With Tadgh Hegarty, Review of Behavioral Finance, 2024.
Asian handicap betting in soccer has been shown to have lower margins and less biased odds than the traditional 1X2 market. But we show in this paper that its pricing is not perfect.
We explain how Asian handicap bets work and the role of refunds. Most Asian handicap bets include a full-refund or half-refund outcomes while others have no refund. We show that average outcomes from these bets depend on the refund structure. Bets with no refund option tend to offer the worst value. Bets with a possible half refund are better. Bets with a full refund option are better again.
While this is well known to be a market with many sophisticated bettors, it appears that, on average, participants underestimate the value of refunds and systematically take bets that have lower returns than others that are available.
Key research finding: The Asian handicap market is not fully efficient in the sense that average returns on different kinds of bets are different. The complexity of the bet structures affects outcomes.
Practical advice: If you bet Asian handicaps, the “no refund” bets (half-goal handicap) tend to be where you get the worst deal and the bets that offer the possibility of a full refund (integer handicap) are the best deals.