If wagering markets were efficient then it would be equally profitable to bet on any racing horse whether it is the favourite or a longshot.

However, the “longshot” bias in wagering has been around since the first satchel swinger hitched his pony to a rail. In simple terms punters tend to overbet longshots and underbet the favourites.

Over the years there have been many studies into the “phenomenon” that constitutes “longshot” bias.

In this article, I will refer to three of these studies and their conclusions, as well as presenting some tables highlighting the longshot bias existing in horse racing in Australia today.

The first study examined is the one made in 2000 by Russell Sobel, of the Department of Economics, West Virginia University, and Travis Raines, of the Department of Economics, University of North Carolina. 

They presented two theoretical explanations for the favourite-longshot bias, finding that the most popular explanation for the bias, the risk preference model, cannot explain the data as well as an information-based model, in which the bias depends on bet complexity and the information possessed by punters.

As mentioned, market efficiency requires that betting on racetrack favourites is as equally profitable as betting on the longshot, or any other horse. However, this is not the case as the returns on betting the favourites are higher than the returns on the longshots.

Sobel and Raines found that less-informed, or “casual” punters tended not only to bet significantly less per person but also less heavily in the exotic betting markets than do regular or “serious” punters.

One of the differences they found was that the “casual” punter tended to bet more over the weekend than what they did at the midweek meetings (and I guess that is why Sunday racing has become so popular in Australia).

For instance, they found that the average betting per person per race is much higher midweek than at a weekend, suggesting a higher proportion of serious punters. For every dollar spent by the average weekend punter, the midweek punter spent between $1.10 to $1.18 dependent on the meeting, with the extremes being as high as 50 per cent per person per race midweek verses the busiest weekends.

On average, the serious punters also tended to concentrate more heavily on the exotic bets involving multiple selections. 

On Saturdays they found that the favourites receive an average of 26.3 per cent of win bets, yet at the midweek meetings they captured 29.2 per cent of the bets. For longshots, the opposite occurs with an average of 5.4 per cent being bet on Saturdays, while only 3.7 per cent of all bets are for the longshot to win at the midweek meetings.

Some previous studies have suggested that the favourite-longshot bias becomes more severe as the racing day progresses. This conflicts with most standard models of risk behaviour as traditional models suggest that as wealth declines throughout the day punters should become less risk-loving.

Sobel and Raines’ research disclosed that there was an upward trend towards longshot betting in the last race – the “get out” stakes.

Their conclusion was that as the proportion of casual (less-informed) punters enter the betting pool, the share of that pool bet on the longshot rises, moving the market further in the direction of a favourite-longshot bias.

In addition, more complex bets tend to demonstrate more of a favourite-longshot bias because higher bet complexity functions similar to having less-informed punters. 

Essentially, casual punters bet too evenly across the possible outcomes thus underbetting the favourite and overbetting the longshot. This same effect is present on very complex bets where it