MLB Betting Angle: Side with Lowly, Unfamiliar Road Dogs Early in the Season
We describe in the following graphic a statistically significant edge for teams with low expectations in the early going of the baseball season. The angle detailed below is predicated on exploiting the betting public's predilection toward favorites, as documented by Woodland & Woodland (1994). These researchers observe evidence of a reverse favorite-longshot bias, but note that this tendency was not sufficiently pronounced as to be exploitable. We contend that early in the season, bettors are especially likely to be overbet favorites, given a lack of information regarding underdogs' likely performance in the new year.
Specifically, we hypothesize that during the first couple of months of new MLB seasons, teams that missed the prior playoffs are handicapped based largely on last year's showing, without a proper accounting for factors such as team improvement, regression of previously outperforming competition and the normalization unlucky outcomes. The phenomenon of overweighting prior performance in assessing likely outcomes in the present is known as recency bias. This propensity creates value with underdogs.
Additionally, we hypothesize that the tendency to underestimate dogs early in the season is more pronounced on the road, where opposition is presumed to enjoy a home field advantage. Consistent with the perspective that home field is overrated, Levernier & Barilla (2006) assert that travel has no value in predicting game winners in MLB action, and that, contrary to widely held beliefs regarding home field advantage, home teams hold edges over road teams only in very close games.
Further, we expect that a lessor level of familiarity between teams, such as when teams from different Leagues match up, enhances to the potential for upsets (though, worth mentioning, the March 2022 collective bargaining agreement creates a more balanced schedule, so the impact of inter-League play may start to diminish after the current season).
After the Nationals beat the Angels as +235 underdogs the evening of Monday, April 10, 2023, the angle described previously improved to a 6-1 record on the season, for a 110% year-to-date return on investment (also per this system, we endorsed the Royals at Giants on April 7th, the Giants at White Sox on April 6th and the Pirates at Red Sox on April 3rd).