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Can And Should Sports Outcomes Be Predicted

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Hubertus Hofkirchner

by Hubertus Hofkirchner -- Vienna, 15 Jun 2017

Predicting Sports Game Outcomes

Betting operators (like William Hill), betting exchanges (like Betfair) and prediction markets (like Prediki) are demonstrably doing an excellent job in predicting sports outcomes (Spann & Skiera 2008). Their prices (odds) typically are the best available indicator of sports outcomes. Evidently, sports managers have a substantial interest to predict and model sports outcomes, so there is substantial real value already hidden in these predictions.


What may confuse a superficial observer is that these predictions come for free, without any cost to sports managers. The simple reason: Betting markets are subsidised by the entertainment value of gambling. For example, it is the gamblers who pay for the bookies’ service through price spreads. Sports managers are free riders.

Predicting Sports Business Outcomes

However, sports executives also have an interest in predicting the impact of possible strategic and tactical measures on their sports club’s or sport association’s business outcomes, such as ticket sales, audience measures, sports fan or audience satisfaction.

Betting exchanges are not practical for predicting such outcomes. However, this very application is where proper prediction markets based on virtual money (like Prediki) come in and excel. Sports executives can use this tool to pre-test their strategic ideas, concepts, and new offerings.

The predictive power of second generation tools generates highly accurate collective intelligence, not just like traditional market research but translated into meaningful sports and business outcomes. They capture the authentic voice of the sports clubs’ customers for much improved and confident decision making.

Sports Fan Participation

The biggest dilemma for sports executives often is to juggle the requirements of (1) the best sports outcome for a great fan experience against (2) the harsh economic realities of commercial success or even survival. Here, prediction markets can help as a participative tool for democratic sports fan involvement.

Sports managers can employ prediction markets to gauge their very fans’ well-reflected expectations on future sports and business outcomes depending on hypothetical strategies, such as potential new service offerings, new league formats, game rule changes, player purchases, stadium construction, expansion or refurbishment, new technology adoption, etc.

This not only informs major decisions but more importantly builds the broadest holistic consensus about the unavoidable commercial angle, the necessary means to achieve ultimate sports success. The enormous pressure and unresolvable conflict of sports club or association executives can thus be decentralised to those who are best to gauge the impact on fans:

The sports fans themselves.