Against All Odds? National Sentiment and Wagering on EuropeanFootball

This paper studies how national sentiment in the form of either a perception or a loyaltybias of bettors may affect pricing patterns on national wagering markets for international sportevents. We show theoretically that both biases can be profitably exploited by bookmakers byway of price adjustment (odds shading). The former bias induces bookmakers to shade oddsagainst the domestic team, the latter to adjust them in a way that depends on the demandelasticity of bettors for their national favorite. Analyzing empirically a unique data set ofbetting quotas from online bookmakers in twelve European countries for qualification gamesto the UEFA Euro 2008, we find evidence for systematic biases in the pricing of own nationalteams in the odds for win offered across countries. Variations in the sign and magnitude ofthese deviations can be explained by differences across countries in the respective strengths ofthe perception and loyalty biases among domestic bettors.