{"id":12719,"date":"2021-06-16T13:01:00","date_gmt":"2021-06-16T12:01:00","guid":{"rendered":"https:\/\/www.economicsobservatory.com\/?post_type=question&p=12719"},"modified":"2021-06-15T16:47:59","modified_gmt":"2021-06-15T15:47:59","slug":"wales-at-euro-2020-are-the-betting-markets-underestimating-their-chances","status":"publish","type":"question","link":"https:\/\/www.economicsobservatory.com\/test\/wales-at-euro-2020-are-the-betting-markets-underestimating-their-chances","title":{"rendered":"Wales at Euro 2020: are the betting markets underestimating their chances?"},"content":{"rendered":"\n

The bookmakers do not give Wales much chance at Euro 2020, offering odds of 150\/1 for the team to win the tournament, despite having drawn their first match. After adjusting for the bookmakers\u2019 margins (the adjustments they make to the \u2018true odds\u2019 so that they can expect to make a profit), this implies a win probability of only 0.5% for the whole tournament. Only Hungary, North Macedonia and Scotland (with odds of 500\/1), Slovakia (at 275\/1), Finland (at 250\/1) and Poland (200\/1) are rated bigger outsiders than Wales.<\/p>\n\n\n\n

But is this a fair reflection of the quality of the Welsh team?<\/p>\n\n\n\n

Table 1: Winner odds by team<\/h4>\n\n\n\n
Team<\/strong><\/td>Odds<\/strong><\/td><\/tr>
France<\/td>9\/2<\/td><\/tr>
England<\/td>5\/1<\/td><\/tr>
Belgium<\/td>6\/1<\/td><\/tr>
Italy<\/td>13\/2<\/td><\/tr>
Spain<\/td>15\/2<\/td><\/tr>
Germany<\/td>8\/1<\/td><\/tr>
Portugal<\/td>8\/1<\/td><\/tr>
Netherlands<\/td>14\/1<\/td><\/tr>
Croatia<\/td>45\/1<\/td><\/tr>
Denmark<\/td>55\/1<\/td><\/tr>
Switzerland<\/td>66\/1<\/td><\/tr>
Czech Republic<\/td>75\/1<\/td><\/tr>
Ukraine<\/td>75\/1<\/td><\/tr>
Sweden<\/td>75\/1<\/td><\/tr>
Austria<\/td>75\/1<\/td><\/tr>
Turkey<\/td>100\/1<\/td><\/tr>
Russia<\/td>100\/1<\/td><\/tr>
Wales<\/strong><\/td>150\/1<\/strong><\/td><\/tr>
Poland<\/td>200\/1<\/td><\/tr>
Finland<\/td>250\/1<\/td><\/tr>
Slovakia<\/td>275\/1<\/td><\/tr>
Scotland<\/td>500\/1<\/td><\/tr>
North Madedonia<\/td>500\/1<\/td><\/tr>
Hungary<\/td>500\/1<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
Source: Paddy Power. Note: Odds accurate on 15 June 2021<\/h5>\n\n\n\n

Betting markets, like stock markets, are relatively efficient in their use of information in evaluating expected future performance. Many people placing bets are well informed and the \u2018wisdom of crowds\u2019 means that, on average, the odds are a reliable indicator of outcomes.<\/p>\n\n\n\n

There is a very strong correlation between the odds offered by the bookmakers and the current squad values of the 24 national teams in Euro 2020. Just as a firm\u2019s share price reflects the current value of expected future profits, players\u2019 transfer costs reflect the current value of their expected future performance both on and off the pitch. The latter relates to the expected commercial value of a player\u2019s image.<\/p>\n\n\n\n

Using the well-respected transfermrkt.co.uk<\/a> website, the Welsh squad has a current value of \u00a3159 million, which ranks Wales as only the 20th<\/sup> most expensive squad in the competition. The top-ranked teams by squad value are England (\u00a31,150 million), France (\u00a3925 million) and Germany (\u00a3843 million). France are the current tournament favourites (with odds of 9\/2), followed by England (5\/1) and Belgium (6\/1).<\/p>\n\n\n\n

Figure 1: Squad values (\u00a3 million)<\/h4>\n\n\n
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