Paradox

Betfair Trading Challenge mentioned something that is worthy of further discussion. He writes, a little confusingly, but you can get the drift:

Take tonight's Europa league game, Stoke 1-0 up with 10 minutes to go. I fancied them to concede but when I looked at the price they were 1.3, to me that was not value and I would have ignored it.

The strange thing is that even though I thought 1.3 was too high a score I could not have backed them at that price. That's a bit paradoxical, is it not ? How can the lay be bad value and the back also be bad value ?

It may seem a paradox, because 1.3 should be either a value back or a value lay (unless the probability of the event is 0.7692 of course), but it's not. For a start, the in-play football markets are very accurate, making it nigh on impossible to find value after taking into account the commission. (In other words, if the Back / Lay prices are 1.3 / 1.31, the true probability is likely 0.7663 [1.305] so it's unlikely that you will find value on either side).

The only opportunities appear to be in the immediate aftermath of a game-changing event, e.g. a goal or a sending off, when there is some volatility, but in a sport like football, the prices will trend to 1.0 or 1000 depending on the time remaining, and many people have very accurate pricing models for this. I don't, and I suspect that most people don't, so while 1.3 may have been too long a price to lay, it may well have been too short a price to back as well.