Changing Rules and Overrounds

In my previous post, I said I'd be taking a look at baseball and as a man of my word, here are my findings. And for those who like to think that profitable systems will last forever, (they shouldn't), it's a rather sobering look.

If you've been following this blog for a while, you'll know that since the start of the 2014 season, one of the perennially profitable systems in this sport was to back "hot" favourites in the regular season, with "hot" here defined as those teams priced at 1.5 or shorter. 

Only four months saw losses in the six seasons up to, and including, 2019 and the one losing season was a very small loss.

And then the world of baseball, and the world in general, was turned upside down by COVID. 

The 2020 season was delayed by four months and completed with a much shortened schedule with significant rule changes, and in 2021 some of these rule changes were retained. 

In 2022 the season was again delayed because of a lockout, and some of the 'new' rules were discarded while the universal Designated Hitter (DH) rule returned. And then for this season we saw the introduction of pitch clocks, a ban on defensive shifts, and larger bases, which all meant that data from earlier seasons was pretty much useless. 

On the eve of the season, I wrote to the Sacred Manuscript subscribers that:

With the MLB season starting tomorrow, I thought I should mention that there are several new rule changes in effect this season, most of which are to increase scoring and reduce the length of games.

Combined with the confirmed changes to the Designated Hitter rule, which means there is essentially no longer any significant difference between American League and National League clubs, the historical data is pretty much useless now, so I am going to be taking a 'wait and see' approach to betting this sport for now.

If I see any market inefficiencies I will of course update you all, and if you are interested in the new rules, check out MLB's home page where they cover them in some detail.

Run Totals will be higher this season, but since this is no secret, the markets will likely have this priced in.

Waiting and seeing turned out not to be the worst of ideas, with the hot favourite system I mentioned at the beginning continuing its losing run. 

 Overall, down just 1.1% looks not too bad, but take out the 2021 season when the DH rule wasn't in effect, and the results are quite shocking. It would appear that the markets are taking their time in adjusting to the new rules, but there's something else going on that explains at least some of this. I use the Killer Sports site for my prices as I've mentioned before. It's not perfect, but it does mean that system results can be verified quite easily. What I see when generating the results shown in this post are that for this season, the overround is higher than used to be the case. 

The average price of a favourite in the MLB since 2004 is -151.9 (1.66) and for most of Killer Sports' history, the underdog was priced at +140 (2.4), for an overround of 102%. 

This season, the underdog has varied between +126 and +135 with an average of +131 and an overround of around 103.6% - in other words, we are not comparing apples with apples. Not enough to make the red numbers above turn green, but also not as bad as they first appear. The markets do seem to be overrating home AL favourites this season when playing NL teams, so there might be an edge opposing these.