Longshot Bias

Longshot bias (also called favorite-longshot bias) is the documented tendency for bettors to overvalue unlikely outcomes. Longshots are systematically overpriced; favorites are systematically underpriced.

The Pattern

Across markets:

Implied Probability	Actual Win Rate
5% (longshot)	~3%
20%	~18%
50%	~50%
80%	~82%
95% (heavy favorite)	~97%

Longshots win less than their odds imply; favorites win more.

Why Longshot Bias Exists

Behavioral explanations:

Lottery preference. People enjoy the dream of a big payout more than the EV math.

Overweighting small probabilities. Psychological tendency to overestimate rare events.

Entertainment value. 50:1 is more exciting than 1:10, regardless of expected value.

Story construction. Upsets are memorable; expected outcomes are forgettable.

Longshot Bias in Data

Academic studies consistently find:

Market	Finding
Horse racing	Longshots return -20 to -30%; favorites return -3 to -5%
NFL betting	Large dogs underperform implied probability
Prediction markets	Low-probability contracts often overpriced

The bias is real and persistent across domains.

Exploiting Longshot Bias

The simple strategy: bet favorites, avoid longshots.

But there's nuance:

• The bias is well-known, so it's partially arbitraged away in efficient markets
• Vig is often higher on heavy favorites
• Individual situations still matter more than broad biases

Smart approach: use bias as one input, not a complete strategy.

Longshot Bias in Prediction Markets

On Kalshi and Polymarket, longshot bias appears as:

• Sub-5% contracts trading higher than justified
• "Moonshot" political outcomes overpriced
• Long-tail event contracts inflated

This is one reason our dashboards compare market prices to historical probabilities—to identify bias-driven mispricings.

When Longshots Are Right

Sometimes longshots offer value:

Information asymmetry. You know something the market doesn't.

Model edge. Your probability estimate is genuinely higher than market.

Structural inefficiency. Certain markets are less efficient.

The goal isn't to avoid all longshots—it's to only bet them when your edge exceeds the bias.

Related Terms

• Dog — Underdogs affected by longshot bias
• Chalk — Favorites potentially underpriced due to bias
• Edge — Required to overcome longshot bias
• Expected Value — Negative on most longshots due to bias