High stakes, experts, and recency bias: evidence from a sports gambling contest

Sports betting markets provide a unique opportunity to test market efficiency and, in this case, study the presence of recency bias and experts in forecasting sports outcomes. This paper uses a panel data set of individual NFL sports gamblers in a season-long contest known as the SuperContest. The contest is used to track the picks of individual gamblers against the spread on games throughout the 2013-18 NFL regular seasons. We find that overall, the SuperContest entrants are no better at picking winners than a coin flip and exhibit a recency bias. However, more skilled contestants are less susceptible to the recency bias and their skill advantage forecasting outcomes may be their avoidance of a recency bias trap.