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How are Lawrenson and Merson beating the market?

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For the last six seasons, ex-Liverpool player and regular BBC pundit Mark (‘Lawro’) Lawrenson has been attempting to predict the outcome of every EPL match. Over on Sky Sports, ex-Arsenal player Paul Merson has been doing the same thing. Their predictions are published on the BBC Sport and Sky Sports websites the week before each match. But how good are they?

Last season I performed a little experiment to assess the performance of the pundit’s predictions against a clear baseline: the betting market. I placed a £1 bet on each predicted outcome – home win, away win or draw – made by Merson and Lawro, selecting the best odds offered for that outcome by one of four bookmakers[1]. Over the course of the season that amounted to 777 bets: 379 on Lawro’s predictions and 378 on Merson’s.

I did surprisingly well out of my little experiment. By the end of the season, Lawro was £63 in profit and Merson £52. This amounts to a return on investment of 17% and 14% respectively – significantly above …