How the bettors' markets predict second-half baseball

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Brandon Belt #9 of the San Francisco Giants slides into Freddy Galvis #13 of the Philadelphia Phillies to break up a double play during the seventh inning at AT&T Park on July 11, 2015 in San Francisco, California.

Major League Baseball just finished its All-Star Game, the midway point of the season, and now teams will start looking toward October. The standings may seem set for postseason play, but don't bet on it.

People who do the actual betting have different ideas. Statisticians at The Power Rank, a sports data and prediction subscription service, use probabilities from the gambling markets to calculate expected records for the teams.

"The markets are very sharp in baseball, as even the best bettors find it hard to make much of a return," said Ed Feng, who runs The Power Rank. "This implies that the expected records from the markets reflect team strength."

Using the moneyline at the close of betting, Feng calculates the implied probability for each game. Compiling the data for games throughout the first half of the season, Feng's system gives us the expected record for each team. Even if they haven't reached that winning percentage by the All-Star break, we can expect teams' records to improve or decline in line with the predictions.

From these calculated metrics, we can see what teams the gambling markets undervalued and which were overblown in their expectations for the 2015 season.

For example, the Minnesota Twins were largely undervalued compared with their performance so far this year. Their current record of 49-40 gives them a winning percentage of .551, 10 points higher than the market predicted.

The markets were not optimistic about the Kansas City Royals this year either, predicting a winning percentage just over .500. Still, the American League Central's first-place team is running above .600 and started three players in Tuesday's All-Star Game, more than any other team.

"As long as a team fields the same players, I expect the teams to perform in the future according to these expected records," Feng said. "Of course, this may change due to injuries or player trades."

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In the National League, the last-place Philadelphia Phillies were expected to do better than their 29-62 record. While they may be written out of postseason play, the markets expect their winning percentage to improve above .400 by October.

Meanwhile the Cardinals, who have won 56 out of their 89 games so far, were vastly undervalued by the markets.

Predicting the postseason

Even with the unusual weakness in the AL East, the Baltimore Orioles are unlikely to make the playoffs, according to the markets. We could expect the fifth-place Red Sox to make a second-half comeback to vie for the division title. The markets overvalued Boston so far this year by more than 5 percentage points.

If the markets are right, here's what the postseason will look like.