Home advantage and mispricing in indoor sports’ ghost games: the case of European basketball

Several recent studies suggest that the home advantage, that is, the benefit competitors accrue from performing in familiar surroundings, was - at least temporarily - reduced in games played without spectators during the COVID-19 Pandemic. These games played without fans during the Pandemic have been dubbed 'ghost games'. However, the majority of the research to date focuses on soccer and no contributions have been provided for indoor sports, where the effect of the support of the fans might have a stronger impact than in outdoor arenas. In this paper, we fill this gap by investigating the effect of ghost games in basketball. In particular, we test (i) for the reduction of the home advantage in basketball, (ii) whether such reduction tends to disappear over time, (iii) if the bookmakers promptly adapt to such structural change or whether mispricing was created on the betting market. The results from a large data set covering all seasons since 2004 for the ten most popular basketball leagues in Europe show an overall significant reduction of the home advantage of around 5% and no evidence that suggests that this effect has been reduced at as teams became more accustomed to playing without fans. At the same time, bookmakers appear to have anticipated such an effect and priced home wins in basketball matches accordingly, thus avoiding any mispricing on betting markets.