A Syracuse University study finds that NFT fantasy sports markets exhibit the same hot hand bias seen in traditional sports betting. Buyers overpay for players on hot streaks, yet performance reverts to baseline by 93-95%. The research was presented at the 19th International Conference on Gambling & Risk Taking at the Bellagio.
This article was produced in collaboration with Syracuse University as part of our commitment to supporting independent research in sports economics and gambling markets.
New research out of Syracuse University has found that the same psychological bias that can influence traditional sports bettors may also be driving prices in NFT fantasy sports markets. The paper, titled "Price in the Player? Testing Performance-Based Mispricing in NFT Fantasy Sports Markets", was presented at the 19th International Conference on Gambling & Risk Taking, held May 26 to 28 at the Bellagio Resort & Casino in Las Vegas.
Hosted and organized by the University of Nevada, Las Vegas' (UNLV) International Gaming Institute (IGI), the conference is widely regarded as the largest and oldest academic gathering devoted to gambling research.
The paper comes from a four-person research team with deep roots in sports economics. It was written by Nick Riccardi (Ph.D. candidate and adjunct professor at Syracuse University), Rodney Paul (professor, department chair, and director of the Sport Analytics Program at Syracuse), Andrew Weinbach (professor of economics at Coastal Carolina University), and Hamid Ekbia (director of Autonomous Systems Policy Institute at Syracuse).
The research examines Sorare, a blockchain platform where collectors buy and sell digital cards tied to real professional soccer players. The team found evidence that buyers pay a premium for players riding a hot streak, even though that streak typically says little about what comes next.
Some sports bettors also show similar tendencies. When a team wins three or four games in a row, money tends to pour in on that team to keep winning, even when nothing about the underlying matchup has actually changed. Economists call this the hot hand bias, and it has shown up in betting markets for decades. The Syracuse University study found the same pattern playing out in the resale market for NFT fantasy soccer cards.
Speaking about why they decided to conduct the study and what they set out to find, Nick Riccardi said, "We decided to conduct [the study] as these markets are understudied. The NFT market is a new and unique sports gambling market."
Sorare issues licensed digital player cards on the Ethereum blockchain. Each card represents a real professional soccer player and comes in one of two rarity tiers: Rare (with 100 cards issued per player per season) and Super Rare (with only 10). Cards carry a serial number, a grade from 1 to 5, and an experience score, and every transaction is permanently recorded on the blockchain, giving researchers a clean view of exactly how prices move over time.
Card owners can use them to compete in fantasy contests, where a card earns a 5% score boost while its real-world league is active, and the same cards trade on an open secondary market where collectors buy and sell based on what they think a player's card is worth.
Unlike a betting line, which resets before every game, a card's price with Sorare can drift for weeks or months based on whatever a player has done most recently on the field.
To test for mispricing in the "Price in the Player? Testing Performance-Based Mispricing in NFT Fantasy Sports Markets" research, the team built a dataset linking real-world player performance to actual Sorare transaction records. They ran three separate statistical tests, each targeting a different piece of the puzzle, and the results lined up across all three tests.
Nick Riccardi said, "For our NFT study, it appears that participants are having strong overreactions to player performance. This speaks to the broader aspects of hot hand bias that we see across traditional fantasy sports and overall sports betting markets."
A one standard deviation increase in a player's performance over their last 5 games, relative to their career average, was associated with a 40% to 50% increase in the card's resale price compared to its previous sale.
The relationship was not a straight line, either. The price premium accelerates as performance gets more extreme, and an exceptional run of form can push resale prices up by more than 100%.
When the researchers checked whether that improved recent form actually carried forward, they found almost none of it did. For every one standard deviation increase in a player's performance over their last 5 games, the model predicted only a 0.05 to 0.07 standard deviation improvement in that player's performance over the following 5 games.
Performance reverted back toward a player's career baseline by roughly 93% to 95%. The streak buyers were paying a premium for what turned out to be mostly noise rather than a real signal of improved ability.
Card owners were somewhat more likely to list a card for sale shortly after a player put together a strong run of games, though the Syracuse researchers note that this effect was modest and not nearly as statistically strong as the pricing and persistence results.
Taken together, the three findings describe a familiar pattern from behavioral economics. Market participants tend to overreact to short-term results; prices move accordingly, and reality eventually catches up once the streak ends.
Many researchers have documented hot hand bias in sportsbooks. Paul and Weinbach's own 2005 study found that NBA bettors overbet large favorites and teams on winning streaks, assuming recent success would continue.
A 2023 paper from Syracuse University assistant professor Jeremy Losak, written with Weinbach and Paul, found a similar pattern in daily fantasy baseball, where players favor hitters who have been performing well in their most recent games despite weak evidence that streaks persist.
The Syracuse team's findings add new data to a long-running story about how some tend to misjudge streaks, whether they are betting on a team, drafting a fantasy lineup, or bidding on a digital trading card. What stands out is how consistent the bias turns out to be across formats.
It's also worth noting that the research has continued to evolve since it was presented at the International Conference on Gambling & Risk Taking back in May. According to Nick Riccardi, following feedback received at the conference from attendees and fellow researchers, the team has refined parts of the research and updated some of its estimates. Nick says that "our research suggests all the same conclusions", but an amended draft of the study is expected to provide a more detailed picture.
Ziv has been covering the iGaming industry for over 25 years, having held senior positions at casino technology companies. He is a slots aficionado who loves the overlap between technology and players, and he loves spending days in Las Vegas, tribal casinos, and other casino floors across the country.
