I think this is a fundamentally different way of thinking that we have. The way to win at betting is to have a better distribution than the other guy. You don’t need to have high confidence about any particular outcome, you just need to recognize when the distribution of odds differ from the true odds. Strong favorites in a low information environment indicate a chance to make good money. Sure, any given low information environment, like a papal conclave, may occur infrequently, and you could lose money on any one event, as is the nature of betting, but if you can recognize when the market is likely to be wrong you can extract money from it. Really, that is the only way to extract money from it.

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In situations like this it may make sense to just bet on all the underdogs. The market is highly overconfident in its information, you think the market’s information is crap, so you just bet against the market by taking the underdogs.