Gambling on losing teams is a legitimate strategy, but more than betting on losing teams I think it is evaluating the risk/reward scenario with a specific bet. Sure, there might be a team that is likely to win, but maybe it pays a penny to the dollar. Basically, winning that bet doesn’t make a difference. I get more entertainment out of betting longshots and making sure the reward is worth the risk.
If the popular team or fighter become an underdog, I think it's good to bet them because usually they have a good chance to pull an upset. But for a mediocre team or fighter, I don't think it's wise to bet them because they mostly lose, only few times they win.
I never want to bet on a huge underdog, it's just like a lottery where the chance to win is near to zero.
But before you place a bet on the underdog team, you should check how likely they are to win so you won't be disappointed or upset. If their odds are not big, you don't need to place a bet and just watch it. Watching them compete is also a form of support for them. After all, they also wouldn't know how many people supported them in that match. We must be wise in placing bets and not waste our money on bets. But it's okay if you want to place a small bet for your team as a form of support so that if your friends ask you, you can answer by placing a bet for your team.
At first glance, and following the elementary logic, betting on an outsider is just stupidity and madness. But this is only at first glance. If it were so, then no one would ever put their bets on such teams. But many players do have reason to make such bets. This may be, as you noted, the athletes you know are on the outsider team. And then you will not be ashamed to tell him that you believed in their victory and even put money on the victory of their team. This will definitely be a good incentive for your friend athlete. And he will certainly inform other players about it. And the mental attitude of any sports team, even an outsider, is important. So for some players, betting on an outsider team is the right thing to do, and from their point of view, this is exactly what should be done.
I don’t even remember the rare cases when outsiders win, which actually happens sometimes too. Then such bets will generally bring not a small profit. And at the same time, double joy for an accidental, so to speak, victory of your favorite team, and for winning money.