Market efficiency and the favorite–longshot bias: evidence from handball betting markets

2017 ◽  
pp. 105-117
Author(s):  
Arne Feddersen
Keyword(s):  
Market Efficiency ◽  
Betting Markets

What Explains The Existence of an Exchange Overround?

2013 ◽  
pp. 275-297
Author(s):  
David Marginson
Keyword(s):  
United Kingdom ◽  
Market Efficiency ◽  
Positive Relationship ◽  
Microstructure Analysis ◽  
Horse Race ◽  
The United Kingdom ◽  
Betting Markets ◽  
Using Data ◽  
Starting Price

This chapter analyzes factors that may explain the existence and magnitude of starting price–based overrounds on Betfair, the leading and globally dominant person-to-person Internet betting site. Drawing on both finance and horse race betting literatures, several hypotheses are developed and tested, using data on 2,184 horse races in the United Kingdom between 2008 and 2010. Results are discussed and explanations offered for the findings, such as a positive relationship between grade of race and Betfair overround (the higher the grade, the higher the overround). More broadly, this research suggests that microstructure analysis of order-driven betting markets, such as Betfair, constitutes a fruitful line of enquiry for those interested in understanding market efficiency.

Anomalies: Parimutuel Betting Markets: Racetracks and Lotteries

1988 ◽  
Vol 2 (2) ◽  
pp. 161-174 ◽  
Author(s):  
Richard H Thaler ◽  
William T Ziemba
Keyword(s):  
Stock Market ◽  
Market Efficiency ◽  
Empirical Research ◽  
Stock Markets ◽  
Cash Flows ◽  
Present Value ◽  
Betting Markets ◽  
Future Cash Flows ◽  
Termination Point ◽  
Parimutuel Betting

Economists have given great attention to stock markets in their efforts to test the concepts of market efficiency and rationality. Yet wagering markets are, in one key respect, better suited for testing market efficiency and rationality. The advantage of wagering markets is that each asset (bet) has a well-defined termination point at which its value becomes certain. The absence of this property is one of the factors that has made it so difficult to test for rationality in the stock market. Since a stock is infinitely lived, its value today depends both on the present value of future cash flows and on the price someone will pay for the security tomorrow. Indeed, one can argue that wagering markets have a better chance of being efficient because the conditions (quick, repeated feedback) are those which usually facilitate learning. However, empirical research has uncovered several interesting anomalies. While there are numerous types of wagering markets, legal and otherwise, this column will concentrate on racetrack betting and lotto-type lottery games.

Baseball Home Field Advantage Without Fans in the Stands

2021 ◽  
Vol 16 (3) ◽  
Author(s):  
Jeremy Losak ◽  
Joseph Sabel
Keyword(s):  
Market Efficiency ◽  
Natural Experiment ◽  
Major League Baseball ◽  
Small Sample ◽  
Significant Evidence ◽  
Home Team ◽  
Home Field Advantage ◽  
Major League ◽  
Betting Markets ◽  
Home Conditions

Home field advantage is universally accepted across most major sports and levels of competition. However, exact causes of home field advantage have been difficult to disentangle. The COVID-19 pandemic offers a unique, natural experiment to isolate elements related to home field advantage since all 2020 regular season Major League Baseball games were played without fans. Results provide no statistically significant evidence of a difference in home field advantage between the 2019 and 2020 seasons, evidence that home crowd support is not a driver of home field advantage. There does appear to be a statistical advantage by the home team batting second in the inning. Travel fatigue seems to have no impact on home field advantage, and while home field advantage seems to increase throughout the 2020 season, we chalk that up to small sample noise. Despite lacking historical precedence, betting markets seemingly respond efficiently to the new home conditions. Keywords: home field advantage, market efficiency, baseball, ghost games

The Efficiency of Pelota Betting Markets

2013 ◽  
pp. 171-193
Author(s):  
Loreto Llorente ◽  
Josemari Aizpurua ◽  
Javier Puértolas
Keyword(s):  
Market Efficiency ◽  
Preliminary Analysis ◽  
Field Data ◽  
Future Research ◽  
Hedging Strategies ◽  
Betting Market ◽  
Betting Markets

In pelota matches, which are games with two mutually exclusive and exhaustive outcomes, wagers on the winner are made between viewers through a middleman who receives 16 percent of the payout. This chapter presents an analysis of this betting market under three different concepts of market efficiency widely utilized in the literature. Attention is then turned to another concept of market efficiency with the preliminary analysis of a set of field data. Finally, some insights are provided for future research on hedging strategies in these markets.

How do Bookmakers Interpret Running Performance of Teams in Previous Games? Evidence From the Football Bundesliga

2020 ◽  
pp. 152700252097582
Author(s):  
Brian P. Soebbing ◽  
Pamela Wicker ◽  
Daniel Weimar ◽  
Johannes Orlowski
Keyword(s):  
Market Efficiency ◽  
Regression Models ◽  
Science Studies ◽  
Beta Regression ◽  
Running Performance ◽  
Sports Science ◽  
Total Distance ◽  
Betting Markets ◽  
Using Data ◽  
Sports Sciences

This study examines how running performance (intensive runs, total distance covered) of football teams in previous games impacts betting markets as it relates to expected win probability. Theoretically, bookmakers could interpret team’s running performance as effort or fatigue, with sports science studies suggesting that distance covered reflects effort and intensive runs signal fatigue. Using data from the 2011/12-2018/19 seasons of the German Bundesliga, beta regression models reveal that bookmakers interpret team’s running performance in previous games contrary to physiological explanations in sports sciences. Tests of market efficiency incorporating these findings do not find a profitable betting strategy for bettors.

Point-Spread Wagering Markets' Analogue to Realized Return in Financial Markets

2011 ◽  
Vol 13 (5) ◽  
pp. 554-566 ◽  
Author(s):  
Greg Durham ◽  
Mukunthan Santhanakrishnan
Keyword(s):  
Financial Markets ◽  
Market Efficiency ◽  
Asset Price ◽  
Rational Behavior ◽  
Sporting Events ◽  
Point Spread ◽  
Betting Markets

Tests for market efficiency and rational behavior in financial markets commonly utilize realized return as the variable of interest. Researchers who study point-spread wagering markets for sporting events generally agree that the point spread is these markets' analogue to asset price in financial markets. An issue that is less clear, to date, is upon exactly which variable researchers should focus when testing for efficiency and rationality in point-spread betting markets. The objective of this article is to verify that change in point spread is an acceptable proxy for realized return.

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