Analyzing Information Efficiency in the Betting Market for Association Football League Winners

2013 ◽  
Vol 7 (2) ◽  
pp. 55-70 ◽  
Author(s):  
Lars Magnus Hvattum
Keyword(s):  
Sports Betting ◽  
Information Efficiency ◽  
Association Football ◽  
Betting Market ◽  
Betting Markets

Sports betting markets have attracted a fair amount of research over the years. For association football, most of this research has focused on predicting the outcome of single matches and hence on the evaluating the efficiency of the match results betting markets. This paper presents a study on the betting market for league winners, a market that operates for almost a full year and therefore operates under different conditions than the relatively short-lived match results markets. Attempts are made to analyze both weak and semi-strong forms of information efficiency. Although the results are mixed, there are some indications that the market is inefficient with respect to both forms of information.

AN EXAMINATION OF IN-PLAY SPORTS BETTING USING ONE-DAY CRICKET MATCHES

2012 ◽  
Vol 1 (2) ◽  
pp. 93-109
Author(s):  
Steve Easton ◽  
Katherine Uylangco
Keyword(s):  
Financial Markets ◽  
Psychological Factors ◽  
Predictive Ability ◽  
Sports Betting ◽  
Bad News ◽  
Good News ◽  
Informational Efficiency ◽  
Betting Market ◽  
Betting Markets ◽  
Betting Odds

There is a wide literature on sports betting markets, a literature that examines the informational efficiency of these markets and uses them as laboratories to test for possible impacts of psychological factors on financial markets. The innovation of this study is the examination of price behaviour in an in-play betting market – namely that for one-day cricket. Cricket provides an ideal construct in which to examine in-play market behaviour, as it is a sport where outcomes can be calibrated as good news or bad news on a play-by-play basis. The results from an examination of over 8000 balls corresponding to over 8000 “news events” shows that the in-play betting market is one in which news is impounded rapidly into betting odds. There is also evidence that odds have a level of predictive ability with respect to outcomes from balls before they are bowled. Further, there is evidence of a drift in odds subsequent to the outcome of balls being known.

REVISITING THE “HOT HAND” HYPOTHESIS IN THE NBA BETTING MARKET USING ACTUAL SPORTSBOOK BETTING PERCENTAGES ON FAVORITES AND UNDERDOGS

2013 ◽  
Vol 5 (2) ◽  
pp. 42-56 ◽  
Author(s):  
Rodney J Paul ◽  
Andrew P Weinbach ◽  
Brad Humphreys
Keyword(s):  
Regression Models ◽  
Sports Betting ◽  
Least Squares Regression ◽  
Professional Basketball ◽  
The Public ◽  
Behavioral Bias ◽  
Hot Hand ◽  
Betting Market ◽  
Closing Price ◽  
Betting Markets

The “hot hand” hypothesis was first investigated in sports betting markets by Camerer (1989) and Brown and Sauer (1993), who examined if professional basketball teams truly could become “hot”, implying a change in their actual skill level, and if the betting market believes teams become “hot” and over bet the teams on winning streaks.   Both assumed that book makers operated a balanced book.  Recent evidence suggests that book makers do not set point spreads to balance betting on either side of games.  Book makers may price as a forecast or shade point spreads to exploit known biases.  The “hot hand” could exist, but closing point spreads may not reflect this bias due to an unbalanced book.   Using a 6 season sample of NBA betting market data, we show wagering against the “hot hand” does not win more than implied by efficiency.  However, OLS and two-stage least squares regression models show that bettors believe in the hot hand, as teams on streaks attract a significantly higher number of bets.  This illustrates that the public believes in the hot hand, reflecting an actual behavioral bias.  This bias exists even though the closing price serves as an optimal and unbiased forecast of outcomes.

IS THE SOCCER BETTING MARKET EFFICIENT? A CROSS-COUNTRY INVESTIGATION USING THE FIBONACCI STRATEGY

2013 ◽  
Vol 6 (2) ◽  
pp. 29-49 ◽  
Author(s):  
Ender Demir ◽  
Hakan Danis ◽  
Ugo Rigoni
Keyword(s):  
Value At Risk ◽  
Fibonacci Sequence ◽  
Simulated Data ◽  
Sports Betting ◽  
The Core ◽  
Betting Market ◽  
The World ◽  
Betting Markets ◽  
Cross Country ◽  
Positive Return

The sports betting industry is one of the fastest growing industries in the world and therefore the literature on sports betting has gained momentum in the last two decades. The literature mainly focuses on testing the efficiency of the sports betting market. The prediction of game outcomes or comparing the odds of bookmakers by predicted odds and the search for betting strategies which yield significant positive returns have been the core of the market efficiency tests. This study, instead of making any predictions or generating odds to be compared by bookmakers’ odds, implements the Fibonacci sequence on draws as a betting rule for 8 European soccer leagues for the seasons from 2005/2006 to 2008/2009. As the odds offered by bookmakers are narrowly distributed, implementing the Fibonacci strategy for 8 soccer leagues of Europe for 4 seasons yields positive return for all cases and also controlling with simulated data the strategy is found to be in most circumstances profitable. The results indicate that the bookmakers are inefficient in terms of predicting the draws and the soccer betting markets are inefficient. Therefore, the betters could exploit this inefficiency by following Fibonacci strategy assuming they have enough financial liquidity. Furthermore, we calculate the capital needed to pursue the strategy resorting to the Value at Risk (VaR) methodology and reveal that the VaR is only 143€ (assuming that the first bet is 1€) at 95% confidence level.

scholarly journals Are Sports Bettors Biased toward Longshots, Favorites, or Both? A Literature Review

Risks ◽  
2021 ◽  
Vol 9 (1) ◽  
pp. 22
Author(s):  
Philip W. S. Newall ◽  
Dominic Cortis
Keyword(s):  
Literature Review ◽  
Large Body ◽  
Sports Betting ◽  
Potential Outcomes ◽  
Horse Racing ◽  
Multiple Outcomes ◽  
Betting Market ◽  
Betting Markets ◽  
Individual Sports ◽  
High Chance

A large body of literature on the favorite–longshot bias finds that sports bettors in a variety of markets appear to have irrational biases toward either longshots (which offer a small chance of winning a large amount of money) or favorites (which offer a high chance of winning a small amount of money). While early studies in horse racing led to an impression that longshot bias is dominant, favorite bias has also now been found in a variety of sports betting markets. This review proposes that the evidence is consistent with both biases being present in the average sports bettor. Sports betting markets with only two potential outcomes, where the favorite therefore has a probability >0.5 of happening, often produce favorite bias. Sports betting markets with multiple outcomes, where the favorite’s probability is usually <0.5, appear more consistent with longshot bias. The presence of restricted odds ranges within any given betting market provides an explanation for why single studies support, at most, one bias. This literature review highlights how individual sports bettors might possess biases toward both highly likely, and highly unlikely, events, a contradictory view that has not been summarized in detail before.

Sports Betting and The Black-Litterman Model: A New Portfolio-Management Perspective

2021 ◽  
Vol 16 (4) ◽  
Author(s):  
Isabel Abinzano ◽  
Maria Jesus Campion ◽  
Luis Muga ◽  
Armajac Raventós-Pujol
Keyword(s):  
Portfolio Management ◽  
Sports Betting ◽  
Google Trends ◽  
Management Model ◽  
Market Prices ◽  
Management Models ◽  
Management Perspective ◽  
Portfolio Manager ◽  
Betting Markets

This paper transfers and adapts the Black-Litterman portfolio management model and its subsequent generalizations to the characteristics and specificities of assets quoted on sports betting markets. The results show that these assets are suitable for the application of portfolio management models with the possible inclusion of investors’ opinions. Information based on the variability of market prices and the attention received by NBA teams in Google Trends is successfully used to simulate the opinions expressed by a hypothetical portfolio manager. Furthermore, the assets are suitable for inclusion in portfolios in which managers are seeking returns uncorrelated with other assets.

scholarly journals Betting, Selection, and Luck: A Long-Run Analysis of Repeated Betting Markets

Entropy ◽  
2019 ◽  
Vol 21 (6) ◽  
pp. 585 ◽  
Author(s):  
Giulio Bottazzi ◽  
Daniele Giachini
Keyword(s):  
Relative Risk ◽  
The Other ◽  
Risk Averse ◽  
Quantal Response ◽  
Two Agents ◽  
Long Run ◽  
Binary Event ◽  
Betting Market ◽  
Betting Markets ◽  
The Difference

We consider a repeated betting market populated by two agents who wage on a binary event according to generic betting strategies. We derive new simple criteria, based on the difference of relative entropies, to establish the relative wealth of the two agents in the long-run. Little information about agents’ behavior is needed to apply the criteria: it is sufficient to know the odds traders believe fair and how much they would bet when the odds are equal to the ones the other agent believes fair. Using our criteria, we show that for a large class of betting strategies, it is generically possible that the ultimate winner is only decided by luck. As an example, we apply our conditions to the case of Constant Relative Risk Averse (CRRA) and quantal response betting.

HOME BIAS AND INTERNATIONAL BETTING MARKETS: CAN INSTITUTIONAL CONSTRAINTS AND BEHAVIORAL BIASES LEAD TO ARBITRAGE PROFITS?

2013 ◽  
Vol 4 (3) ◽  
pp. 20-30
Author(s):  
Ludwig Chincarini ◽  
Christina Contreras
Keyword(s):  
Home Country ◽  
Home Bias ◽  
Sports Betting ◽  
Institutional Constraints ◽  
Small Data ◽  
Bias Effect ◽  
Data Set ◽  
Small Data Set ◽  
Betting Markets ◽  
European Football

The international sports betting markets are becoming more global, but there is still a large concentration of local bettors in gambling markets of individual countries. Home loyalty and other patterns of human behavior might lead to odds for international competitions being different in different countries with less favorable odds being quoted in the home country; the home bias effect. In this paper we explain the logic of this phenomena and examine a small data set to show the existence of the bias in three different sports: tennis, golf, and European football. We also suggest ideas for a more thorough investigation of the home bias phenomenon.

Information Efficiency in High-Frequency Betting Markets

2013 ◽  
pp. 209-232
Author(s):  
J. James Reade ◽  
John Goddard
Keyword(s):  
High Frequency ◽  
Information Transfer ◽  
Academic Research ◽  
Strong Form ◽  
Sporting Events ◽  
Information Efficiency ◽  
Wide Range ◽  
Betting Markets ◽  
Online Betting ◽  
Form Information

The betting industry has been transformed by the Internet. Growth of person-to-person betting, mediated through online betting exchanges, has been a key element of this transformation. Betting exchanges enable traders to either back (buy) or lay (sell) bets on a wide range of sporting events. Such continuously operating online betting markets have ensured the transition of the use of high-frequency data (sub-daily sampling) from the financial setting into the betting market context. This chapter reviews recent academic research on the topic of information efficiency in high-frequency, in-play football betting markets. Several studies have reported evidence violating weak-form information efficiency, in the form of a favorite-longshot bias in in-play betting prices. However, there is evidence in the literature in favor of semi-strong form information efficiency. One study reports interesting evidence in support of strong-form information efficiency. As in-play betting markets continue to develop, driven by further improvements in computing power, parallel growth is anticipated in research on information transfer and price formation in financial markets, an exciting new arena for academic study.

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