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

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.

Player Pricing Mechanisms and the Daily Fantasy Sport Chance Versus Skill Debate

Differentiating and defining games of skill versus chance have major legal implications when classifying gambling, especially in relation to daily fantasy sports in the United States. This paper provides a theoretical discussion and introduces an empirical approach to analyzing game player pricing mechanisms. If game pricing mechanisms are fully efficient—player prices fully reflect the expected contributions from players—then that game is one of chance since there is no opportunity for skill to play a role in outcomes. This paper examines player prices from DraftKings’ daily fantasy football product. Empirical results show that there are strategies deriving from the pricing mechanism that can be incorporated by skilled participants to increase their expected performance and improve their chances of winning. This provides evidence that daily fantasy sports are skill-based—a necessary condition for skill to be a predominant factor in game outcomes as part of the legal debate.

The Effects of (Un)Expected Match Outcomes on Stock Return: A Case Study of Borussia Dortmund

We analyze the nature of stock price reactions of Borussia Dortmund, the only publicly traded soccer club in Germany, following domestic league and international matches over an extended period of time. Our results suggest that abnormal returns vary with the match result, the match venue, the competition type, bookmakers’ expectations, and the importance of the Bundesliga match. Although our results confirm the evidence presented in previous studies, they are surprising insofar as the legal form of Borussia Dortmund GmbH & Co. KGaA—a mixture of a stock company (AG) and a limited partnership (KG)—is quite different from that of traditional stock companies. From a theoretical perspective, diluted property rights and a lack of managerial monitoring are the main characteristics of this legal form. However, the club managers’ career concerns and the competitive pressures of the football industry seem to compensate for these deficits in the organizational architecture.

Domestic League Competitive Balance and UEFA Performance

This paper investigates the relationship between European football league competitive balance and the performance of that league’s participants in UEFA competitions. The evidence suggests that competitive balance measured using performance points fits the performance coefficients of countries participating in the Champions League and Europa League and that a reciprocal model fits the data best. The evidence suggests that marginal improvements in competitive balance can lead to increase of one-third a win for a league’s participants in the Champions League. The increased rewards for UEFA success suggest policies that promote competitive balance have both public and private benefits for clubs.

Impacts of International Sports Events on the Stock Market: Evidence from the Announcement of the 18th Asian Games and 30th Southeast Asian Games

This paper assesses the influence of hosting major international sporting competitions on the host countries’ stock market performance before and after the announcement of such events. Specifically, this study explores whether stock markets of hosting countries experience cumulative average abnormal return (CAAR) during the aforementioned period. For the purposes of investigation, the study considers announcements of the 18th Asian Games and 30th Southeast Asian Games hosted by Indonesia and the Philippines, respectively. The LQ45 index of the Indonesia Stock Exchange (IDX) and PSEi index of the Philippines Stock Exchange (PSE) were chosen to test the significance of these events. It is found that only PSE experienced a significantly positive CAAR for the event. Findings of this study can make a significant contribution to helping national governments and investors understand the significance of sports to the economies of developing countries and how major sports events can improve stock market efficiency.

Soccer Clubs and Diminishing Returns: The Case of Paris Saint-Germain

Paris Saint-Germain (PSG), one of France’s top soccer clubs, was bought by Qatar Sports Investments (QSI) in 2011. Since then, the club’s expenditure has risen precipitously, as have its victories. In this paper, we ask whether this represents value for money. We find that the efficiency of PSG did not deteriorate following the takeover. However, while PSG operated close to the production frontier in terms of converting resources to points, it scored vastly more points than was necessary to win the league. We estimate that PSG spent €140m more than was necessary to win the French league in 2016/2017. Since 2011, PSG is estimated to have overspent by up to €600m. This expenditure could be thought of as being merely the price of creditable performance at a European level, but we show that it has brought less success than would be expected.

Baseball Home Field Advantage Without Fans in the Stands

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

Are Sports Betting Markets Semi-Strong Efficient? Evidence From the COVID-19 Pandemic

This paper examines whether sports betting markets are semi-strong form efficient—i.e., whether new information is rapidly and completely incorporated into betting prices. We use news on ghost games in the top European football leagues due to the COVID-19 pandemic as a clean arrival of new public information. Because spectators are absent during ghost games, the home advantage is reduced, and we test whether this information is fully reflected in betting prices. Our results show that bookmakers and betting exchanges systematically overestimated a home team’s winning probability during the first period of the ghost games, which suggests that betting markets are, at least temporally, not semi-strong form efficient. Examining different leagues, we find that our main results are driven by the German Bundesliga, which was the first league to resume operations. We exploit a betting strategy that yields a positive net payoff over more than one month.

Uncertainty of Outcome and Attendance: Evidence from Russian Football

In this study, we estimate an attendance demand model in a reduced form, with uncertainty as one of the determinants of demand, to test the uncertainty of outcome hypothesis (UOH). Data from the Russian Football Premier League (RFPL) are used. These data fit our requirements for two reasons. First, there are few sellout matches, so demand for tickets in the RFPL is not restricted by stadium capacity. Secondly, there have been no articles devoted to the study of outcome uncertainty in the RFPL. The results indicate that the UOH does not explain the behavioral pattern of attendees in the RFPL. The dependence between attendance and uncertainty is U-shaped. We observe some evidence that attendee’s utility in the RFPL depends more on seeing a home team win.

Nationality-Based Prejudice in Sports: Fan Demand for Foreign Athletes in the Czech

This paper aims to answer the question of whether fans discriminate against foreign athletes. It uses data from the fantasy sports environment. The sample consists of 11 rounds in the football competition in Czechia during the 2015–2016 season. A total of 8,036 people participated in the game, and they completed a total of 53,951 squads. The final dataset consists of 3,741 observations of a specific footballer in a single round. The results show that Czech fantasy sports users prefer domestic players. The influence of the players’ origin varies depending on the region they are from. The results show that Asian and Eastern European countries, namely Croatia, Serbia, and Slovakia, present a negative influence. On the other hand, Czechs prefer players from South America and Russia. In the case of African and Western European countries, the influence is insignificant in the models. Performance, however, influences the demand for athletes the most.