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Do bookmakers possess superior skills to bettors in predicting outcomes?


Smith, Michael A.; Paton, David; Williams, Leighton Vaughan


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Abstract In this paper we test the hypothesis that bookmakers display superior skills to bettors in predicting the outcome of sporting events by using matched data from traditional bookmaking and person-to-person exchanges. Employing a conditional logistic regression model on horse racing data from the UK we find that, in high liquidity betting markets, betting exchange odds have more predictive value than the corresponding bookmaker odds. To control for potential spillovers between the two markets, we repeat the analysis for cases where prices diverge significantly. Once again, exchange odds yield more valuable information concerning race outcomes than the bookmaker equivalents.
Klassifikation Allgemeines, spezielle Theorien und "Schulen", Methoden, Entwicklung und Geschichte der Wirtschaftswissenschaften
Freie Schlagwörter betting exchanges; market efficiency; prediction
Sprache Dokument Englisch
Publikationsjahr 2009
Seitenangabe 539–549 S.
Zeitschriftentitel Journal of Economic Behavior & Organization, 71 (2009) 2
DOI http://dx.doi.org/10.1016/j.jebo.2009.03.016
Status Postprint; begutachtet (peer reviewed)
Lizenz PEER Licence Agreement (applicable only to documents from PEER project)