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Do bookmakers possess superior skills to bettors in predicting outcomes?
[journal article]
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... view more
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.... view less
Classification
Basic Research, General Concepts and History of Economics
Free Keywords
betting exchanges; market efficiency; prediction
Document language
English
Publication Year
2009
Page/Pages
539–549 p.
Journal
Journal of Economic Behavior & Organization, 71 (2009) 2
DOI
https://doi.org/10.1016/j.jebo.2009.03.016
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)