Testing semi-strong efficiency in a fixed odds betting market: Evidence from principal European football leagues.

Bernardo, Giovanni and Ruberti, Massimo and Verona, Roberto (2015): Testing semi-strong efficiency in a fixed odds betting market: Evidence from principal European football leagues.

Abstract

In this paper, we try to measure the semi-strong efficiency of the sports betting market. In particular, we aim to understand whether the efficiency of the market is realized in the case of fixed odds provided by bookmakers on the four major European football championships. By examining the trends of odds in the event of some major change in expectations about the teams’ results, i.e. when a team’s coach is replaced, we attempt to verify the argument that a profitable betting strategy for the bettor is likely possible. In this case, the market that we are taking into account will be inefficient.

• Item Type: MPRA Paper
• Language: English
• Keywords: Market efficiency,semi-strong efficiency, sports betting market, fixed odds,
• Subjects: C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C80 - General; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D40 - General; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection

References

ALI M. M., Probability models on horse-race outcomes. Journal of Applied Statistics, 25(2), 221–229, 1998.

ANDERSSON P., EDMAN J., EKMAN M., Predicting the World Cup 2002 in soccer: Performance and confidence of experts and non-experts. International Journal of Forecasting, 21(3), 565–576, 2005.

ASCH P., MALKIEL B. G., QUANDT R. E., Market efficiency in racetrack betting. The Journal of Business, 57(2), 165–175, 1984.

AUDAS R., GODDARD J., & ROWE G., Modelling Employment Durations of NHL Head Coaches: Turnover and Post-succession Performance. Managerial and Decision Economics, 27, 293-306, 2006.

BOLTON R. N., CHAPMAN R. G, Searching for positive returns at the track: A multinomial logic model for handicapping horse races. Management Science, 32(8), 1040–1060, 1986.

BRIER G. W., Verification of forecasts expressed in terms of probability. Monthly Weather Review, 75, 1–3, 1950.

BROWN M.C., Administrative succession and organizational performance: The succession effect. Administrative Science Quarterly, 27, 1–16, 1982.

BUCHDAHL JOSEPH, Fixed odds sports betting, the essential guide. Highstakes, London, 2003.

CAIN M., LAW D., PEEL D., The favourite-loghshot bias and market efficiency in UK football betting. Scottish Journal of Political Economy, 47, 25-36, 2000.

CONSTANTINOU ANTHONY C., FENTON NORMAN E., Profiting from arbitrage and odds biases of the European football gambling market. The Journal of Gambling Business and Economics, Vol. 7, 2: 41-70, 2013.

CONSTANTINOU A. C., FENTON, N. E., NEIL, M., Profiting from an Inefficient Association Football Gambling Market: Prediction, risk and uncertainty using Bayesian network. Gambling Market Knowledge-Based Systems Journal Volume 50, September, 2013.

DEPAOLA M., SCOPPA V., The Effects of Managerial Turnover: Evidence from Manager Dismissals in Italian Football Teams. Journal of Sports Economics, 2012.

DESCHAMPS BRUNO, GERGAUD OLIVIER, Efficiency in betting markets: evidence from English football. The Journal of Prediction Markets 1, 61–73, 2007.

DIXON M., COLES S., Modelling association football scores and inefficiencies in the football betting market. Applied Statistics, 46, 265-80, 1997.

DIXON M. J., POPE P. F., The value of statistical forecasts in the UK association football betting market. International Journal of Forecasting, 20, 697–711, 2004.

EDELMAN D., A Competitive Horse-Race Handicapping Algorithm Based on an Analysis of Covariance. In L. Vaughan Williams, The Economics of Gambling, Routledge, London, pp. 106-113, 2003.

EPSTEIN E. S., A scoring system for probability forecasts of ranked categories. Journal of Applied Meteorology, 8, 985–987, 1969.

FABIANIC D., Managerial Change and Organizational Effectiveness in Major League Baseball: Findings for the Eighties. Journal of Sport Behavior, 17, 135-147,1994.

FAMA EUGENE F., Efficient Capital Markets: A Review of the Theory and Empirical Work. Journal of Finance, 25(2), 383-417, 1970.

FICOM LEISURE ADVISORY & INVESTMENTS, Update on Italy’s Online Betting &Gaming Market, Aprile 2011.

FORREST D., GODDARD J., SIMMONS R.. Odds-setters as forecasters: The case of English football. International Journal of Forecasting, 21, 551–564, 2005.

FORREST D., SIMMONS R., Forecasting sport: The behaviour and performance of football tipsters. International Journal of Forecasting, 16, 317–331, 2000.

FORREST D., SIMMONS R., Globalisation and efficiency in the fixed-odds soccer betting market. Centre for the Study of Gambling and Commercial Gaming, University of Salford, 2001.

FORREST D., SIMMONS R., Sentiment in the betting market on Spanish football. Applied Economics, 40, 119–126, 2008.

GODDARD J., ASIMAKOPOULOS I., Forecasting Football Results and the Efficiency of Fixed-odds Betting. Journal of Forecasting, 23, 51-66, 2004.

GRAHAM I., STOTT H, Predicting bookmaker odds and efficiency for UK football. Applied Economics, 40, 99-109, 2008.

HAUSCH D., ZIEMBA W., RUBINSTEIN M., Efficiency of the market for racetrack betting. Management Science, 27(12), 1435–1452, 1981.

HAUSCH D. B., ZIEMBA W. T., Arbitrage Strategies for Cross-Track Betting on Major Horse Races, Journal of Business, 63, pp. 61–78, 1990.

HAUSCH D. B., ZIEMBA W. T., Efficiency of sports and lottery betting markets. Handbooks in operations research and management science, 9 (18), 1995.

KUYPERS TIM, Information and efficiency: an empirical study of a fixed odds betting market. Applied Economics, 32(11), 2000.

LO S. Y., The application of ranking probability models to racetrack betting. Management Science, 41(6), 1048–1059, 1995.

MCTEER W., WHITE P.G., & PERSAD S., Manager/coach mid-season replacement and team performance in professional team sport. Journal of Sport Behaviour, 18, 58–68, 1995.

MURPHY, A. H., On the ranked probability skill score. Journal of Applied Meteorology, 8, 988–989, 1969.

POPE P. F., PEEL D. A., Information, prices and efficiency in a fixed-odds betting market. Economica, 56, 323–341, 1988.

RUE H., SALVESEN O., Prediction and retrospective analysis of soccer matches in a league. The Statistician, 49, Part 3, pp. 339-418, 2000.

SMITH M. A., The Impact of Tipster Information on Bookmakers, Prices in UK Horse-Race Markets. In L. Vaughan Williams, The Economics of Gambling, Routledge, London, pp. 67-79, 2003.

SONG C., BOULIER B. L., STEKLER H. O., The comparative accuracy of judgmental and model forecasts of American football games. International Journal of Forecasting, 23(3), 405–413, 2007.

STRUMBELJ E., ROBNIK SIKONJA M., Online bookmakers’ odds as forecasts: The case of European soccer leagues. International Journal of Forecasting 26, 482–488, 2010.

SWINDLER S., SHAW R., Racetrack wagering and the uninformed bettor: A study of market efficiency. The Quarterly Review of Economics and Finance, 35(3), 305–314, 1995.

VAUGHAN WILLIAMS LEIGHTON, Information Efficiency in Financial and Betting Markets. Edito da L. Vaughan Williams. Cambridge: Cambridge University Press, 2005.

XU JASMINE SIWEI, Online sports gambling: a look into the efficiency of bookmakers’ odds as forecasts in the case of English Premier League. Undergraduate Economics Honor Thesis, University of California, Berkeley, 2011.