Against All Odds? - National Sentiment and Wagering On European Football

19 Pages Posted: 13 May 2008

See all articles by Sebastian Braun

Sebastian Braun

Kiel Institute for the World Economy - IFW

Michael Kvasnicka

RWI Essen (Berlin Office)

Date Written: March 2008

Abstract

This paper studies how national sentiment in the form of either a perception or a loyalty bias of bettors may affect pricing patterns on national wagering markets for international sport events. We show theoretically that both biases can be profitably exploited by bookmakers by way of price adjustment (odds shading). The former bias induces bookmakers to shade odds against the domestic team, the latter to adjust them in a way that depends on the demand elasticity of bettors for their national favorite. Analyzing empirically a unique data set of betting quotas from online bookmakers in twelve European countries for qualification games to the UEFAEuro 2008, we find evidence for systematic biases in the pricing of own national teams in the odds for win offered across countries.Variations in the sign and magnitude of these deviations can be explained by differences across countries in the respective strengths of the perception and loyalty biases among domestic bettors.

Keywords: Football, home bias, investment, patriotism

JEL Classification: L20, L83

Suggested Citation

Braun, Sebastian Till and Kvasnicka, Michael, Against All Odds? - National Sentiment and Wagering On European Football (March 2008). Ruhr Economic Paper No. 42. Available at SSRN: https://ssrn.com/abstract=1132766 or http://dx.doi.org/10.2139/ssrn.1132766

Sebastian Till Braun

Kiel Institute for the World Economy - IFW ( email )

United States

Michael Kvasnicka (Contact Author)

RWI Essen (Berlin Office) ( email )

Hohenzollernstr. 1-3
Berlin, 45128
Germany

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