Inter‐Market Arbitrage in Betting

26 Pages Posted: 14 Mar 2013

See all articles by Egon P. Franck

Egon P. Franck

University of Zurich - Department of Business Administration (IBW)

Erwin Verbeek

University of Zurich - Department of Business Administration (IBW)

Stephan Nuesch

University of Zurich - Department of Business Administration (IBW)

Date Written: April 2013

Abstract

We show that a combined bet at the bookmaker and at the bet exchange market yields a guaranteed positive return in 19.2% of the matches in the top five European soccer leagues. Moreover, we find that all considered bookmakers frequently offer arbitrage positions, and that they experience, on average, negative margins from these postings. Our findings indicate that bookmakers set prices not only by optimizing over a particular bet, but also by taking the future trading behaviour of their customers into account. We discuss the implications for the literature on the relationship between betting market structure and informational efficiency.

Suggested Citation

Franck, Egon P. and Verbeek, Erwin and Nuesch, Stephan, Inter‐Market Arbitrage in Betting (April 2013). Economica, Vol. 80, Issue 318, pp. 300-325, 2013, Available at SSRN: https://ssrn.com/abstract=2233213 or http://dx.doi.org/10.1111/ecca.12009

Egon P. Franck (Contact Author)

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich 8032
Switzerland
+41 1 634 28 45 (Phone)

Erwin Verbeek

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland

Stephan Nuesch

University of Zurich - Department of Business Administration (IBW) ( email )

Hottingerstrasse 10
Plattenstrasse 14
Zurich, 8032
Switzerland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
825
PlumX Metrics