Profitable Robot Strategies in Pari‐Mutuel Betting

21 Pages Posted: 8 Apr 2017

See all articles by Petter Bjerksund

Petter Bjerksund

Norwegian School of Economics (NHH) - Department of Business and Management Science

Gunnar Stensland

Norwegian School of Economics (NHH) - Department of Business and Management Science

Date Written: April 7, 2017

Abstract

We have collected odds and results from 7,474 horse races in Norway and Sweden for a period of approximately 1.5 years. Based on the odds from the win game, we construct a profitable betting strategy for the corresponding triple game. Given a 30% track take, the existence of a profitable strategy is surprising. A robot is typically needed to identify and exploit underrated bets. We argue that the existence of heterogeneous beliefs between players in the market might form a basis for profitable betting strategies. We did expect that bigger pools (more liquidity) would remove this anomaly. That is not the case. More players, and thereby bigger pools, increases the profitability of the system.

Keywords: Horse races, low odds bias, heterogeneous beliefs

JEL Classification: L83

Suggested Citation

Bjerksund, Petter and Stensland, Gunnar, Profitable Robot Strategies in Pari‐Mutuel Betting (April 7, 2017). NHH Dept. of Business and Management Science Discussion Paper No. 2017/6. Available at SSRN: https://ssrn.com/abstract=2948308 or http://dx.doi.org/10.2139/ssrn.2948308

Petter Bjerksund (Contact Author)

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Gunnar Stensland

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

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