Information, Prices and Efficiency in An Online Betting Market

13 Pages Posted: 23 May 2019 Last revised: 11 Sep 2019

See all articles by Guy Elaad

Guy Elaad

Ariel University

James Reade

University of Reading

Carl Singleton

Department of Economics, University of Reading

Date Written: September 9, 2019

Abstract

We contribute to the discussion on betting market efficiency by studying the odds (or prices) set by fifty-one online bookmakers, for the result outcomes in over 16,000 association football matches in England since 2010. Adapting a methodology typically used to evaluate forecast efficiency, we test the Efficient Market Hypothesis in this context. We find odds are generally not biased when compared against actual match outcomes, both in terms of favourite-longshot or outcome types. But individual bookmakers are not efficient. Their own odds do not appear to use fully the information contained in their competitors' odds.

Keywords: Prediction Markets, Efficient Market Hypothesis, Favourite-Longshot Bias

JEL Classification: C53, G14, Z29

Suggested Citation

Elaad, Guy and Reade, James and Singleton, Carl, Information, Prices and Efficiency in An Online Betting Market (September 9, 2019). Finance Research Letters, 2019, Available at SSRN: https://ssrn.com/abstract=3378257 or http://dx.doi.org/10.2139/ssrn.3378257

Guy Elaad

Ariel University ( email )

Ariel, 40700
Israel

James Reade

University of Reading

Carl Singleton (Contact Author)

Department of Economics, University of Reading ( email )

Whiteknights
Reading, Berkshire RG6 6AH
United Kingdom

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