Information Asymmetry in the NFL Gambling Market: Inside Information Versus Informed Bettors

Abstract

I employ a unique NFL gambling dataset to disentangle information asymmetry between bettors and sportsbooks. In contrast to expectations, I find no evidence that sportsbooks hold more information than the bettors. In fact, the results show that in instances where sportsbooks behave as if they are informed, the market is inefficient and gamblers are earning a profit. One explanation for these results is that gamblers are more informed than the sportsbooks.

Keywords: Financial Markets, Gambling, Information Asymmetry, Market Efficiency, Sports Betting

JEL Classification: D82, G1, G4, L83