Efficiency of online football betting markets |
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| Institution: | 1. Departments of Economics, University Ca’ Foscari of Venice, Italy;2. Department of Economics, University of Bologna, Italy;1. Institute of Sport, Exercise and Active Living, Victoria University, PO Box 14428, Melbourne 8001, VIC, Australia;2. Sport Science and Medicine Unit, Tennis Australia, PO Box 6060, Richmond South 3121, VIC, Australia;1. Instituto Nacional de Estadística y Geografía, Mexico;2. University of Liverpool Management School;3. Università di Sassari and CRENoS, Italy;4. Instituto Flores de Lemus and Department of Statistics, Universidad Carlos III de Madrid, Spain;1. Southampton Business School, University of Southampton, UK;2. Nottingham University Business School, University of Nottingham, UK;1. School of Mathematics, University of Manchester, UK;2. Centre for Sports Business, Salford Business School, University of Salford, UK |
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| Abstract: | This paper evaluates the efficiency of online betting markets for European (association) football leagues. The existing literature shows mixed empirical evidence regarding the degree to which betting markets are efficient. We propose a forecast-based approach for formally testing the efficiency of online betting markets. By considering the odds proposed by 41 bookmakers on 11 European major leagues over the last 11 years, we find evidence of differing degrees of efficiency among markets. We show that, if the best odds are selected across bookmakers, eight markets are efficient while three show inefficiencies that imply profit opportunities for bettors. In particular, our approach allows the estimation of the odds thresholds that could be used to set profitable betting strategies both ex post and ex ante. |
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| Keywords: | Market efficiency Sports forecasting Probability forecasting Favourite–longshot bias Betting markets |
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