Sentimental Preferences and the Organizational Regime of Betting Markets

Egon Franck, Erwin Verbeek () and Stephan Nuesch
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Erwin Verbeek: Institute for Strategy and Business Economics, University of Zurich

No 89, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: We analyze the price impact of sentimental bettor preferences within a bookmaker betting market. Our model demonstrates that, under reasonable assumptions about the nature of demand in a market with strong competition, the bookmaker will offer lower prices for bets with comparatively stronger demand. Using a sample of more than 16,000 English soccer matches we find evidence that more favorable odds are extended to bets on more popular clubs and that this effect is amplified on weekends when sentimental bettors face lower opportunity costs to wager. Our findings help to explain why the market for sports gambling operates as a hybrid structure with bookmakers able to attract a considerable share of the betting volume although identical contracts are traded on exchange markets at lower costs; the organizational design of a quote-driven market enables the dealer to take advantage of sentimental bettor preferences.

Keywords: betting; market structure; sentiment; price elasticity (search for similar items in EconPapers)
JEL-codes: D11 D12 D21 D81 G14 (search for similar items in EconPapers)
Pages: 28
Date: 2008, Revised 2010
New Economics Papers: this item is included in nep-cbe and nep-spo
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Citations: View citations in EconPapers (4)

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http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/89_ISU_full.pdf First version, 2008 (application/pdf)

Related works:
Journal Article: Sentimental Preferences and the Organizational Regime of Betting Markets (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:iso:wpaper:0089

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