Disagreement and Market Structure in Betting Markets: Theory and Evidence from European Soccer

Tadgh Hegarty and Karl Whelan

No 202312, Working Papers from School of Economics, University College Dublin

Abstract: Online sports betting is growing rapidly around the world. We describe how the competitive structure of the bookmaking market affects odds when bettors disagree about the probabilities of the outcomes of sporting events but are on average correct. We show that the demand for bets on longshots is less sensitive to the odds than bets on favorites. This means monopolistic bookmakers will set odds exhibiting favorite-longshot bias while competitive bookmaking markets will not have this feature. We develop a version of the model for soccer matches and use these results to explain empirical findings on odds for over 80,000 European soccer games from two different bookmaking markets.

Keywords: Favorite-longshot bias; Monopoly; Sports betting (search for similar items in EconPapers)
JEL-codes: D42 G14 L83 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2023-05
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10197/24670 First version, 2023 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 405 Not Allowed (http://hdl.handle.net/10197/24670 [302 Found]--> https://researchrepository.ucd.ie/handle/10197/24670)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:202312

Access Statistics for this paper

More papers in Working Papers from School of Economics, University College Dublin Contact information at EDIRC.
Bibliographic data for series maintained by UCD School of Economics ().