An Application of Expert Information to Win Betting on the Kentucky Derby, 1981—2005

Roderick S. Bain, Donald B. Hausch and William T. Ziemba

Chapter 18 in Sports Analytics, 2022, pp 283-301 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The Kentucky Derby features top three-year-old thoroughbred horses. Run at 114 miles, it is typically at least 1/8 mile longer than any of the horses has raced before. This extra distance, combined with a large field, makes the race a difficult test of stamina for horses this young. Bettors, because there is no direct evidence of whether a horse has the stamina to compete effectively at 114 miles, are also challenged. The informational content of one publicly available, pedigree-based measure of stamina, the Dosage Index, is used with simple performance measures to identify a semi-strong-form inefficiency, and to create a betting scheme based on the optimal capital growth model that merges these criteria with the public’s opinion. Statistically significant profits, net of transaction costs, could have been achieved during the period 1981 to 2005.

Keywords: Sports Analytics; Statistical Analysis of Sports Decisions; NFL Football; Thoroughbred Racing; Basketball; Baseball; Hockey; Jai Alai; Optimal Betting Strategies; Mean Reversion Risk; Arbitrage; Decision Strategies by Coaches (search for similar items in EconPapers)
JEL-codes: C1 L83 Z2 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789811250217_0018 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789811250217_0018 (text/html)
Ebook Access is available upon purchase.

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:wsi:wschap:9789811250217_0018

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().