Information and Idiosyncratic Risk in the NCAA Men's Basketball Betting Market

Ira Horowitz
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Ira Horowitz: University of Florida

Journal of Gambling Business and Economics, 2011, vol. 5, issue 3, 27-42

Abstract: Betting lines and scores from the 2009/10 college basketball season for 169 mid-major and major colleges are used to verify the efficiency hypothesis for the betting-market analogy to the CAPM-based market model. As in that model, the portion of the variance in the spreads that is unexplained by the betting lines is the idiosyncratic risk associated with a team’s games. The paper shows that this risk is due to team-specific and conference-specific informational and consistency-of-play factors that impact bettors’ decisions.

Keywords: information; idiosyncratic risk; NCAA basketball; betting markets; market efficiency; synchronicity; CAPM market model; competitive balance; power ratings; team-specific information; conference-specific information (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Date: 2011
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