Prediction accuracy of different market structures -- bookmakers versus a betting exchange

Egon Franck, Erwin Verbeek and Stephan Nuesch

International Journal of Forecasting, 2010, vol. 26, issue 3, 448-459

Abstract: There is a well-established body of literature on separately testing the prediction power of different betting market settings. This paper provides an inter-market comparison of the forecasting accuracy of bookmakers and a major betting exchange. Employing a dataset covering all football matches played in the major leagues of the "Big Five" (England, France, Germany, Italy, Spain) during three seasons (5478 games in total), we find evidence that the betting exchange provides more accurate predictions of a given event than bookmakers. A simple betting strategy of selecting bets for which bookmakers offer lower probabilities (higher odds) than the betting exchange generates above average, and in some cases even positive returns.

Keywords: Prediction; accuracy; Betting; Bookmaker; Bet; exchange; Probit; regression (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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Related works:
Working Paper: Prediction Accuracy of Different Market Structures – Bookmakers versus a Betting Exchange (2009)
Working Paper: Prediction Accuracy of Different Market Structures – Bookmakers versus a Betting Exchange (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfor:v:26:y::i:3:p:448-459

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