Do bookmakers possess superior skills to bettors in predicting outcomes?

Michael A. Smith, David Paton and Leighton Vaughan Williams

Journal of Economic Behavior & Organization, 2009, vol. 71, issue 2, 539-549

Abstract: In this paper we test the hypothesis that bookmakers display superior skills to bettors in predicting the outcome of sporting events by using matched data from traditional bookmaking and person-to-person exchanges. Employing a conditional logistic regression model on horse racing data from the UK we find that, in high liquidity betting markets, betting exchange odds have more predictive value than the corresponding bookmaker odds. To control for potential spillovers between the two markets, we repeat the analysis for cases where prices diverge significantly. Once again, exchange odds yield more valuable information concerning race outcomes than the bookmaker equivalents.

Keywords: Betting; exchanges; Market; efficiency; Prediction (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (27)

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Working Paper: Do Bookmakers Possess Superior Skills to Bettors in Predicting Outcomes? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:71:y:2009:i:2:p:539-549

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