The liquidity advantage of the quote-driven market: Evidence from the betting industry

Raphael Flepp, Stephan Nüesch and Egon Franck

The Quarterly Review of Economics and Finance, 2017, vol. 64, issue C, 306-317

Abstract: Even though betting exchanges are considered to be the superior business model in the betting industry due to less operational risk and lower information costs, bookmakers continue to be successful. We explain the puzzling coexistence of these two market structures with the advantage of guaranteed liquidity in the bookmaker market. Using matched panel data of over 1.8 million bookmaker and betting exchange odds for 17,410 soccer matches played worldwide, we find that the bookmaker offers higher odds and bettor returns than the betting exchange when liquidity at the betting exchange is low.

Keywords: Market structure; Liquidity; Betting industry (search for similar items in EconPapers)
JEL-codes: D40 L10 L83 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: The Liquidity Advantage of the Quote-Driven Market: Evidence from the Betting Industry (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:64:y:2017:i:c:p:306-317

DOI: 10.1016/j.qref.2016.07.016

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