Exchange vs Dealers: A High-Frequency Analysis of In-Play Betting Prices

Karen Croxson and J Reade

Discussion Papers from Department of Economics, University of Birmingham

Abstract: We conduct the first high-frequency comparison of pricing behaviour in betting markets making use of a novel dataset of prices from the UK's two largest bookmakers and the world's largest betting exchange. We investigate price competitiveness, finding that the betting exchange structure offers customers superior returns and substantial liquidity. Given the persistence of large bookmakers, we speculate that switching costs (e.g. learning costs) must be significant. We also compare information arrival in betting markets across these two market structures. We find some support for the hypothesis that the betting exchange leads price discovery, with traditional bookmakers following.

Keywords: Information; market efficiency; gambling (search for similar items in EconPapers)
JEL-codes: C01 D0 G14 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2011-12
New Economics Papers: this item is included in nep-mst
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:bir:birmec:11-19

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