Prediction Accuracy of Different Market Structures – Bookmakers versus a Betting Exchange

Egon Franck, Erwin Verbeek () and Stephan Nuesch
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Erwin Verbeek: Institute for Strategy and Business Economics, University of Zurich

No 96, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: There is a well-established literature on separately testing the prediction power of different betting market settings. This paper provides an inter-market comparison of the forecasting accuracy between 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 the same underlying event than bookmakers. A simple betting strategy of selecting bets for which bookmakers offer lower probabilities(higher odds) than the bet exchange generates above average and, in some cases, even positive returns.

Keywords: Nprediction accuracy; betting; bookmaker; betting exchange; probit regression (search for similar items in EconPapers)
Pages: 25 pages
Date: 2008, Revised 2009
New Economics Papers: this item is included in nep-for and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Forthcoming International Journal of Forecasting

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http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/96_ISU_full.pdf (application/pdf)

Related works:
Journal Article: Prediction accuracy of different market structures -- bookmakers versus a betting exchange (2010)
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:iso:wpaper:0096

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