Chance or Ability? The Efficiency of the Football Betting Market Revisited

Johannes Gross and Luca Rebeggiani ()

MPRA Paper from University Library of Munich, Germany

Abstract: The extent of market efficiency induced by rational behaviour of market participants is central for economic research. Many economists have already examined sports-betting markets as a laboratory to better understand trading behaviour and efficiency of stock prices while avoiding to jointly test the hypothesis of a correct capital market model. The following paper will investigate whether the European football betting market fulfils the efficiency paradigm introduced by Fama (1970) with a unique dataset allowing for an investigation of the German betting market in view of its regulatory changes recently. The analysis contributes to the literature by conducting a variety of empirical strategy including rational expectation frameworks and an ordered choice model to stress the ex post market performance from a weak and semi-strong form perspective. In view of existing market distortions as taxes, switching costs of changing betting providers and limitation in competition, the results of the analysis are indicative of a rational market equilibrium surprisingly close to the efficiency benchmark.

Keywords: Sports Betting; Gambling; Market Efficiency; Sports Economics; Market Regulation (search for similar items in EconPapers)
JEL-codes: G14 L83 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-spo and nep-upt
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Working Paper: Chance or Ability? The Efficiency of the Football Betting Market Revisited (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:87230

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