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Gambling on Momentum

Marius Ötting (), Christian Deutscher (), Carl Singleton and Luca De Angelis
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Marius Ötting: Deparment of Business Administration and Economics and Department of Sport Science, Bielefeld University
Christian Deutscher: Deparment of Business Administration and Economics and Department of Sport Science, Bielefeld University

No em-dp2022-10, Economics Discussion Papers from Department of Economics, University of Reading

Abstract: Sports betting markets are proven real-world laboratories to test theories of asset pricing anomalies and risky behaviour. Using a high-frequency dataset provided directly by a major bookmaker, containing the odds and amounts staked throughout German Bundesliga football matches, we test for evidence of momentum in the betting and pricing behaviour after equalising goals. We find that bettors see value in teams that have the apparent momentum, staking about 40\% more on them than teams that just conceded an equaliser. Still, there is no evidence that such perceived momentum matters on average for match outcomes or is associated with the bookmaker offering favourable odds. We also confirm that betting on the apparent momentum would lead to substantial losses for bettors.

Keywords: Behavioural bias; Betting markets; Market efficiency; Momentum; Risk-taking (search for similar items in EconPapers)
JEL-codes: G14 G41 L83 Z2 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2022-11-11
New Economics Papers: this item is included in nep-mst and nep-spo
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