The Liquidity Advantage of the Quote-Driven Market: Evidence from the Betting Industry

Raphael Flepp, Stephan Nüesch () and Egon Franck
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Stephan Nüesch: Department of Business Administration, University of Zurich

No 342, Working Papers from University of Zurich, Department of Business Administration (IBW)

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)
Pages: 25 pages
Date: 2014-10
New Economics Papers: this item is included in nep-ind and nep-mst
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http://repec.business.uzh.ch/RePEc/zrh/wpaper/342_IBW_full.pdf (application/pdf)

Related works:
Journal Article: The liquidity advantage of the quote-driven market: Evidence from the betting industry (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zrh:wpaper:342

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