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Inter-market arbitrage in betting - Zurich Open Repository and Archive


Franck, Egon; Verbeek, Erwin; Nüesch, Stephan (2013). Inter-market arbitrage in betting. Economica, 80(318):300-325.

Abstract

We show that a combined bet at the bookmaker and at the bet exchange market yields a guaranteed positive return in 19.2% of the matches in the top five European soccer leagues. Moreover, we find that all considered bookmakers frequently offer arbitrage positions, and that they experience, on average, negative margins from these postings. Our findings indicate that bookmakers set prices not only by optimizing over a particular bet, but also by taking the future trading behaviour of their customers into account. We discuss the implications for the literature on the relationship between betting market structure and informational efficiency.

Abstract

We show that a combined bet at the bookmaker and at the bet exchange market yields a guaranteed positive return in 19.2% of the matches in the top five European soccer leagues. Moreover, we find that all considered bookmakers frequently offer arbitrage positions, and that they experience, on average, negative margins from these postings. Our findings indicate that bookmakers set prices not only by optimizing over a particular bet, but also by taking the future trading behaviour of their customers into account. We discuss the implications for the literature on the relationship between betting market structure and informational efficiency.

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Citations

5 citations in Web of Science®
8 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:2013
Deposited On:29 Jan 2014 08:31
Last Modified:05 Apr 2016 17:26
Publisher:Wiley-Blackwell
ISSN:0013-0427
Publisher DOI:https://doi.org/10.1111/ecca.12009
Other Identification Number:merlin-id:8671

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