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The Optimality and Statistical Detection of Price Rigging in Betting Markets

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  • Adi Schnytzer

    (Department of Economics, Bar-Ilan University)

  • Yuval Shilony
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    Abstract

    The purpose of this paper is to determine empirically whether or not there is systematic price rigging in three Australian betting markets: Horse, harness and greyhound racing. We present a simple model which shows the conditions under which it is optimal for insiders to rig prices by deliberate underperformance in some races. We then show how an empirical analysis of the relationship between win and place probabilities in conjunction with observed patterns of betting behavior, may be used to establish the presence of price rigging. It is shown that there is no significant systematic price rigging in these markets.

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    Bibliographic Info

    Article provided by University of Buckingham Press in its journal Journal of Gambling Business and Economics.

    Volume (Year): 1 (2007)
    Issue (Month): 1 (February)
    Pages: 13-29

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    Handle: RePEc:buc:jgbeco:v:1:y:2007:i:1:p:13-29

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    Web: http://www.jgbe.com/index_files/Page492.htm

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