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How efficient is the European football betting market? Evidence from arbitrage and trading strategies

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Author Info

  • Nikolaos Vlastakis

    (Department of Management Science and Technology, Athens University of Economics and Business, Greece)

  • George Dotsis

    (School of Accounting, Finance and Management, Essex Business School)

  • Raphael N. Markellos

    (Department of Management Science and Technology, Athens University of Economics and Business, Greece)

Abstract

This paper assesses the international efficiency of the European football betting market by examining the forecastability of match outcomes on the basis of the information contained in different sets of online and fixed odds quoted by six major bookmakers. The paper also investigates the profitability of strategies based on: combined betting, simple heuristic rules, regression models and prediction encompassing. The empirical results show that combined betting across different bookmakers can lead to limited but highly profitable arbitrage opportunities. Simple trading rules and betting strategies based on forecast encompassing are found capable of also producing significant positive returns. Despite the deregulation, globalization and increased competition in the betting industry over recent years, the predictabilities and profits reported in this paper are not fully consistent with weak-form market efficiency. Copyright © 2008 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/for.1085
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Forecasting.

Volume (Year): 28 (2009)
Issue (Month): 5 ()
Pages: 426-444

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Handle: RePEc:jof:jforec:v:28:y:2009:i:5:p:426-444

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/2966

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References

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Citations

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Cited by:
  1. Babatunde Buraimo & David Peel & Rob Simmons, 2013. "Systematic Positive Expected Returns in the UK Fixed Odds Betting Market: An Analysis of the Fink Tank Predictions," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 1(4), pages 168-182, December.
  2. Colantonio Emiliano, 2013. "Betting Markets: Opportunities For Many?," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 200-208, December.
  3. Lahvicka, Jiri, 2013. "The Fibonacci Strategy Revisited: Can You Really Make Money by Betting on Soccer Draws?," MPRA Paper 47649, University Library of Munich, Germany.
  4. Lessmann, Stefan & Sung, Ming-Chien & Johnson, Johnnie E.V. & Ma, Tiejun, 2012. "A new methodology for generating and combining statistical forecasting models to enhance competitive event prediction," European Journal of Operational Research, Elsevier, vol. 218(1), pages 163-174.
  5. Masahiro Ashiya, 2013. "Lock! Risk-Free Arbitrage in the Japanese Racetrack Betting Market," Discussion Papers 1301, Graduate School of Economics, Kobe University.

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