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Valuation of soccer spread bets

Author

Listed:
  • A D Fitt

    (University of Southampton)

  • C J Howls

    (University of Southampton)

  • M Kabelka

    (University of Southampton)

Abstract

Simple statistical and probabilistic arguments are used to value the most commonly traded online soccer spread bets. Such markets typically operate dynamically during the course of a match and accurate valuations must, therefore, reflect the changing state of the match. Both goals and corners are assumed to evolve as Poisson processes with constant means. Although many of the bets that are typically traded are relatively easy to value, some (including the ‘four flags’ market) require more detailed analysis. Examples are given of the evolution of the spread during typical matches and theoretical predictions are shown to compare closely to spreads quoted by online bookmakers during some of the important matches of the EURO2004 tournament.

Suggested Citation

  • A D Fitt & C J Howls & M Kabelka, 2006. "Valuation of soccer spread bets," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(8), pages 975-985, August.
    • Handle: RePEc:pal:jorsoc:v:57:y:2006:i:8:d:10.1057_palgrave.jors.2602062
    DOI: 10.1057/palgrave.jors.2602062
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    References listed on IDEAS

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    Cited by:

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    2. Sung, Ming-Chien & McDonald, David C.J. & Johnson, Johnnie E.V. & Tai, Chung-Ching & Cheah, Eng-Tuck, 2019. "Improving prediction market forecasts by detecting and correcting possible over-reaction to price movements," European Journal of Operational Research, Elsevier, vol. 272(1), pages 389-405.
    3. Oberstone Joel, 2009. "Differentiating the Top English Premier League Football Clubs from the Rest of the Pack: Identifying the Keys to Success," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 5(3), pages 1-29, July.

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