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Testing Market Efficiency in a Fixed Odds Betting Market

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Author Info
Jakobsson, Robin () (Department of Business, Economics, Statistics and Informatics)
Karlsson, Niklas () (Department of Business, Economics, Statistics and Informatics)
Abstract

This paper tests the hypothesis of market efficiency for the fixed odds betting market of Swedish trotting head-to-head matches. The hypothesis is carried out by a Wald test within a logistic regression model. Data support rejection of semi-strong efficiency at the 5 percent level of significance, while the weak form efficiency cannot be rejected. Moreover, evaluation of the simple strategy to bet on those horses where, conditional on the estimated model, the expected profit is positive results in a profit of 7.8 percent per bet.

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Publisher Info
Paper provided by Örebro University, Swedish Business School in its series Working Papers with number 2007:12.

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Length: 13 pages
Date of creation: 13 Dec 2007
Date of revision:
Handle: RePEc:hhs:oruesi:2007_012

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Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, Sweden
Phone: 019-30 30 00
Fax: 019-33 25 46
Web page: http://www.oru.se/templates/oruExtDeptIntroPage.aspx?id=3059
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Related research
Keywords: EMH; betting; trotting; market; efficiency; logit; Wald;

Find related papers by JEL classification:
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Figlewski, Stephen, 1979. "Subjective Information and Market Efficiency in a Betting Market," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 75-88, February. [Downloadable!] (restricted)
  2. Gandar, John, et al, 1988. " Testing Rationality in the Point Spread Betting Market," Journal of Finance, American Finance Association, vol. 43(4), pages 995-1008, September. [Downloadable!] (restricted)
  3. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May. [Downloadable!] (restricted)
  4. Ioannis Asimakopoulos & John Goddard, 2004. "Forecasting football results and the efficiency of fixed-odds betting," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 23(1), pages 51-66. [Downloadable!]
  5. Gabriel, Paul E & Marsden, James R, 1990. "An Examination of Market Efficiency in British Racetrack Betting," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 874-85, August. [Downloadable!] (restricted)
  6. Pope, Peter F & Peel, David A, 1989. "Information, Prices and Efficiency in a Fixed-Odds Betting Market," Economica, London School of Economics and Political Science, vol. 56(223), pages 323-41, August. [Downloadable!] (restricted)
  7. Ali, Mukhtar M, 1977. "Probability and Utility Estimates for Racetrack Bettors," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 803-15, August. [Downloadable!] (restricted)
  8. Snyder, Wayne W, 1978. "Horse Racing: Testing the Efficient Markets Model," Journal of Finance, American Finance Association, vol. 33(4), pages 1109-18, September. [Downloadable!] (restricted)
  9. Kuypers, Tim, 2000. "Information and Efficiency: An Empirical Study of a Fixed Odds Betting Market," Applied Economics, Taylor and Francis Journals, vol. 32(11), pages 1353-63, September. [Downloadable!] (restricted)
  10. Asch, Peter & Malkiel, Burton G & Quandt, Richard E, 1984. "Market Efficiency in Racetrack Betting," Journal of Business, University of Chicago Press, vol. 57(2), pages 165-75, April. [Downloadable!] (restricted)
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