Prediction Accuracy of Different Market Structures – Bookmakers versus a Betting Exchange
AbstractThere is a well-established literature on separately testing the prediction power of different betting market settings. This paper provides an inter-market comparison of the forecasting accuracy between bookmakers and a major betting exchange. Employing a dataset covering all football matches played in the major leagues of the “Big Five” (England, France, Germany, Italy, Spain) during three seasons (5478 games in total), we find evidence that the betting exchange provides more accurate predictions of the same underlying event than bookmakers. A simple betting strategy of selecting bets for which bookmakers offer lower probabilities(higher odds) than the bet exchange generates above average and, in some cases, even positive returns.
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Bibliographic InfoPaper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0096.
Length: 25 pages
Date of creation: 2008
Date of revision: 2009
Publication status: Forthcoming International Journal of Forecasting
Nprediction accuracy; betting; bookmaker; betting exchange; probit regression;
Other versions of this item:
- Franck, Egon & Verbeek, Erwin & Nüesch, Stephan, 2010. "Prediction accuracy of different market structures -- bookmakers versus a betting exchange," International Journal of Forecasting, Elsevier, vol. 26(3), pages 448-459, July.
- Egon Franck & Erwin Verbeek & Stephan Nüesch, 2008. "Prediction Accuracy of Different Market Structures – Bookmakers versus a Betting Exchange," Working Papers 0025, University of Zurich, Center for Research in Sports Administration (CRSA), revised 2009.
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.:
- Â Egon Franck & Â Erwin Verbeek & Â Stephan Nuesch, .
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