Systematic Positive Expected Returns in the UK Fixed Odds Betting Market: An Analysis of the Fink Tank Predictions
We report striking evidence of semi-strong inefficiency in the UK fixed-odds football betting market using a reputable newspaper tipster which offers probabilities of match outcomes rather than simple result indicators. Betting on the Fink Tank probabilities of home wins across 10 bookmakers, when there are positive expected returns, would have generated positive returns in each of the seasons from 2006â€“07 to 2011â€“12 for a variety of different betting strategies. These returns could have been enhanced by employing the best odds from a greater number of bookmakers. However, the fact that pure arbitrage bets have existed for years and appear to last for several hours or days suggest they are in practice not exploitable to a magnitude that poses any threat to bookmakers.
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.:
- Nikolaos Vlastakis & George Dotsis & Raphael N. Markellos, 2009. "How efficient is the European football betting market? Evidence from arbitrage and trading strategies," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 28(5), pages 426-444.
- Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
- Â Egon Franck & Â Erwin Verbeek & Â Stephan Nuesch, .
"Â Sentimental Preferences and the Organizational Regime of Betting Markets,"
0089, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2010.
- Egon Franck & Erwin Verbeek & Stephan Nüesch, 2011. "Sentimental Preferences and the Organizational Regime of Betting Markets," Southern Economic Journal, Southern Economic Association, vol. 78(2), pages 502-518, October.
- Brad R. Humphreys, 2011. "The Financial Consequences of Unbalanced Betting on NFL Games," International Journal of Sport Finance, Fitness Information Technology, vol. 6(1), pages 60-71, February.
- I. Graham & H. Stott, 2008. "Predicting bookmaker odds and efficiency for UK football," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 99-109.
- Egon Franck & Erwin Verbeek & Stephan Nüesch, 2008.
"Prediction Accuracy of Different Market Structures – Bookmakers versus a Betting Exchange,"
0025, University of Zurich, Center for Research in Sports Administration (CRSA), revised 2009.
- 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 0096, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2009.
- Shin, Hyun Song, 1992. "Prices of State Contingent Claims with Insider Traders, and the Favourite-Longshot Bias," Economic Journal, Royal Economic Society, vol. 102(411), pages 426-35, March.
- Shleifer, Andrei & Vishny, Robert W, 1997.
" The Limits of Arbitrage,"
Journal of Finance,
American Finance Association, vol. 52(1), pages 35-55, March.
- Andrei Shleifer & Robert W. Vishny, 1995. "The Limits of Arbitrage," NBER Working Papers 5167, National Bureau of Economic Research, Inc.
- Andrei Shleifer ad Robert W. Vishny, 1995. "The Limits of Arbitrage," Harvard Institute of Economic Research Working Papers 1725, Harvard - Institute of Economic Research.
- Rodney J. Paul & Andrew P. Weinbach, 2007. "Does Sportsbook.com Set Pointspreads to Maximize Profits? Tests of the Levitt Model of Sportsbook Behavior," Journal of Prediction Markets, University of Buckingham Press, vol. 1(3), pages 209-218, December.
- Egon Franck & Erwin Verbeek & Stephan Nüesch, 2013. "Inter-market Arbitrage in Betting," Economica, London School of Economics and Political Science, vol. 80(318), pages 300-325, 04.
- Vaughan Williams, Leighton, 1999. "Information Efficiency in Betting Markets: A Survey," Bulletin of Economic Research, Wiley Blackwell, vol. 51(1), pages 1-30, January.
- 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.
- Steven D. Levitt, 2004. "Why are gambling markets organised so differently from financial markets?," Economic Journal, Royal Economic Society, vol. 114(495), pages 223-246, 04.
- Forrest, David & Goddard, John & Simmons, Robert, 2005. "Odds-setters as forecasters: The case of English football," International Journal of Forecasting, Elsevier, vol. 21(3), pages 551-564.
- Harry Markowitz, 1952. "The Utility of Wealth," Journal of Political Economy, University of Chicago Press, vol. 60, pages 151.
- Raymond D. Sauer, 1998. "The Economics of Wagering Markets," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2021-2064, December.
- Constantinou Anthony Costa & Fenton Norman Elliott, 2012. "Solving the Problem of Inadequate Scoring Rules for Assessing Probabilistic Football Forecast Models," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 8(1), pages 1-14, March.
- Péter Kondor, 2009. "Risk in Dynamic Arbitrage: The Price Effects of Convergence Trading," Journal of Finance, American Finance Association, vol. 64(2), pages 631-655, 04.
- Forrest, David & Simmons, Robert, 2000. "Forecasting sport: the behaviour and performance of football tipsters," International Journal of Forecasting, Elsevier, vol. 16(3), pages 317-331.
When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:1:y:2013:i:4:p:168-182:d:31044. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (XML Conversion Team)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.