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Time to Unbridle U.S. Thoroughbred Racetracks? Lessons from Australian Bookies

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  • Charles Moul

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  • Joseph Keller

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Abstract

We consider a policy reform that would relax price controls in American pari-mutuel wagering on horse racing by examining bookie behavior in Australia’s fixed-odds gambling sector. Descriptive regressions indicate that bookmaker takeouts (the effective prices of races) vary substantially and systematically with race characteristics, though in sometimes counterintuitive ways. Estimates of an explicitly reduced form model of bookie takeout, however, can qualitatively match both intuition and prior findings in the literature. Counterfactuals that use these estimates suggest that regulatory reform that permits racecourses to alter takeout across races would increase variable profit by about 5 %. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Charles Moul & Joseph Keller, 2014. "Time to Unbridle U.S. Thoroughbred Racetracks? Lessons from Australian Bookies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(3), pages 211-239, May.
  • Handle: RePEc:kap:revind:v:44:y:2014:i:3:p:211-239
    DOI: 10.1007/s11151-014-9418-z
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    References listed on IDEAS

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    1. Moul, Charles C., 2015. "Estimating demand for spatially differentiated firms with unobserved quantities and limited price data," Economics Letters, Elsevier, vol. 131(C), pages 50-53.

    More about this item

    Keywords

    Regulatory reform; Gambling; Horse racing; D22; L5; L83;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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