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Symposium -An Empirical Examination of the Parimutuel Sports Lottery Market versus the Bookmaker Market

Author

Listed:
  • Jaiho Chung

    () (Business School, Korea University, Anam-dong, Seongbuk-Gu, Seoul 136-701, Korea)

  • Joon Ho Hwang

    () (Business School, Korea University, Anam-dong, Seongbuk-Gu, Seoul 136-701, Korea)

Abstract

A sports lottery in Korea presents a unique opportunity for comparing a parimutuel-type sports lottery market against a bookmaker market outside the realm of horse racing. Using two- and three-game soccer final-score betting in the sports lottery market in Korea, which features matches in the English Premier League, we compare winning payoffs in this parimutuel-type sports lottery against corresponding payoffs from an established bookmaker market in the United Kingdom. We find that for outcomes with relatively high payouts (that is, lower-probability events), winning bets placed in the sports lottery market have greater payoffs than corresponding bets placed in the bookmaker-based market. However, the opposite is true for outcomes with relatively low payouts (that is, higher-probability events). Results suggest that participants in the sports lottery market tend to bet more toward high-probability events than the amount implied by the bookmaker’s odds. Results also suggest that the favoritelongshot bias is still present in the bookmaker market, even when there is less threat of privately informed bettors than in horse racing.

Suggested Citation

  • Jaiho Chung & Joon Ho Hwang, 2010. "Symposium -An Empirical Examination of the Parimutuel Sports Lottery Market versus the Bookmaker Market," Southern Economic Journal, Southern Economic Association, vol. 76(4), pages 884-905, April.
  • Handle: RePEc:sej:ancoec:v:76:4:y:2010:p:884-905
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    File URL: http://dx.doi.org/10.4284/sej.2010.76.4.884
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    References listed on IDEAS

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    1. repec:wsi:qjfxxx:v:03:y:2013:i:03n04:n:s2010139213500110 is not listed on IDEAS
    2. Steven J. Davis & Paul Willen, 2013. "Occupation-Level Income Shocks and Asset Returns: Their Covariance and Implications for Portfolio Choice," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 3(03n04), pages 1-53.
    3. Flavio Cunha & James Heckman & Salvador Navarro, 2005. "Separating uncertainty from heterogeneity in life cycle earnings," Oxford Economic Papers, Oxford University Press, vol. 57(2), pages 191-261, April.
    4. Ignacio Palacios-Huerta, 2003. "An Empirical Analysis of the Risk Properties of Human Capital Returns," American Economic Review, American Economic Association, vol. 93(3), pages 948-964, June.
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    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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