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Market efficiency and NCAA college basketball gambling

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  • Rodney Paul
  • Andrew Weinbach

Abstract

The betting market for NCAA college basketball is examined from the 1996–97 season through 2003–04. In the overall sample, market efficiency cannot be rejected. For big favorites, specifically those favorites of 20 or more, a simple strategy of betting the underdog in these games is shown to reject the null hypothesis of a fair bet since the underdog wins more than implied by efficiency. This bias appears to be the same as in other sports. The home-team bias in college basketball is shown to be the opposite of the other sports, however, since big favorites win more often than implied by efficiency. Potential reasons for this bias such as NCAA tournament incentives and uniformity of playing conditions are discussed. Copyright Springer 2005

Suggested Citation

  • Rodney Paul & Andrew Weinbach, 2005. "Market efficiency and NCAA college basketball gambling," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 29(3), pages 403-408, September.
  • Handle: RePEc:spr:jecfin:v:29:y:2005:i:3:p:403-408
    DOI: 10.1007/BF02761584
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    References listed on IDEAS

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    Cited by:

    1. Stekler, H.O. & Sendor, David & Verlander, Richard, 2010. "Issues in sports forecasting," International Journal of Forecasting, Elsevier, vol. 26(3), pages 606-621, July.
      • Herman O. Stekler & David Sendor & Richard Verlander, 2009. "Issues in Sports Forecasting," Working Papers 2009-002, The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting.
    2. S Lessmann & M-C Sung & J E V Johnson, 2011. "Towards a methodology for measuring the true degree of efficiency in a speculative market," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(12), pages 2120-2132, December.
    3. Berkowitz, Jason P. & Depken, Craig A. & Gandar, John M., 2017. "A favorite-longshot bias in fixed-odds betting markets: Evidence from college basketball and college football," The Quarterly Review of Economics and Finance, Elsevier, vol. 63(C), pages 233-239.
    4. Rodney J. Paul & Andrew P. Weinbach, 2011. "Investigating Allegations of Pointshaving in NCAA Basketball Using Actual Sportsbook Betting Percentages," Journal of Sports Economics, , vol. 12(4), pages 432-447, August.
    5. Rodney J. Paul & Mark Wilson, 2015. "Political Correctness, Selection Bias, and the NCAA Basketball Tournament," Journal of Sports Economics, , vol. 16(2), pages 201-213, February.
    6. Jinook Jeong & Jee Young Kim & Yoon Jae Ro, 2019. "On the efficiency of racetrack betting market: a new test for the favourite-longshot bias," Applied Economics, Taylor & Francis Journals, vol. 51(54), pages 5817-5828, November.
    7. Daniel Kuester & Shane Sanders, 2011. "Regional information and market efficiency: the case of spread betting in United States college football," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 35(1), pages 116-122, January.
    8. Daniel C. Hickman, 2020. "Efficiency in the madness? examining the betting market for the ncaa men’s basketball tournament," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(3), pages 611-626, July.

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