IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Determinants of betting market efficiency

  • Marshall Gramm
  • Douglas Owens
Registered author(s):

    Previous studies of efficient markets in parimutuel betting isolated only one race characteristic, determining efficiency by comparing subjective to objective probabilities of different groupings. By incorporating regression analysis and looking at a wide range of race specific variables, this study is able to isolate various factors which influence efficiency. Using a data set of 5020 races at 18 US racetracks, a standard favourite-longshot bias was found, which diminishes for races with larger pools and more horses in a field, and increases for races with higher quality fields and maiden races. When track-specific characteristics are factored out, similar results occur and it is also found that races on grass reduce the bias.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

    Volume (Year): 12 (2005)
    Issue (Month): 3 ()
    Pages: 181-185

    in new window

    Handle: RePEc:taf:apeclt:v:12:y:2005:i:3:p:181-185
    Contact details of provider: Web page:

    Order Information: Web:

    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.:

    as in new window
    1. Russell Sobel & S. Travis Raines, 2003. "An examination of the empirical derivatives of the favourite-longshot bias in racetrack betting," Applied Economics, Taylor & Francis Journals, vol. 35(4), pages 371-385.
    2. David Paton & Leighton Vaughan Williams, 1998. "Do betting costs explain betting biases?," Applied Economics Letters, Taylor & Francis Journals, vol. 5(5), pages 333-335.
    3. Busche, Kelly & Hall, Christopher D, 1988. "An Exception to the Risk Preference Anomaly," The Journal of Business, University of Chicago Press, vol. 61(3), pages 337-46, July.
    4. Kelly Busche & W. David Walls, 2001. "Breakage and betting market efficiency: evidence from the horse track," Applied Economics Letters, Taylor & Francis Journals, vol. 8(9), pages 601-604.
    5. Thaler, Richard H & Ziemba, William T, 1988. "Parimutuel Betting Markets: Racetracks and Lotteries," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 161-74, Spring.
    6. Asch, Peter & Malkiel, Burton G. & Quandt, Richard E., 1982. "Racetrack betting and informed behavior," Journal of Financial Economics, Elsevier, vol. 10(2), pages 187-194, July.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:12:y:2005:i:3:p:181-185. 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: (Michael McNulty)

    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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.