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In search of the source of informed trader information in the college football betting market

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  • William Dare
  • John Gandar
  • Richard Zuber
  • Robert Pavlik

Abstract

The movement between the opening and closing of betting lines on sports events has been shown to contain valuable information. The purpose of this study is to search for the source of this valuable information. Changes in college football betting lines are examined with respect to information from the widely disseminated Dunkel Index, the Associated Press Writers' Poll, and lagged performance variables. It is found that bettors use this information to bet but that this information is not significant to betting outcomes, which indicates noise trading. Most importantly, it is shown that the unexplained betting line movements are most important in explaining final game outcomes. This result leads to the conclusion that informed bettors are using private information.

Suggested Citation

  • William Dare & John Gandar & Richard Zuber & Robert Pavlik, 2005. "In search of the source of informed trader information in the college football betting market," Applied Financial Economics, Taylor & Francis Journals, vol. 15(3), pages 143-152.
  • Handle: RePEc:taf:apfiec:v:15:y:2005:i:3:p:143-152
    DOI: 10.1080/0960310042000306961
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    References listed on IDEAS

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    1. Dare, William H. & MacDonald, S. Scott, 1996. "A generalized model for testing the home and favorite team advantage in point spread markets," Journal of Financial Economics, Elsevier, vol. 40(2), pages 295-318, February.
    2. Avery, Christopher & Chevalier, Judith, 1999. "Identifying Investor Sentiment from Price Paths: The Case of Football Betting," The Journal of Business, University of Chicago Press, vol. 72(4), pages 493-521, October.
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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, Research Program on Forecasting.
    2. Baker, Rose D. & McHale, Ian G., 2013. "Forecasting exact scores in National Football League games," International Journal of Forecasting, Elsevier, vol. 29(1), pages 122-130.
    3. Vaughan Williams, Leighton & Stekler, Herman O., 2010. "Sports forecasting," International Journal of Forecasting, Elsevier, vol. 26(3), pages 445-447, July.
      • Herman O. Stekler, 2007. "Sports Forecasting," Working Papers 2007-001, The George Washington University, Department of Economics, Research Program on Forecasting, revised Jan 2007.

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