IDEAS home Printed from https://ideas.repec.org/h/wsi/wschap/9789812819192_0017.html
   My bibliography  Save this book chapter

Searching For Positive Returns At The Track: A Multinomial Logit Model For Handicapping Horse Races

In: Efficiency Of Racetrack Betting Markets

Author

Listed:
  • RUTH N. BOLTON

    (Department of Marketing & Economic Analysis, Faculty of Business, University of Alberta, Edmonton, Alberta, Canada T6G 2R6, Canada)

  • RANDALL G. CHAPMAN

    (Department of Marketing & Economic Analysis, Faculty of Business, University of Alberta, Edmonton, Alberta, Canada T6G 2R6, Canada)

Abstract

This paper investigates fundamental investment strategies to detect and exploit the public's systematic errors in horse race wager markets. A handicapping model is developed and applied to win-betting in the pari-mutuel system. A multinomial logit model of the horse racing process is posited and estimated on a data base of 200 races. A recently developed procedure for exploiting the information content of rank ordered choice sets is employed to obtain more efficient parameter estimates. The variables in this discrete choice probability model include horse and jockey characteristics, plus several race-specific features. Hold-out sampling procedures are employed to evaluate wagering strategies. A wagering strategy that involves unobtrusive bets, with a side constraint eliminating long-shot betting, appears to offer the promise of positive expected returns, even in the presence of the typically large track take encountered at Thoroughbred racing events.

Suggested Citation

  • Ruth N. Bolton & Randall G. Chapman, 2008. "Searching For Positive Returns At The Track: A Multinomial Logit Model For Handicapping Horse Races," World Scientific Book Chapters, in: Donald B Hausch & Victor SY Lo & William T Ziemba (ed.),Efficiency Of Racetrack Betting Markets, chapter 17, pages 151-171, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789812819192_0017
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/pdf/10.1142/9789812819192_0017
    Download Restriction: Ebook Access is available upon purchase.

    File URL: http://www.worldscientific.com/doi/abs/10.1142/9789812819192_0017
    Download Restriction: Ebook Access is available upon purchase.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    More about this item

    Keywords

    Racetrack Efficiency; Racetrack Betting Market; Racetrack Betting; Win Market; Finance;

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:wschap:9789812819192_0017. 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: (Tai Tone Lim). General contact details of provider: http://www.worldscientific.com/page/worldscibooks .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.