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Forecasting Soccer Matches With Betting Odds: A Tale of Two Markets

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  • Hegarty, Tadgh
  • Whelan, Karl

Abstract

We compare the properties of betting market odds set in two distinct markets for a large sample of European soccer matches. We confirm inefficiencies in the traditional market for bets on a home win, an away win or a draw as found in previous studies such as Angelini and De Angelis (2019), in particular that there is a strong pattern of favourite-longshot bias. Conversely, we document how a betting market that has emerged in recent years, the Asian handicap market, can generate efficient forecasts for the same set of matches using a new methodology for mapping its odds into probabilities.

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  • Hegarty, Tadgh & Whelan, Karl, 2023. "Forecasting Soccer Matches With Betting Odds: A Tale of Two Markets," CEPR Discussion Papers 17949, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17949
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    1. Tadgh Hegarty, 2021. "Information and price efficiency in the absence of home crowd advantage," Applied Economics Letters, Taylor & Francis Journals, vol. 28(21), pages 1902-1907, December.
    2. Hegarty, Tadgh & Whelan, Karl, 2023. "Disagreement and Market Structure in Betting Markets: Theory and Evidence from European Soccer," CEPR Discussion Papers 18144, C.E.P.R. Discussion Papers.
    3. Angelini, Giovanni & De Angelis, Luca, 2019. "Efficiency of online football betting markets," International Journal of Forecasting, Elsevier, vol. 35(2), pages 712-721.
    4. Hyun Song Shin, 2008. "Prices Of State Contingent Claims With Insider Traders, And The Favourite-Longshot Bias," World Scientific Book Chapters, in: Donald B Hausch & Victor SY Lo & William T Ziemba (ed.), Efficiency Of Racetrack Betting Markets, chapter 34, pages 343-352, World Scientific Publishing Co. Pte. Ltd..
    5. Whelan, Karl & Hegarty, Tadgh, 2023. "Calculating The Bookmaker's Margin: Why Bets Lose More On Average Than You Are Warned," MPRA Paper 116924, University Library of Munich, Germany.
    6. Michael Cain & David Law & David Peel, 2000. "The Favourite‐Longshot Bias and Market Efficiency in UK Football betting," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(1), pages 25-36, February.
    7. 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.
    8. Gray, Philip K & Gray, Stephen F, 1997. "Testing Market Efficiency: Evidence from the NFL Sports Betting Market," Journal of Finance, American Finance Association, vol. 52(4), pages 1725-1737, September.
    9. repec:bla:econom:v:56:y:1989:i:223:p:323-41 is not listed on IDEAS
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    Cited by:

    1. Whelan, Karl, 2023. "Fortune's Formula or the Road to Ruin? The Generalized Kelly Criterion With Multiple Outcomes," CEPR Discussion Papers 18060, C.E.P.R. Discussion Papers.
    2. Hegarty, Tadgh & Whelan, Karl, 2023. "Do Gamblers Understand Complex Bets? Evidence From Asian Handicap Betting on Soccer," MPRA Paper 117244, University Library of Munich, Germany.
    3. Karl Whelan, 2024. "Risk aversion and favourite–longshot bias in a competitive fixed‐odds betting market," Economica, London School of Economics and Political Science, vol. 91(361), pages 188-209, January.
    4. Hegarty, Tadgh & Whelan, Karl, 2023. "Disagreement and Market Structure in Betting Markets: Theory and Evidence from European Soccer," CEPR Discussion Papers 18144, C.E.P.R. Discussion Papers.
    5. Hegarty, Tadgh & Whelan, Karl, 2024. "Comparing Two Methods for Testing the Efficiency of Sports Betting Markets," MPRA Paper 121382, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L8 - Industrial Organization - - Industry Studies: Services
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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