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Profitable Robot Strategies in Pari-Mutuel Betting

Author

Listed:
  • Bjerksund, Petter

    (Dept. of Business and Management Science, Norwegian School of Economics)

  • Stensland, Gunnar

    (Dept. of Business and Management Science, Norwegian School of Economics)

Abstract

We have collected odds and results from 7 474 horse races in Norway and Sweden for a period of approximately 1.5 years. Based on the odds from the win game, we construct a profitable betting strategy for the corresponding triple game. Given a 30% track take, the existence of a profitable strategy is surprising. A robot is typically needed to identify and exploit underrated bets. We argue that the existence of heterogeneous beliefs between players in the market might form a basis for profitable betting strategies. We did expect that bigger pools (more liquidity) would remove this anomaly. That is not the case. More players, and thereby bigger pools, increases the profitability of the system.

Suggested Citation

  • Bjerksund, Petter & Stensland, Gunnar, 2017. "Profitable Robot Strategies in Pari-Mutuel Betting," Discussion Papers 2017/6, Norwegian School of Economics, Department of Business and Management Science.
  • Handle: RePEc:hhs:nhhfms:2017_006
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    File URL: http://hdl.handle.net/11250/2437106
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    References listed on IDEAS

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    More about this item

    Keywords

    Horse races; low odds bias; heterogeneous beliefs;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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