Profitable Robot Strategies in Pari-Mutuel Betting
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.
|Date of creation:||07 Apr 2017|
|Contact details of provider:|| Postal: NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway|
Phone: +47 55 95 92 93
Fax: +47 55 95 96 50
Web page: http://www.nhh.no/en/research-faculty/department-of-business-and-management-science.aspx
More information through EDIRC
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.:
- Ali, Mukhtar M, 1977. "Probability and Utility Estimates for Racetrack Bettors," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 803-815, August.
- Hurley, William & McDonough, Lawrence, 1995. "A Note on the Hayek Hypothesis and the Favorite-Longshot Bias in Parimutuel Betting," American Economic Review, American Economic Association, vol. 85(4), pages 949-955, September.
- Donald B. Hausch & William T. Ziemba & Mark Rubinstein, 1981. "Efficiency of the Market for Racetrack Betting," Management Science, INFORMS, vol. 27(12), pages 1435-1452, December.
- Nicolae B. Gârleanu & Lasse H. Pedersen, 2015. "Efficiently Inefficient Markets for Assets and Asset Management," NBER Working Papers 21563, National Bureau of Economic Research, Inc.
- Victor S. Y. Lo & John Bacon-Shone & Kelly Busche, 1995. "The Application of Ranking Probability Models to Racetrack Betting," Management Science, INFORMS, vol. 41(6), pages 1048-1059, June.
- Martin Weitzman, 2008.
"Utility Analysis And Group Behavior An Empirical Study,"
World Scientific Book Chapters,in: Efficiency Of Racetrack Betting Markets, chapter 9, pages 47-55
World Scientific Publishing Co. Pte. Ltd..
- Weitzman, Martin L., 1965. "Utility Analysis and Group Behavior: An Empirical Study," Scholarly Articles 3710799, Harvard University Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:hhs:nhhfms:2017_006. 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: (Stein Fossen)
If references are entirely missing, you can add them using this form.