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Inter-market Arbitrage in Sports Betting

  • Egon Franck

    ()

    (University of Zurich)

  • Erwin Verbeek

    ()

    (University of Zurich)

  • Stephan Nuesch

    ()

    (University of Zurich)

Unlike the existing literature on sports betting, which concentrates on arbitrage within a single market, this paper examines inter-market arbitrage by searching for arbitrage opportunities through combining bets at the bookmaker and the exchange market. Using the posted odds of eight different bookmakers and the corresponding odds traded at a well-known bet exchange for 5,478 football matches played in the top-five European leagues during three seasons, we find (only) ten intra-market arbitrage opportunities. However, we find 1,450 cases in which a combined bet at the bookmaker as well as at the exchange yields a guaranteed positive return. Further analyses reveal that inter-market arbitrage emerges from different levels of informational efficiency between the two markets.

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File URL: http://www.ncer.edu.au/papers/documents/WPNo48.pdf
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Paper provided by National Centre for Econometric Research in its series NCER Working Paper Series with number 48.

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Length: 29 pages
Date of creation: 27 Oct 2009
Date of revision:
Handle: RePEc:qut:auncer:2009_61
Contact details of provider: Phone: 07 3138 5066
Fax: 07 3138 1500
Web page: http://www.ncer.edu.au

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  1. Shleifer, Andrei & Vishny, Robert W, 1997. " The Limits of Arbitrage," Journal of Finance, American Finance Association, vol. 52(1), pages 35-55, March.
  2. Hausch, Donald B & Ziemba, William T, 1990. "Arbitrage Strategies for Cross-Track Betting on Major Horse Races," The Journal of Business, University of Chicago Press, vol. 63(1), pages 61-78, January.
  3. David Edelman & Nigel O'Brian, 2004. "Tote arbitrage and lock opportunities in racetrack betting," The European Journal of Finance, Taylor & Francis Journals, vol. 10(5), pages 370-378.
  4. Karen Croxson & J. James Reade, 2011. "Information and Efficiency: Goal Arrival in Soccer Betting," Discussion Papers 11-01, Department of Economics, University of Birmingham.
  5. Forrest, David & Goddard, John & Simmons, Robert, 2005. "Odds-setters as forecasters: The case of English football," International Journal of Forecasting, Elsevier, vol. 21(3), pages 551-564.
  6. Smith, Michael A. & Paton, David & Williams, Leighton Vaughan, 2009. "Do bookmakers possess superior skills to bettors in predicting outcomes?," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 539-549, August.
  7. Dixon, Mark J. & Pope, Peter F., 2004. "The value of statistical forecasts in the UK association football betting market," International Journal of Forecasting, Elsevier, vol. 20(4), pages 697-711.
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