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Betting on a buzz, mispricing and inefficiency in online sportsbooks

Author

Listed:
  • Philip Ramirez

    (Department of Economics, University of Reading)

  • J. James Reade

    (Department of Economics, University of Reading)

  • Carl Singleton

    (Department of Economics, University of Reading)

Abstract

Bookmakers sell claims to bettors that depend on the outcomes of professional sports events. Like other financial assets, the wisdom of crowds could help sellers to price these claims more efficiently. We use the Wikipedia profile page views of professional tennis players involved in over ten thousand singles matches to construct a buzz factor. This measures the difference between players in their pre-match page views relative to the usual number of views they received over the previous year. The buzz factor significantly predicts mispricing by bookmakers. Using this fact to forecast match outcomes, we demonstrate that a strategy of betting on players who received more pre-match buzz than their opponents can generate substantial profits. These results imply that sportsbooks could price outcomes more efficiently by listening to the buzz.

Suggested Citation

  • Philip Ramirez & J. James Reade & Carl Singleton, 2021. "Betting on a buzz, mispricing and inefficiency in online sportsbooks," Economics Discussion Papers em-dp2021-10, Department of Economics, University of Reading.
  • Handle: RePEc:rdg:emxxdp:em-dp2021-10
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    File URL: http://www.reading.ac.uk/web/FILES/economics/emdp202110.pdf
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    More about this item

    Keywords

    Wisdom of crowds; Betting markets; Efficient Market Hypothesis; Forecast efficiency; Professional tennis;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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