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Handbook of Sports and Lottery Markets
1st Edition - September 2, 2008
Editors: Donald B. Hausch, G. Constantinides, W.T. Ziemba, H.M Markowitz, R.C. Merton, S.C. Myers, P.A. Samuelson, W.F. Sharpe, Kenneth J. Arrow
Language: English
Hardback ISBN:9780444507440
9 7 8 - 0 - 4 4 4 - 5 0 7 4 4 - 0
eBook ISBN:9780080559957
9 7 8 - 0 - 0 8 - 0 5 5 9 9 5 - 7
Its basic empirical research and investigation of pure theories of investment in the sports and lottery markets make this volume a winner. These markets are simpler to study than…Read more
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Its basic empirical research and investigation of pure theories of investment in the sports and lottery markets make this volume a winner. These markets are simpler to study than traditional financial markets, and their expected values and outcomes are uncomplicated. By means of new overviews of scholarship on the industry side of racetrack and other betting markets to betting exchanges and market efficiencies, contributors consider a variety of sports in countries around the world. The result is not only superior information about market forecasting, but macro- and micro-analyses that are relevant to other markets.
Easily studied sports markets reveal features relevant for more complex traditional financial markets
Significant coverage of sports from racing to jai alai
New studies of betting exchanges and Internet wagering markets
Primary: university, research, and major public libraries with finance and economics holdings. Secondary: academics in finance and economics
Dedication
List of Contributors
Preface
Introduction to the Series
Part I: Industry Studies
Chapter 1: Pari-Mutuel Horse Race Wagering—Competition from Within and Outside the Industry
Abstract
1 INTRODUCTION
2 COMPETITION FROM CASINO GAMING
3 COMPETITION FROM STATE LOTTERIES
4 COMPETITION FROM PROFESSIONAL SPORTS
5 COMPETITION FROM LIVE RACING
6 COMPETITION FROM SIMULCAST WAGERING
7 SUMMARY AND CONCLUSIONS
Chapter 2: Modeling Money Bet on Horse Races in Hong Kong
Part II: Utility, Probability, and Pace Estimation
Chapter 3: Empirical Evidence on the Preferences of Racetrack Bettors
1 INTRODUCTION
2 SOME STYLIZED FACTS
3 EXPECTED UTILITY
4 DISTORTIONS OF PROBABILITIES
5 REFERENCE POINTS AND ASYMMETRIC PROBABILITY WEIGHTS
6 HETEROGENEOUS PREFERENCES
7 EXOTIC BETS
8 CONCLUDING REMARKS
Chapter 4: Approximating the Ordering Probabilities of Multi-Entry Competitions by a Simple Method
Abstract
Acknowledgments
1 INTRODUCTION
2 THEORETICAL RESULTS OF THE LIMITING CASES
3 A SIMPLE APPROXIMATION
4 CONCLUSION
APPENDIX: Proof of Theorem 1
Chapter 5: Modeling Distance Preference and Pace Character in Thoroughbred Turf Racing
Abstract
Acknowledgment
1 BACKGROUND
2 CASE STUDY 1: SHA TIN (HONG KONG, SAR, PRC)
3 CASE STUDY 2: RANDWICK (SYDNEY, AUSTRALIA)
4 QUALITATIVE QUESTIONS
5 DISCUSSION
Part III: Favorite-Longshot Bias in the Win Market
Chapter 6: The Favorite-Longshot Bias: An Overview of the Main Explanations
Abstract
1 INTRODUCTION
2 NOTATION
3 MISESTIMATION OF PROBABILITIES
4 MARKET POWER BY INFORMED BETTORS
5 PREFERENCE FOR RISK
6 HETEROGENEOUS BELIEFS
7 MARKET POWER BY UNINFORMED BOOKMAKER
8 LIMITED ARBITRAGE
9 SIMULTANEOUS BETTING BY INSIDERS
10 TIMING OF BETS
Chapter 7: Examining Explanations of a Market Anomaly: Preferences or Perceptions?
Abstract
Acknowledgments
1 INTRODUCTION
2 PREFERENCES—EXPECTED UTILITY MODELS WITH LINEAR PROBABILITIES
3 PERCEPTIONS—THE WEIGHTING OF TRUE PROBABILITIES
4 PERCEPTIONS–INFORMATIONAL EFFECTS
5 DEFINITION OF MODELS AND IMPLICATIONS FOR COMBINATORIC BETS
6 USING COMBINATORIC MARKETS TO TEST THE MODELS
7 CONCLUSION
APPENDIX A Pricing of Combinatoric Bets Using Conditional Independence
APPENDIX B Data
Chapter 8: Unifying the Favorite-Longshot Bias with Other Market Anomalies
1 INTRODUCTION
2 BIASES FOUND IN THE PREVIOUS LITERATURE
3 WHAT CAUSES THE FAVORITE-LONGSHOT BIAS AT THE RACETRACK?
4 IS IT RISK OR INFORMATION?
5 CAN THE MODEL EXPLAIN THE BIASES IN OTHER MARKETS?
6 CONCLUSION
Chapter 9: The Favorite-Longshot Bias in S&P 500 and FTSE 100 Index Futures Options: The Return to Bets and the Cost of Insurance
Abstract
1 INTRODUCTION
2 METHODOLOGY
3 RESULTS
4 CONCLUSIONS
Part IV: Weak Market Efficiency
Chapter 10: Efficiency of Racing, Sports, and Lottery Betting Markets
Abstract
Acknowledgments
1 INTRODUCTION
2 EXTENT OF GAMBLING IN THE U.S
3 RACETRACK BETTING MARKETS
4 THE FOOTBALL BETTING MARKET
5 THE BASKETBALL BETTING MARKET
6 LOTTERIES
Chapter 11: Point Spread and Odds Betting: Baseball, Basketball, and American Football
Abstract
1 INTRODUCTION
2 EFFICIENCY OF ODDS BETTING MARKETS
3 EFFICIENCY OF POINT SPREAD BETTING MARKETS
4 RELATIONSHIP OF POINT SPREAD AND ODDS BETTING
5 THE NORMAL MODEL AND MID-EVENT WAGERING
6 SUMMARY
Chapter 12: Comparing Efficiency of the Over/Under-Bets on NFL and NBA Games
1 INTRODUCTION
2 THE SPORTS BETTING MARKET: SETTING POINT SPREADS AND OVER/UNDERS
3 NFL AND NBA BETTING MARKET EFFICIENCY
4 CONCLUSION
Chapter 13: Arbitrage and Risk Arbitrage in Team Jai Alai
Abstract
Acknowledgments
1 INTRODUCTION
2 THE ARBITRAGE
3 RISK ARBITRAGES
4 FINAL REMARKS
Part V: Semi-Strong Form Efficiency
Chapter 14: Semi-Strong Form Information Efficiency in Horse Race Betting Markets
Abstract
1 INTRODUCTION
2 SEMI-STRONG FORM EFFICIENCY IN HORSE RACE BETTING MARKETS: SINGLE VARIABLE MODELS
3 SEMI-STRONG FORM EFFICIENCY IN HORSE RACE BETTING MARKETS: MULTIPLE VARIABLE MODELS
4 SEMI-STRONG FORM EFFICIENCY IN HORSE RACE BETTING MARKETS: CONCLUSION
Chapter 15: The Dosage Breeding Theory for Horse Racing Predictions
Abstract
Acknowledgments
1 INTRODUCTION
2 THE RACETRACK AS A SEQUENCE OF MARKETS
3 THE DOSAGE INDEX AND PERFORMANCE MEASURES
4 DATA ACQUISITION
5 APPLICATION OF BREEDING INFORMATION AND PERFORMANCE MEASURES TO REFINE ESTIMATED WIN PROBABILITIES FOR THE KENTUCKY DERBY
6 THE KELLY BETTING MODEL
7 THE KENTUCKY DERBY, 1981–2006
8 THE PREAKNESS STAKES, 1946–2006
9 THE BELMONT STAKES, 1946–2006
10 CONCLUSIONS
Chapter 16: Efficiency in Horse Race Betting Markets: The Role of Professional Tipsters
Abstract
1 INTRODUCTION
2 THE MODEL
3 DATA
4 RESULTS
5 CONCLUSION
Appendix Proof of Equation (5)
Part VI: Prediction Markets
Chapter 17: Index Betting for Sports and Stock Indices
Abstract
1 BACKGROUND
2 HOW INDEX BETTING OPERATES
3 SETTING SPREADS
4 SPREADS IN PERFORMANCE INDICES
5 ADVANTAGEOUS BETS
6 REGULATION, TAXATION, AND BIASES IN SPREAD BETTING MARKETS
Chapter 18: Prediction Markets: From Politics to Business (and Back)
Abstract
1 OVERVIEW
2 THE FIRST PREDICTION MARKETS
3 MARKETS IN THE LAB
4 CURRENT USES OF PREDICTION MARKETS: BUSINESS AND POLICY
5 FUTURE DIRECTIONS: DECISION MARKETS
6 POTENTIAL PITFALLS
7 CONCLUSION
Chapter 19: Betting Exchanges : A Technological Revolution in Sports Betting
Abstract
1 INTRODUCTION
2 THE OPERATION OF BETTING EXCHANGES
3 EMPIRICAL MODELS AND EVIDENCE CONCERNING WEAK-FORM INFORMATION EFFICIENCY IN BETTING EXCHANGES
4 NEW EVIDENCE ON THE DEGREE OF BIAS IN BETTING EXCHANGE ODDS
5 CONCLUSIONS
Part VII: Soccer
Chapter 20: Soccer Betting in Britain
Abstract
1 INTRODUCTION
2 DEVELOPMENT OF SOCCER BETTING
3 TRANSACTIONS COSTS IN THE FIXED ODDS MARKET
4 EARLY STUDY OF MARKET EFFICIENCY
5 TIPSTERS
6 FUNDAMENTAL ANALYSIS AS AN AID TO SOCCER BETTING
7 TECHNICAL ANALYSIS
8 SENTIMENT
9 THE FUTURE OF RESEARCH ON SOCCER BETTING
Chapter 21: Efficiency of Soccer Betting Odds—Evidence from a Pan-European Electronic Market
Abstract
Acknowledgments
1 INTRODUCTION
2 THE SOCCER BETTING MARKET
3 DATA DESCRIPTION
4 EFFICIENCY TESTS
5 CONCLUSION
Part VIII: Lotteries
Chapter 22: How to Design a Lottery
Abstract
Acknowledgments
1 INTRODUCTION
2 THE ODDS OF WINNING A (PARI-MUTUEL) LOTTERY
3 THE EXPECTED VALUE CALCULATION
4 HIGHER MOMENTS OF THE PRIZE DISTRIBUTION
5 ECONOMETRIC METHODOLOGY, DATA, AND ESTIMATES
6 GAME DESIGN SIMULATIONS
7 CONCLUSION
APPENDIX: The Expected Value Formula
Chapter 23: The Statistics of Lotteries
Abstract
1 INTRODUCTION
2 PRIZE STRUCTURE AND WINNING CHANCES
3 TESTS OF RANDOMNESS
4 GAMBLER CHOICES
Chapter 24: U.S. Lotto Markets
Abstract
1 INTRODUCTION
2 DIFFERENCES BETWEEN AMERICAN AND EUROPEAN LOTTERIES
3 FUNGIBILITY OF LOTTERY REVENUES
4 EFFICIENCY OF LOTTERY MARKETS—PART 1
5 EFFICIENCY OF LOTTERY MARKETS—PART 2
6 EFFICIENCY OF LOTTERY MARKETS—PART 3
7 CONCLUSIONS
Subject Index
Author Index
No. of pages: 560
Language: English
Edition: 1
Published: September 2, 2008
Imprint: North Holland
Hardback ISBN: 9780444507440
eBook ISBN: 9780080559957
DH
Donald B. Hausch
Affiliations and expertise
University of Wisconsin, Madison, USA
GC
G. Constantinides
Affiliations and expertise
University of Chicago, Chicago, IL, USA
WZ
W.T. Ziemba
Affiliations and expertise
University of British Columbia, Vancouver, Canada
HM
H.M Markowitz
Affiliations and expertise
University of California-San Diego, La Jolla, CA, USA
RM
R.C. Merton
Affiliations and expertise
Harvard Business School, Cambridge, MA, USA
SM
S.C. Myers
Affiliations and expertise
MIT, Sloan School of Management, Cambridge, MA, USA
PS
P.A. Samuelson
Affiliations and expertise
Mass Inst. of Technology, Cambridge, MA, USA
WS
W.F. Sharpe
Affiliations and expertise
Graduate School of Business, Stanford, CA, USA
KA
Kenneth J. Arrow
Kenneth Arrow is the Joan Kenney Professor of Economics and Professor of Operations Research, emeritus; a CHP/PCOR fellow; and an FSI senior fellow by courtesy. He is the joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972. To date, he is the youngest person to have received this award, at 51. In economics, he is a figure in post-World War II neo-classical economic theory. Many of his former graduate students have gone on to win the Nobel Memorial Prize themselves. His most significant works are his contributions to social choice theory, notably "Arrow's impossibility theorem", and his work on general equilibrium analysis. He has also provided foundational work in many other areas of economics, including endogenous growth theory and the economics of information. He has been co-editor of the Handbooks in Economics series since the mid-1980s.
Affiliations and expertise
Kenneth Arrow, Joan Kenney Professor of Economics and Professor of Operations Research, Emeritus, Stanford University, Stanford, CA, USA
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