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Expert Analysis and Insider Information in Horse Race Betting: Regulating Informed Market Behavior

Peirson, John D., Smith, Michael A. (2010) Expert Analysis and Insider Information in Horse Race Betting: Regulating Informed Market Behavior. Southern Economic Journal, 76 (4). pp. 976-992. ISSN 0038-4038. (doi:10.4284/sej.2010.76.4.976) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided) (KAR id:40548)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. (Contact us about this Publication)
Official URL
http://dx.doi.org/10.4284/sej.2010.76.4.976

Abstract

We present a new model analyzing the effect of uncertainty faced by bookmakers. It is shown that bettors with inside information or expert analysis decrease the odds set by profit-maximizing bookmakers. Data on previously unraced 2-year-old horses and those that have raced previously are used to examine the impact of the greater possibility of insider information on odds bias in relation to unraced horses. The probability of an unraced 2-year-old winning is found to be on average 16% higher than that of a raced 2-year-old horse with the same odds. This effect decreases as the probability of winning increases. The latter effect indicates a possible contribution to the favorite-longshot bias, and the former shows the importance of insider information in the setting of market odds. The regulation of the use of insider information is discussed in light of the similar impact of insider information and expert analysis on bookmaker odds.

Item Type: Article
DOI/Identification number: 10.4284/sej.2010.76.4.976
Additional information: number of additional authors: 1;
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Stewart Brownrigg
Date Deposited: 07 Mar 2014 00:05 UTC
Last Modified: 29 May 2019 12:26 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/40548 (The current URI for this page, for reference purposes)
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