IDEAS home Printed from https://ideas.repec.org/a/bla/manchs/v69y2001i2p197-207.html
   My bibliography  Save this article

The Incidence of Insider Trading in Betting Markets and the Gabriel and Marsden Anomaly

Author

Listed:
  • Michael Cain
  • David Law
  • David A. Peel

Abstract

Estimates of insider trading in the betting on individual races, conditional on the Shin model (Economic Journal, Vol. 103 (1993), pp. 1141–1153), are employed in an analysis of the market anomaly observed by Gabriel and Marsden (Journal of Political Economy, Vol. 98 (1990), pp. 874–885) that Tote payments on winning bets consistently exceed those paid by bookmakers. Use of more appropriate statistical methods suggests that the original anomaly disappears, but that another remains: bookmakers pay more generously than the Tote on winning bets on favourites, but less generously on winning longshot bets. This discrepancy is shown to be associated with the incidence of insider trading in the betting on each race, and it is argued that it cannot be arbitraged away because of the bookmakers’ dominant market position.

Suggested Citation

  • Michael Cain & David Law & David A. Peel, 2001. "The Incidence of Insider Trading in Betting Markets and the Gabriel and Marsden Anomaly," Manchester School, University of Manchester, vol. 69(2), pages 197-207, March.
    • Handle: RePEc:bla:manchs:v:69:y:2001:i:2:p:197-207
    DOI: 10.1111/1467-9957.00242
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-9957.00242
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-9957.00242?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. D. A. Peel & Jie Zhang & D. Law, 2008. "The Markowitz model of utility supplemented with a small degree of probability distortion as an explanation of outcomes of Allais experiments over large and small payoffs and gambling on unlikely outc," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 17-26.
    2. Vincenzo Candila & Antonio Scognamillo, 2019. "On the Longshot Bias in Tennis Betting Markets: The Casco Normalization," Working Papers 3_236, Dipartimento di Scienze Economiche e Statistiche, Università degli Studi di Salerno.
    3. 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.
    4. Les Coleman, 2004. "New light on the longshot bias," Applied Economics, Taylor & Francis Journals, vol. 36(4), pages 315-326.
    5. Nikolaos Vlastakis & George Dotsis & Raphael N. Markellos, 2009. "How efficient is the European football betting market? Evidence from arbitrage and trading strategies," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 28(5), pages 426-444.
    6. Les Coleman, 2007. "Just How Serious is Insider Trading? An Evaluation using Thoroughbred Wagering Markets," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 1(1), pages 31-55, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:manchs:v:69:y:2001:i:2:p:197-207. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/semanuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.