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Using Betting Market Odds to Measure the Uncertainty of Outcome in Major League Baseball

Author

Listed:
  • Rodney J. Paul

    (St. Bonaventure University)

  • Andrew P. Weinbach

    (Coastal Carolina University)

  • Richard Borghesi

    (University of South Florida – Sarasota)

  • Mark Wilson

    (St. Bonaventure University)

Abstract

Betting market odds for Major League Baseball are used to examine the level of uncertainty of outcome, an ex-ante form of competitive balance. The efficient markets hypothesis cannot be rejected for the years 1990-2006 in Major League Baseball. Therefore, the odds provide an ex-ante measure of the uncertainty of outcome of baseball games in the minds of fans and bettors. The odds for both the American and National Leagues were shown to increase during the 1990s, implying more certainty in the expected outcome of the game. Bettors and fans believed favorites in Major League Baseball were more likely to win during this time frame. Differences in the average odds, formed ex-ante, compared to win percentages, formed ex-post, help to explain the dichotomy found in Schmidt and Berri (2001) in relation to public belief in less competitiveness compared to economic findings of relatively high levels of competitive balance.

Suggested Citation

  • Rodney J. Paul & Andrew P. Weinbach & Richard Borghesi & Mark Wilson, 2009. "Using Betting Market Odds to Measure the Uncertainty of Outcome in Major League Baseball," International Journal of Sport Finance, Fitness Information Technology, vol. 4(4), pages 255-263, November.
    • Handle: RePEc:jsf:intjsf:v:4:y:2009:i:4:p:255-263
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    More about this item

    Keywords

    uncertainty of outcome; market efficiency; economics; baseball;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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