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Odds-setting efficiency in gambling markets: Evidence from the PGA TOUR

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  • Stephen Shmanske

Abstract

This paper describes the gambling market for PGA TOUR events for the 2002 season. The extent to which the odds predict the outcome is examined, illustrating how much information is captured in the odds and whether there are any identifiable biases in the odds. The overall implied profit to the casino is calculated as well as the returns to several naive betting strategies. By splitting the sample based on whether or not Tiger Woods is in the tournament, a “Tiger Woods effect” or a “thin market versus thick market effect” can be examined. On the whole, efficient markets propositions hold up, but the overwhelming share of the variation in the tournament outcome remains unexplained. Copyright Springer 2005

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  • Stephen Shmanske, 2005. "Odds-setting efficiency in gambling markets: Evidence from the PGA TOUR," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 29(3), pages 391-402, September.
    • Handle: RePEc:spr:jecfin:v:29:y:2005:i:3:p:391-402
    DOI: 10.1007/BF02761583
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    References listed on IDEAS

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    1. Bassett, Gilbert W, Jr, 1981. "Point Spreads versus Odds," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 752-768, August.
    2. Hurley, William & McDonough, Lawrence, 1995. "A Note on the Hayek Hypothesis and the Favorite-Longshot Bias in Parimutuel Betting," American Economic Review, American Economic Association, vol. 85(4), pages 949-955, September.
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    Cited by:

    1. Stekler, H.O. & Sendor, David & Verlander, Richard, 2010. "Issues in sports forecasting," International Journal of Forecasting, Elsevier, vol. 26(3), pages 606-621, July.
      • Herman O. Stekler & David Sendor & Richard Verlander, 2009. "Issues in Sports Forecasting," Working Papers 2009-002, The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting.
    2. David Forrest & Ian Mchale, 2007. "Anyone for Tennis (Betting)?," The European Journal of Finance, Taylor & Francis Journals, vol. 13(8), pages 751-768.
    3. Alan Cinnamond, 2015. "An analysis of the design of the PGA Tour's FedExCup," Birkbeck Sports Business Centre Working Papers 12, Birkbeck College, Department of Management.

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