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Empirical evidence of error in pricing of favorites and longshots in greyhound racing

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  • Anil Gulati
  • Shekar Shetty

Abstract

Sports bettors' success depends on the ability to accurately assess the true probability of outcomes. Successful racetrack bettors can realize returns better than the track take out. Historical empirical evidence shows the presence of favorite-longshot bias (FLB) in horse racing where bettors underbet favorites. Conversely, bettors overbet longshots. We tested for FLB bias in racing data from three greyhound racetracks. Our results show opposite behavior. We show bettors apparently underestimated for longshots, and overestimated for favorites, the true probability of winning. In 10 out of 14 grades bettors significantly overbet favorites, and underbet longshots in 8 out of 14. Copyright Springer 2007

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  • Anil Gulati & Shekar Shetty, 2007. "Empirical evidence of error in pricing of favorites and longshots in greyhound racing," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 31(1), pages 49-58, March.
    • Handle: RePEc:spr:jecfin:v:31:y:2007:i:1:p:49-58
    DOI: 10.1007/BF02751511
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    Cited by:

    1. Jinook Jeong & Jee Young Kim & Yoon Jae Ro, 2019. "On the efficiency of racetrack betting market: a new test for the favourite-longshot bias," Applied Economics, Taylor & Francis Journals, vol. 51(54), pages 5817-5828, November.

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