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Betting volume and market efficiency in Hong Kong race track betting

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  • W. David Walls
  • Kelly Busche

Abstract

The Harville formula provides an analytical basis for the arbitrage pricing relationship between the odds on 'win' bets and the odds on 'quinella' bets in parimutuel betting markets. This study employs this relationship and high frequency time series data on the evolution of the betting odds from Hong Kong race tracks to test the hypothesis of betting market efficiency and to examine the role of the volume of belting. The non-stationary odds data are analysed using Johansen's maximum likelihood cointegration techniques to test the condition for market efficiency. The volume of betting is found to be a significant determinant of the degree of market efficiency across races but not within races.

Suggested Citation

  • W. David Walls & Kelly Busche, 1996. "Betting volume and market efficiency in Hong Kong race track betting," Applied Economics Letters, Taylor & Francis Journals, vol. 3(12), pages 783-787.
    • Handle: RePEc:taf:apeclt:v:3:y:1996:i:12:p:783-787
    DOI: 10.1080/135048596355592
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    Cited by:

    1. Kelly Busche & W. David Walls, 2000. "Decision Costs And Betting Market Efficiency," Rationality and Society, , vol. 12(4), pages 477-492, November.

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