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New entry, strategic diversity and efficiency in soccer betting markets: the creation and suppression of arbitrage opportunities

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  • Andrew Grant
  • Anastasios Oikonomidis
  • Alistair C. Bruce
  • Johnnie E. V. Johnson

Abstract

We find that prices offered by competing bookmakers within the same quote-driven soccer (football) betting market provide arbitrage opportunities. However, the management practices of bookmakers prevent informed bettors exploiting these in practice. We identify two groups of bookmakers, ‘position-takers’ and ‘book-balancers’. Position-takers alter their odds infrequently, while actively restricting informed traders. Book-balancers actively manage inventory by adjusting odds, and place few restrictions on their customers. We identify 545 arbitrage portfolios, and find that around 50% would require a bet on the favourite at the position-taking bookmaker. The management practices of position-takers generally prevent these opportunities being exploited in practice.

Suggested Citation

  • Andrew Grant & Anastasios Oikonomidis & Alistair C. Bruce & Johnnie E. V. Johnson, 2018. "New entry, strategic diversity and efficiency in soccer betting markets: the creation and suppression of arbitrage opportunities," The European Journal of Finance, Taylor & Francis Journals, vol. 24(18), pages 1799-1816, December.
    • Handle: RePEc:taf:eurjfi:v:24:y:2018:i:18:p:1799-1816
    DOI: 10.1080/1351847X.2018.1443148
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    3. Lorig, Matthew & Zhou, Zhou & Zou, Bin, 2021. "Optimal bookmaking," European Journal of Operational Research, Elsevier, vol. 295(2), pages 560-574.

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