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Efficiency and Profitability in Exotic Bets

In: Efficiency Of Racetrack Betting Markets

Author

Listed:
  • PETER ASCH

    (Rutgers University, USA)

  • RICHARD E. QUANDT

    (Princeton University, USA)

Abstract

The efficiency and profitability of exotic racetrack bets such as exactas and daily doubles are examined. Efficiency is understood to mean that above average returns cannot be made in the long run once risk is appropriately controlled for. The markets in question are found not to be efficient; the inefficiencies, however, are insufficient to permit simple strategies to show a consistent profit. Some evidence of “smart money” exists in that holders of inside information may bet on exactas rather than equivalent standard bets in order to avoid signalling their actions to the betting public.

Suggested Citation

  • Peter Asch & Richard E. Quandt, 2008. "Efficiency and Profitability in Exotic Bets," World Scientific Book Chapters, in: Donald B Hausch & Victor SY Lo & William T Ziemba (ed.), Efficiency Of Racetrack Betting Markets, chapter 45, pages 453-463, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789812819192_0045
    as

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