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An Examination of Market Efficiency in British Racetrack Betting

In: Efficiency Of Racetrack Betting Markets

Author

Listed:
  • Paul E. Gabriel

    (Loyola University of Chicago, USA)

  • James R. Marsden

    (University of Kentucky, USA)

Abstract

The nature of the British racetrack betting market provides a distinctly different opportunity for testing market efficiency. On the basis of data from a single racing season, we compare the returns to two similar forms of betting: (1) starting price bets placed with bookmakers and (2) pari-mutuel tote bets. Our analysis indicates that tote returns are consistently higher than starting price returns, even though both betting forms are of similar risk and the payoffs are widely reported. The persistently higher tote returns suggest that the British racetrack betting market does not satisfy the conditions of semistrong efficiency. Our results also provide indirect support that the market fails to meet the conditions for strong efficiency.

Suggested Citation

  • Paul E. Gabriel & James R. Marsden, 2008. "An Examination of Market Efficiency in British Racetrack Betting," World Scientific Book Chapters, in: Donald B Hausch & Victor SY Lo & William T Ziemba (ed.), Efficiency Of Racetrack Betting Markets, chapter 54, pages 551-562, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789812819192_0054
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