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The University of Southampton
Centre for Risk Research

Visiting researcher from Sydney Business School delivers seminar on betting in sports markets

Published: 7 January 2014

One of the Centre for Risk Research's visiting members of staff, Dr. Andrew Grant from the University of Sydney, delivered a seminar that explored how certain bookmakers are more efficient at predicting outcomes in football betting markets.

In his seminar, delivered at the University of Southampton, Andrew argued that there are two types of bookmakers in football betting markets: label book-balancing and position-taking bookmakers. He suggested that their operational differences hold the key to the evolution of prices within the aggregate marketplace.

Dr. Grant describes his findings

Book-balancing bookmakers provide online services only, and operate a high-turnover, low-margin business, and do not restrict trade with sophisticated bettors. Position-taking bookmakers, conversely, operate both physical world betting shops and operate a high-margin, low-turnover business, whilst actively maintaining a clientele of unsophisticated customers. Andrew described how he and his colleagues analysed a unique longitudinal dataset relating to the odds posted by a leading book-balancing and a leading position-taking bookmaker for six major European football leagues over the 2012-13 season.

Dr. Grant answering questions

Andrew explained that his research found that the book-balancing bookmaker charged a consistently lower transaction cost, and changes their odds five times more frequently than the position-taking bookmaker, indicative of active management of the book to avoid liabilities from sophisticated clientele. The prices from the book-balancing bookmaker are more efficient predictors of match outcomes than the prices from the position-taking bookmaker. Andrew concluded by explaining that prices in football betting markets are set on the demand side, rather than the supply side as has previously been hypothesised.

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