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

New entry, strategic diversity and efficiency in soccer betting markets: the creation and suppression of arbitrage opportunities
New entry, strategic diversity and efficiency in soccer betting markets: the creation and suppression of arbitrage opportunities
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.
1351-847X
1-18
Grant, Andrew
3c10e948-3f7e-452e-a3f1-8cfb8712c522
Oikonomidis, Anastasios
3a9f5674-08ab-4f9f-9285-bb929dce146c
Bruce, Alistair C.
acee9acc-fd28-44bf-8781-7a9d135319ac
Johnson, Johnnie E.V.
6d9f1a51-38a8-4011-a792-bfc82040fac4
Grant, Andrew
3c10e948-3f7e-452e-a3f1-8cfb8712c522
Oikonomidis, Anastasios
3a9f5674-08ab-4f9f-9285-bb929dce146c
Bruce, Alistair C.
acee9acc-fd28-44bf-8781-7a9d135319ac
Johnson, Johnnie E.V.
6d9f1a51-38a8-4011-a792-bfc82040fac4

Grant, Andrew, Oikonomidis, Anastasios, Bruce, Alistair C. and Johnson, Johnnie E.V. (2018) New entry, strategic diversity and efficiency in soccer betting markets: the creation and suppression of arbitrage opportunities. European Journal of Finance, 1-18. (doi:10.1080/1351847X.2018.1443148).

Record type: Article

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.

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Accepted/In Press date: 15 February 2018
e-pub ahead of print date: 5 March 2018

Identifiers

Local EPrints ID: 418258
URI: http://eprints.soton.ac.uk/id/eprint/418258
ISSN: 1351-847X
PURE UUID: e806b2ff-b6ae-4665-bf30-48b69812edd8

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Date deposited: 27 Feb 2018 17:30
Last modified: 07 Oct 2020 05:39

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Contributors

Author: Andrew Grant
Author: Anastasios Oikonomidis
Author: Alistair C. Bruce

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