Research on insider trading in sports betting markets presents a complex picture, with some studies suggesting that insiders can achieve an edge by accurately predicting outcomes, while others highlight the challenges of identifying and quantifying insider activity (Hegarty, 2024; Brown, 2012; Whelan, 2024). Insider trading raises ethical and regulatory concerns, as it can impose hidden costs on regular bettors who lack access to privileged information. This has led to debates over whether stricter oversight is necessary to level the playing field (Paton et al., 1999; Peirson, 2010). However, regulatory enforcement remains difficult due to the challenge of distinguishing between legitimate expert analysis and the use of undisclosed information (Peirson, 2010; Schnytzer & Shilony, 1995).
While insider information can theoretically yield betting advantages, alternative sources of market intelligence, such as online tipster communities, have also been studied for their predictive potential. Some research suggests that crowdsourced betting advice, when aggregated properly, can enhance returns, though the reliability of these insights varies depending on the level of expertise within a given community (Grüttner et al., 2021). This raises the question of whether insider knowledge is inherently superior or whether informed public bettors can achieve similar success through diligent research and pattern recognition.
Importantly, betting returns alone may not always reflect genuine forecasting skill. Some bettors may achieve positive returns through short-term market inefficiencies rather than superior predictive accuracy (Wunderlich & Memmert, 2020). This distinction is crucial, as it suggests that financial success in betting markets is not necessarily a direct measure of an individual’s ability to predict outcomes. Ultimately, while insider tips may offer some advantage, they do not guarantee profitability, and the role of privileged information remains an area of ongoing debate and scrutiny.
This raises the question of whether insider knowledge is inherently superior or whether informed public bettors can achieve similar success through diligent research and pattern recognition
Summary of: Grüttner Et Al 2021
Anecdote
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Articles Cited
- “Karl Whelan (2024): On Estimates of Insider Trading in Sports Betting, https://doi.org/10.1111/manc.12505
- The method used in previous research to estimate the fraction of money placed on sports betting by “”insiders”” with superior information to bookmakers is flawed and will produce positive estimates even when there are no insiders, and variations in these estimates are more likely due to other factors rather than the amount of inside information.”
- “Tadgh Hegarty (2024): Separating insider and informed behavior: Evidence from a natural setting, https://doi.org/10.1002/soej.12690
- This paper uses novel betting markets to separate insider from expert trading, and finds evidence supporting predictions from the Shin model of insider trading, including that price setters charge a premium in markets with high proportions of insiders and that insiders accurately predict event outcomes.”
- “Alasdair Brown (2012): Evidence of in-play insider trading on a UK betting exchange, https://doi.org/10.1080/00036846.2010.537644
- The paper examines whether “”informed”” traders in a betting market derive their advantage from access to private, inside information or from a superior ability to process public information, using data from a sports betting exchange during a tennis match, and finds evidence of inside information but not of a superior ability to process public information.”
- “A. Grüttner, Thiemo Wambsganss, A. Back (2021): From data to dollar: using the wisdom of an online tipster community to improve sports betting returns, https://doi.org/10.1504/EJIM.2021.10031658
- The researchers found that online tipster communities contain wisdom that can be used to improve sports betting returns, with tipsters winning 3.29% more tips than bookmakers and producing average yields of 3.97%, and they identified four characteristics that indicate smarter sub-crowds within the overall community.”
- “D. Paton, L. Williams, Stuart A. Fraser (1999): Regulating Insider Trading in Betting Markets, https://doi.org/10.1111/1467-8586.00081
- The paper argues that insider trading in betting markets should be more tightly regulated, as it imposes a cost on the majority of bettors, and that empirical evidence shows that betting markets with tighter controls against insider trading have a lower incidence of such activity.”
- “J. Peirson (2010): Expert Analysis and Insider Information in Horse Race Betting: Regulating Informed Market Behaviour, https://doi.org/10.4284/SEJ.2010.76.4.976
- The paper presents a new model analyzing the effect of uncertainty faced by bookmakers, showing that bettors with inside information or expert analysis decrease the odds set by profit-maximizing bookmakers, and uses data on previously unraced two-year-old horses and those that have raced previously to examine the impact of the greater possibility of insider information on odds bias in relation to unraced horses.”
- “Adi Schnytzer, Y. Shilony (1995): Inside Information in a Betting Market, https://doi.org/10.2307/2235162
- Even exposure to “”second hand”” inside information in the Australian horse-betting market can affect behavior, increase payoffs, and improve the prediction of race results.”
- “Fabian Wunderlich, D. Memmert (2020): Are betting returns a useful measure of accuracy in (sports) forecasting?, https://doi.org/10.1016/j.ijforecast.2019.08.009
- The paper demonstrates that positive betting returns can be generated without superior model accuracy, and that betting returns should not be treated as a valid measure of model accuracy, but rather as a measure of profitability.”
Insufficient Detail?
At times it is difficult to answer the question as there are not enough relevant published journal articles to relate. It could be that the topic is niche, there’s a significant edge (and researchers prefer not to publish), there is no edge or simply no one has thought to investigate.
