Research on betting market efficiency presents mixed findings, with some studies identifying persistent inefficiencies and others suggesting that markets have become more efficient over time. Certain strategies have been found to yield profits, such as backing favorites with high win probabilities, which appears to exploit pricing errors in betting markets (Direr, 2011). Similarly, probit-based models have been used to identify profitable opportunities, indicating that some inefficiencies persist despite market sophistication (Gray & Gray, 1997). However, other research suggests that these inefficiencies have declined over time as market participants become more informed and bookmakers refine their odds-setting processes (Krieger et al., 2011; Gramm & Owens, 2006).
Behavioral complexity in advertising may contribute to inefficiencies by encouraging bettors to engage in complex wagers that do not offer optimal returns. Studies suggest that advertising strategies can influence betting behavior by promoting bets that appear appealing but are ultimately disadvantageous for consumers (Newall, 2017). Another potential source of inefficiency is arbitrage betting, where differences in odds across bookmakers create risk-free profit opportunities. While some research has identified conditions where arbitrage betting is possible (Vlastakis et al., 2009), transaction costs and bookmaker restrictions often limit profitability, particularly for small-stakes bettors (Direr, 2011).
The influence of televised sporting events on betting markets is also notable, as certain betting outcomes, such as point spreads, can impact viewer engagement and market movements (Salaga et al., 2020). Ultimately, while inefficiencies in betting markets exist, they do not always translate into sustained profits due to market evolution, bookmaker adjustments, and the imposition of betting restrictions (Asch & Quandt, 1987; Gray & Gray, 1997). These factors highlight the dynamic nature of betting markets, where profitable strategies may be temporary as markets adapt to new information and bettor behavior.
The influence of televised sporting events on betting markets is also notable, as certain betting outcomes, such as point spreads, can impact viewer engagement and market movements
Summary of: Salaga et al, 2020
Anecdote
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Articles Cited
- “A. Direr (2011): Are betting markets efficient? Evidence from European Football Championships, https://doi.org/10.1080/00036846.2011.602010
- The paper finds that a simple betting strategy of backing overwhelmingly favorite outcomes with odds less than 1.19 can yield a statistically significant positive return, suggesting that the European football online betting market is not fully efficient.”
- “Kevin Krieger, Andy Fodor, Greg Stevenson (2011): The Sensitivity of Findings of Expected Bookmaker Profitability, https://doi.org/10.1177/1527002511418516
- The authors re-examined the findings of a previous study by Levitt on the profitability of sports bookmakers, and found that the increased profitability reported by Levitt has decreased in more recent data.”
- “Steven Salaga, Scott Tainsky, Michael J. Mondello (2020): Betting Market Outcomes and NBA Television Viewership, https://doi.org/10.1123/jsm.2019-0046
- Betting market outcomes, specifically whether the local team covers the point spread and the uncertainty around the point spread, are statistically and economically significant drivers of local market television viewership for NBA games.”
- “P. Newall (2017): Behavioral complexity of British gambling advertising, https://doi.org/10.1080/16066359.2017.1287901
- The paper examines how the complexity of British gambling advertising, particularly “”live-odds”” TV gambling adverts for soccer matches, leads consumers to overestimate the probability of winning these complex bets.”
- “P. Gray, Stephen Gray (1997): Testing market efficiency: Evidence from the NFL sports betting market, https://doi.org/10.1111/J.1540-6261.1997.TB01129.X
- The paper examines the efficiency of the NFL betting market using a probit model and finds that probit-based betting strategies can generate statistically significant profits, though with some inconsistency in out-of-sample predictions.”
- “Marshall K. Gramm, Douglas H. Owens (2006): Efficiency in Pari-Mutuel Betting Markets across Wagering Pools in the Simulcast Era, https://doi.org/10.2307/20111861
- The paper investigates the efficiency of betting markets in the simulcast era, finding that while inefficiencies still exist, they are reduced compared to prior studies due to the increased accessibility and betting volume associated with simulcasting.”
- “P. Asch, R. Quandt (1987): Efficiency and Profitability in Exotic Bets, https://doi.org/10.2307/2554443
- The paper examines the efficiency and profitability of exotic racetrack bets, finding the markets are not efficient but the inefficiencies are insufficient to permit consistent profits from simple betting strategies, and there is some evidence of “”smart money”” using exotic bets to avoid signaling their actions.”
- “Nikolaos Vlastakis, George Dotsis, Raphael N. Markellos (2009): How Efficient is the European Football Betting Market? Evidence from Arbitrage and Trading Strategies, https://doi.org/10.1002/FOR.1085
- The paper assesses the efficiency of the European football betting market by examining the forecastability of match outcomes and the profitability of various betting strategies.”
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.
