Bookmaker and Pari-Mutuel Betting : Is a (Reverse) Favourite-Longshot Bias Built-In?

A widely documented empirical regularity in gambling markets is that bets on high probability events (a race won by a favourite) have higher expected returns than bets on low probability events (a longshot wins). Such favourite-longshot (FL) biases however appear to be more severe and persistent in bookmaker markets than in pari-mutuel markets; the latter sometimes exhibit no bias or a reverse FL bias. Our results help understand these differences: the odds grid in bookmaker markets leads to a built-in FL bias, whereas that used in pari-mutuel betting pushes these markets toward a reverse FL bias

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Year of publication:	[2007]
Authors:	Koch, Alexander K.
Other Persons:	Shing, Hui-Fai (contributor)
Publisher:	[2007]: [S.l.] : SSRN
Subject:	Glücksspiel \| Gambling \| Pferdesport \| Equestrian sports \| Systematischer Fehler \| Bias \| Wetten \| Betting \| Theorie \| Theory

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