In this paper, the authors employ a large new data set to examine explanations of the tendency for favorites to be under-bet and longshots over-bet in recent British racetrack betting markets. They demonstrate that both demand-and-supply side factors can explain this favorite-longshot bias and...

Several environmental changes in the 1990s--including the introduction of a national lottery, the rise of Internet gambling, and the reduction of trade barriers within the EU--induced the UK government to initiate a large--scale review of betting duty. As a result of this review, the government...