This paper is an analysis of the demand for thoroughbred racetrack wagers, examining evidence that would support the existence of two types of bettors: the risk-averse informed bettor versus the uninformed bettor. Looking at 12 major racetracks over the fall of 2002, we undertake an empirical examination of the determinants of bettors' preferences for particular wagers on specific races. The goal is to try to determine what individual aspects of a race (conditions, surface, participants, etc.) will encourage increased wagering dollars. With the advent of simulcasting, the competition for the wagering dollar is fierce, as the bettor can choose from more than 100 races daily, each race offering numerous betting options. We find for most wagers that higher quality participants, larger and more competitive fields, and turf races increase betting volume while higher pari-mutuel takeout, poor track conditions, and other races run concurrently reduce volume. However, more competitive fields reduce betting volume in the show and trifecta pools. Optimal field size is determined to be between 10 and 12 betting interests. Overall, we find support for the existence of a significant share of risk-averse informed bettors.

Previous studies of efficient markets in parimutuel betting isolated only one race characteristic, determining efficiency by comparing subjective to objective probabilities of different groupings. By incorporating regression analysis and looking at a wide range of race specific variables, this study is able to isolate various factors which influence efficiency. Using a data set of 5020 races at 18 US racetracks, a standard favourite-longshot bias was found, which diminishes for races with larger pools and more horses in a field, and increases for races with higher quality fields and maiden races. When track-specific characteristics are factored out, similar results occur and it is also found that races on grass reduce the bias.

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Many empirical studies have found the existence of a bias where the general public overestimates low probability events. This phenomenon has been termed the favourite-longshot bias and has been much studied in betting markets. This article looks at efficiency in multihorse 'exotic' wagers using 11 194 races run at 35 U.S. racetracks. We find the standard favourite-longshot in exacta wagers (involves picking the first two finishers in order). Results are unclear for trifecta wagers (picking the first three finishers in order).