Betting on a buzz: Mispricing and inefficiency in online sportsbooks

Markets are information aggregators. But how do they incorporate new data into their pricing? We examine the response of prediction markets to a novel information shock in a quasi‐natural experiment: How did the absence announcements of elite soccer players influence the betting odds of affected matches? Analyzing the first four statistical moments of 117,174 odds from 32 bookmakers, we identify initial inertia followed by a lagged reaction that we cannot reason with learning. Our findings raise questions about how bettors and bookmakers incorporate new information into their beliefs. It has broader implications regarding information processing in markets.

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Suspense and Surprise: The Role of Bookmakers’ Spreads

Abinzano,

Bonilla,

Muga

2024

Journal of Sports Economics

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Uncertainty in a competition's final result can affect the event's demand via suspense and surprise. Based on a sample of more than 50,000 professional tennis matches, this paper shows how information from bookmaker prices, implied probabilities, and price spreads contain relevant information that explains the uncertainty in the final results of the matches. There is a negative relation between the implied probability for the favorite and the different measures of match result uncertainty proposed and a positive relationship between the spread and these measures when the bookmaker sets prices based on information. This second relation disappears when the bookmaker sets prices based on betting volumes. The results have potential implications both for organizers in scheduling matches with higher levels of uncertainty and for punters in setting strategies that predict the exact result of a match.

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Betting on a buzz: Mispricing and inefficiency in online sportsbooks

Cited by 3 publications

References 39 publications

Not feeling the buzz: Correction study of mispricing and inefficiency in online sportsbooks

Not feeling the buzz: Correction study of mispricing and inefficiency in online sportsbooks

Pricing in response to new information: The case of betting markets

Suspense and Surprise: The Role of Bookmakers’ Spreads

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