Publication details

To bet or not to bet: a reality check for tennis betting market efficiency

Authors

LYÓCSA Štefan VÝROST Tomáš

Year of publication 2018
Type Article in Periodical
Magazine / Source Applied Economics
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web http://www.tandfonline.com/doi/abs/10.1080/00036846.2017.1394973
Doi http://dx.doi.org/10.1080/00036846.2017.1394973
Field Management and administrative
Keywords Market efficiency; betting; Bradley-Terry model; data- snooping bias; tennis
Attached files
Description We present evidence that the tennis betting market appears to be much more efficient than suggested by previous studies. More specifically, we study the market efficiency by studying the forecasting performance of a diversified set of 40 betting rules in two ways: by searching for the existence of a return differential between betting rules and by analysing the profitability of betting rules. Even though individual tests provide evidence that, within our universe of betting rules, positive returns can be achieved, when data-snooping bias is taken into account, the evidence diminishes. Subsequently, we also find very little evidence of return differentials between betting rules. These results cast doubts on previous research as they suggest that when the potential detrimental effects of data-dreading are taken into account, betting markets in general might not, ultimately, be so inefficient.

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