New entry, strategic diversity and efficiency in soccer betting markets: the creation and suppression of arbitrage opportunitiesTools Grant, Andrew and Oikonomidis, Anastasios and Bruce, Alistair C. and Johnson, Johnnie E.V. (2018) New entry, strategic diversity and efficiency in soccer betting markets: the creation and suppression of arbitrage opportunities. European Journal of Finance . ISSN 1466-4364
AbstractWe find that prices offered by competing bookmakers within the same quote-driven soccer (football) betting market provide arbitrage opportunities. However, the management practices of bookmakers prevent informed bettors exploiting these in practice. We identify two groups of bookmakers, ‘position-takers’ and ‘book-balancers.’ Position-takers alter their odds infrequently, while actively restricting informed traders. Book-balancers actively manage inventory by adjusting odds, and place few restrictions on their customers. We identify 545 arbitrage portfolios, and find that around 50% would require a bet on the favourite at the position-taking bookmaker. The management practices of position-takers generally prevent these opportunities being exploited in practice.
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