Modelling football match results and testing the efficiency of the betting market

The research models football results using an ordered probit regression. The football market differs from that of horse racing in that it is typically fixed odds in nature. The betting prices generally remain unchanged in relation to bettor demand. Created by the bookmakers, this added risk exposure generates ample opportunities to uncover inefficiencies in the market. A dataset consisting of information from the most recent 11 years from six European countries has been used. Evidence is found of departures from weak-form efficiency. The betting odds on offer do not reflect their true probabilities and evidence is found showing favourite long shot bias consistent with past research. Also, the betting odds available for favourites tend to be overpriced. The evidence shows that a strategy of betting on home teams offers better value for the money than betting on draws or away teams. The bookmaker odds on offer include a premium charged to compensate risk exposure and include economic rents charged. As a result, the researcher was not able to capitalise on these betting inaccuracies because of this over-round mechanism. The researcher’s ordered probit model suggests that there is available information not reflected in bookmaker prices. The research uses this information to create strategies capable of exploiting betting inefficiencies. Evidence shows that a strategy of betting on favourites and home teams that are overpriced provide positive returns.

Level dc:type.qualificationlevel

masters

Grantor dc:publisher.institution

National University of Ireland Maynooth

Year dc:date.issued

2012

Author dc:creator

• Sheridan, Declan

• Economics, Finance & Accounting

Language dc:language

en