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Title: Information, prices and efficiency in an online betting market Authors:  Guy Elaad - Ariel University (Israel)
Carl Singleton - University of Reading (United Kingdom) [presenting]
James Reade - University of Reading (United Kingdom)
Abstract: The odds (or prices) set by fifty-one online bookmakers for the result outcomes in over 16,000 association football matches in England since 2010 are studied. Adapting a methodology typically used to evaluate forecast efficiency, we test the Efficient Market Hypothesis in this context. At the overall market level, we found no statistically significant evidence which could reject an efficient market hypothesis of the online betting market for English football match results. The odds offered by online bookmakers were generally not biased towards any particular result outcome, nor did they feature the favourite-longshot bias, which has been documented in other betting markets. But individual bookmaker-specific markets are not efficient, since they fail to use the information contained in their competitors' odds. There is also suggestive evidence that the increased competition facing online bookmakers has reduced commission rates and profit margins.