Globalisation and Efficiency in the Fixed-odds Soccer Betting ... - Istituti

This should add to their excitement at the match. Bookmakers would again be expected as part
of their profit-maximising decision to take account of how odds-sensitive this segment of the
market (mainly home fans, betting (if at all) on home teams) is likely to be.
We also test for favourite-longshot bias. The result is likely to be of interest in that
evidence on favourite-longshot bias in American team sports appears to be that it is in the
opposite direction from that widely observed in horse and dog racing (see Woodland and
Woodland (1994 and 2001) on baseball and hockey respectively). If we were similarly to find
negative favourite-longshot bias in this market, we might start to discern the beginning of a
pattern in which sets of odds in team sports consistently displayed different characteristics from
those in horse and dog betting.
The earliest study of the fixed odds market, Pope and Peel (1989), estimated a linear
probability model where the outcome of a bet (win or not) was regressed on the bookmaker-
probability associated with the bet. We adopt this model and also follow their procedure of
estimating by weighted least squares (with weights derived from fitted values of the dependent
variable, obtained using preliminary OLS estimation) in recognition of the likelihood of a
heteroscedasticity problem from ordinary least squares. However, we expand the regression to
test for home-away bias and for bias associated with relative fan numbers of the teams in a
match. Our model is therefore
PROBWINi = ∀ + ∃1 BOOKMAKER-PROBABILITYi + ∃2 (HOMEi)*(BOOKMAKER-
PROBABILITYi) + ∃3 HOMEi + ∃4 DIFFATTEND
17