Whilst Vaughan Williams’ research on the horse race betting market is highly supportive of the notion that transaction costs are a barrier to efficiency, recent research by David Forrest and Ian McHale, lecturers at the University of Salford, has highlighted the fact that despite the presence of low transaction costs in the (traditional fixed odds) tennis betting market, there remains in place a strong positive longshot bias.
The authors also highlight a situation where there are positive returns to be had from a strategy of backing very strong favourites and, indeed, how, returns to betting on strong favourites are even greater when wagering is restricted to high profile tournaments such as Wimbledon.
“The evidence then is that this market is weak form efficient. Knowledge of returns on bets in one year allowed participants to identify a strategy that yielded above-average returns in the following year… we have even been able to document positive returns to a strategy of backing very strong favourites.”
I was going to shut up for a while Niall, but you ruined my day.
Your post, this is great news for every gambler out there…
But let’s have a reality check nonetheless.
There must be close to 100 people who think they got a winning proposition, but don’t, for every person who does find a winning strategy. This in itself is a rather unfortunate “observation” because it means more firepower for the sceptics who believe it might take 10 years before we can celebrate wide acceptance of prediction markets. Because, it means we may need to convince 99% of the public.
When someone does detect a superior strategy, for the right reasons, don’t expect it to be publicized…. or sold. The “inventer” will carefully hide it in his closet and put 10 locks on it.
How depressive… the good stuff we will never read about, and the bad stuff will keep haunting us.
Back to science. As for the two gentlemen you mentioned Niall, it probably only takes one injured player and one or two surprise results to shut them up for good. This is how it usually works out for the prejudiced mind – the Gambling God can be relentless.
Now we’re getting close to the heart of the matter. Betting exchanges express the ultimate form of research, science at it’s best. If you are a lazy researcher or easily convinced, maybe even full of yourself, you most likely will have to pay, or pay dearly. Only a true scientist (pro or amateur), objective and sceptical, someone who can be honest with himself, will have a chance of making money.
“We excite citizen science…” your main page should read, Chris. Don’t count on betfair, btw.
“Tennis authorities were last night investigating a suspected Wimbledon betting sting after bookmakers suspended the market on Jürgen Melzer’s straight-sets defeat of Wayne Odesnik on Court 14.
The Tennis Integrity Unit, set up last year to investigate allegations of match fixing, was alerted by several betting operators who had witnessed suspicious activity around the match. Paddy Power withdrew odds on the match after thousands of pounds were staked in cash at several London shops specifically on a 3–0 result – exactly how the match ended. Ladbrokes similarly withdrew its market.
Betfair, the betting exchange, reported that odds on a straight-sets victory for the No26 seed, Melzer, had tumbled from their pre-match level of evens to 1–5. All but £1,000 of the £255,000 staked on Betfair’s correct-score market came down on a 3-0 Melzer win. Punters clearly considered Melzer’s win a foregone conclusion, with odds collapsing from 1–4 to 1–16.
When asked about the suspicious betting activity after his match, Odesnik, the 109th-ranked player in the world, said he knew nothing of it. “It’s only my second time playing here, I’m young, I’m here to play,” he said. “I’m here with my coach and friends and I would never do anything like that to jeopardise my future.”
Odesnik had been spotted the evening before in a pub in London’s Earl’s Court, O’Neills, but insisted he had been there only “for dinner”. He also confirmed the rumours circulating on betting forums prior to the match that he had been carrying an injury into the match. “I had a little bit of an injury in my last grass-court tournament this year,” he said.”
Medemi
In the long run there is only one certainty – death.
http://www.guardian.co.uk/sport/2009/jun/24/wimbledon-betting-melzer-digger