The Favourite‐Longshot Bias, Bookmaker Margins and Insider Trading in a Variety of Betting Markets
Open accessAbstract
This paper verifies the existence of the favourite‐longshot bias in a variety of sports betting markets where odds are set by bookmakers, but the precise pattern of the bias is not identical. Evidence is found to support a central prediction of the Shin (1993) model, which asserts that bookmakers are impelled to create a bias in their odds because of the presence of insider traders: that margins increase with the number of competitors.
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
The self-check needs the paper’s full text.
Cites
Anomalies: Parimutuel Betting Markets: Racetracks and Lotteries
Thaler, R. H., & Ziemba, W. T. (1988) · Journal of Economic Perspectives · doi:10.1257/jep.2.2.161 · Cited by 621 · see citing works
Probability and Utility Estimates for Racetrack Bettors
Ali, M. M. (1977) · Journal of Political Economy · doi:10.1086/260600 · Cited by 397 · see citing works
Market Efficiency and the Favorite-Longshot Bias: The Baseball Betting Market
Woodland, L. M., & Woodland, B. M. (1994) · The Journal of Finance · doi:10.1111/j.1540-6261.1994.tb04429.x · Cited by 207 · see citing works
Measuring the Incidence of Insider Trading in a Market for State-Contingent Claims
Shin, H. S. (1993) · The Economic Journal · doi:10.2307/2234240 · Cited by 197 · see citing works
Prices of State Contingent Claims with Insider Traders, and the Favourite-Longshot Bias
Shin, H. S. (1992) · The Economic Journal · doi:10.2307/2234526 · Cited by 182 · see citing works
Optimal Betting Odds Against Insider Traders
Shin, H. S. (1991) · The Economic Journal · doi:10.2307/2234434 · Cited by 166 · cited 2× · see citing works
“degree of insider trading in horse racing are similar to the average estimates reported by Shin (1993). It is interesting that the average degree of insider trading is estimated to be lower in greyhound and horse racing than in the other sports (except baseball) even though they have the highest individual estimates.”
Utility Analysis and Group Behavior: An Empirical Study
Weitzman, M. L. (1965) · Journal of Political Economy · doi:10.1086/258989 · Cited by 156 · see citing works
Information Efficiency in Betting Markets: a Survey
Williams, L. V. (1999) · Bulletin of Economic Research · doi:10.1111/1467-8586.00069 · Cited by 138 · see citing works
Quandt, R. E. (1986) · The Quarterly Journal of Economics · doi:10.2307/1884650 · Cited by 126 · see citing works
An Exception to the Risk Preference Anomaly
Busche, K., & Hall, C. D. (1988) · The Journal of Business · doi:10.1086/296436 · Cited by 124 · see citing works
Some Evidence of Insider Knowledge in Horse Race Betting in Britain
Crafts, N. F. R. (1985) · Economica · doi:10.2307/2553853 · Cited by 95 · see citing works
Rosett, R. N. (1965) · Journal of Political Economy · doi:10.1086/259086 · Cited by 84 · see citing works
An examination of the empirical derivatives of the favourite-longshot bias in racetrack betting
Sobel, R. S., & Raines, S. T. (2003) · Applied Economics · doi:10.1080/00036840110111176 · Cited by 74 · see citing works
Racetrack wagering and the “uninformed” bettor: A study of market efficiency
Swidler, S. M., & Shaw, R. (1995) · The Quarterly Review of Economics and Finance · doi:10.1016/1062-9769(95)90071-3 · Cited by 44 · see citing works
The Relationship between Two Indicators of Insider Trading in British Racetrack Betting
Cain, M., Law, D., & Peel, D. A. (2001) · Economica · doi:10.1111/1468-0335.00235 · Cited by 13 · see citing works
Self-citation
Flagged first, then by citations
1 of the 16 references couldn’t be matched to a known paper.
Research works printed but not linked: 8
- Blough, S. R. (1994). 'Differences of opinion at the racetrack', pp. 323-42 in
- Hausch, D. B., Lo, V. S. Y. and Ziemba, W. T. (eds.), Efficiency of Racetrack Betting Markets, San Diego: Academic Press.
- Busche, K. (1994). 'Efficient market results in an Asian setting', pp. 615-16 in
- Hausch, D. B., Lo, S. Y. and Ziemba, W. T. (eds.), Efficiency of Racetrack Betting Markets, San Diego: Academic Press.
- Hausch, D. B., Lo, V. S. Y. and Ziemba, W. T. (eds.) (1994). Efficiency of Racetrack Betting Markets, San Diego: Academic Press.
- Sauer, R. D. (1998). 'The economics of wagering markets', Journal of Economic Literature, 36, pp. 2021-64.
- BULLETIN OF ECONOMIC RESEARCH # Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research 2003. 14678586, 2003, 3, · DOI
- THE FAVOURITE-LONGSHOT BIAS 273 # Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research 2003. 14678586, 2003, 3, · DOI
Cited by
Sorted by citations
Market Efficiency in Person‐to‐Person Betting
Smith, M., Paton, D., & Williams, L. V. (2006) · Economica · doi:10.1111/j.1468-0335.2006.00518.x · Cited by 92 · see citing works
Vlastakis, N., Dotsis, G., & Markellos, R. N. (2007) · Journal of Forecasting · doi:10.1002/for.1085 · Cited by 97 · see citing works
On determining probability forecasts from betting odds
Štrumbelj, E. (2014) · International Journal of Forecasting · doi:10.1016/j.ijforecast.2014.02.008 · Cited by 97 · see citing works
Assessing model-based and conflict-based uncertainty
Patt, A. (2006) · Global Environmental Change · doi:10.1016/j.gloenvcha.2006.10.002 · Cited by 76 · see citing works
Why do some soccer bettors lose more money than others
Buhagiar, R., Cortis, D., & Newall, P. (2018) · Journal of Behavioral and Experimental Finance · doi:10.1016/j.jbef.2018.01.010 · Cited by 59 · see citing works
Forrest, D., & McHale, I. G. (2007) · European Journal of Finance · doi:10.1080/13518470701705736 · Cited by 42 · see citing works
Cortis, D. (2015) · The Journal of Prediction Markets · doi:10.5750/jpm.v9i1.987 · Cited by 37 · see citing works
Set-level Strategic and Psychological Momentum in Best-of-three-set Professional Tennis Matches
Depken, C. A., Gandar, J. M., & Shapiro, D. A. (2022) · Journal of Sports Economics · doi:10.1177/15270025221085715 · Cited by 36 · see citing works
Betting market inefficiencies are short-lived in German professional football
Deutscher, C., Frick, B., & Ötting, M. (2018) · Applied Economics · doi:10.1080/00036846.2017.1418082 · Cited by 32 · see citing works
Štrumbelj, E. (2014) · Journal of Sports Economics · doi:10.1177/1527002513519329 · Cited by 29 · see citing works
The house doesn’t always win: Evidence of anchoring among Australian bookies
McAlvanah, P., & Moul, C. C. (2013) · Journal of Economic Behavior & Organization · doi:10.1016/j.jebo.2013.03.009 · Cited by 28 · see citing works
OPTIMAL PRICE SETTING IN FIXED‐ODDS BETTING MARKETS UNDER INFORMATION UNCERTAINTY
Makropoulou, V., & Markellos, R. N. (2011) · Scottish Journal of Political Economy · doi:10.1111/j.1467-9485.2011.00557.x · Cited by 27 · see citing works
Forecasting outcomes in spread betting markets: can bettors use ?quarbs? to beat the book?
Paton, D., & Williams, L. V. (2005) · Journal of Forecasting · doi:10.1002/for.949 · Cited by 29 · see citing works
The Conversion of Money Lines Into Win Probabilities
Berkowitz, J. P., Depken, C. A., & Gandar, J. M. (2017) · Journal of Sports Economics · doi:10.1177/1527002517696957 · Cited by 30 · see citing works
Random forest model identifies serve strength as a key predictor of tennis match outcome
Gao, Z., & Kowalczyk, A. M. (2021) · Journal of Sports Analytics · doi:10.3233/jsa-200515 · Cited by 25 · see citing works
Berkowitz, J. P., Depken, C. A., & Gandar, J. M. (2016) · The Quarterly Review of Economics and Finance · doi:10.1016/j.qref.2015.11.011 · Cited by 24 · see citing works
What causes the favourite-longshot bias? Further evidence from tennis
Lahvička, J. (2013) · Applied Economics Letters · doi:10.1080/13504851.2013.842628 · Cited by 22 · see citing works
Machine learning the harness track: Crowdsourcing and varying race history
Schumaker, R. P. (2012) · Decision Support Systems · doi:10.1016/j.dss.2012.12.013 · Cited by 22 · see citing works
Combining historical data and bookmakers’ odds in modelling football scores
Egidi, L., Pauli, F., & Torelli, N. (2018) · Statistical Modelling · doi:10.1177/1471082x18798414 · Cited by 20 · see citing works
Are Betting Markets Inefficient? Evidence From Simulations and Real Data
Winkelmann, D., Ötting, M., Deutscher, C., & Makarewicz, T. (2023) · Journal of Sports Economics · doi:10.1177/15270025231204997 · Cited by 16 · see citing works
Forecasting horse race outcomes: New evidence on odds bias in UK betting markets
Smith, M., & Williams, L. V. (2010) · International Journal of Forecasting · doi:10.1016/j.ijforecast.2009.12.014 · Cited by 15 · see citing works
Are Sports Bettors Biased toward Longshots, Favorites, or Both? A Literature Review
Newall, P. W. S., & Cortis, D. (2021) · Risks · doi:10.3390/risks9010022 · Cited by 14 · see citing works
Statistical risk warnings in gambling
Newall, P. W. S., Walasek, L., Hassanniakalager, A., Russell, A. M. T., Ludvig, E. A., & Browne, M. (2020) · Behavioural Public Policy · doi:10.1017/bpp.2020.59 · Cited by 12 · see citing works
What drives intermediation costs? A case of tennis betting market
Lyócsa, Š., & Fedorko, I. (2015) · Applied Economics · doi:10.1080/00036846.2015.1111993 · Cited by 11 · see citing works
Weak form information efficiency in betting markets
Williams, L. V. (2005) · Cambridge University Press eBooks · doi:10.1017/cbo9780511493614.003 · Cited by 11 · see citing works
It Takes All Sorts: A Heterogeneous Agent Explanation of State-Contingent Claims Mispricing
Restocchi, V., McGroarty, F., Gerding, E., & JOHNSON, J. E. V. (2016) · European Journal of Operational Research · doi:10.1016/j.ejor.2018.04.011 · Cited by 11 · see citing works
Bettors’ reaction to match dynamics: Evidence from in-game betting
Michels, R., Ötting, M., & Langrock, R. (2023) · European Journal of Operational Research · doi:10.1016/j.ejor.2023.04.006 · Cited by 9 · see citing works
Power, Not Fear: A Collusion-Based Account of Betting Market Inefficiency
Bruce, A. C., & Marginson, D. E. W. (2013) · International Journal of the Economics of Business · doi:10.1080/13571516.2013.782982 · Cited by 8 · see citing works
Betting market efficiency and prediction in binary choice models
Koning, R. H., & Zijm, R. (2022) · Annals of Operations Research · doi:10.1007/s10479-022-04722-3 · Cited by 8 · see citing works
Market evidence against widespread point shaving in college basketball
Berkowitz, J. P., Depken, C. A., & Gandar, J. M. (2018) · Journal of Economic Behavior & Organization · doi:10.1016/j.jebo.2018.06.018 · Cited by 8 · see citing works
Expert Analysis and Insider Information in Horse Race Betting: Regulating Informed Market Behavior
Peirson, J., & Smith, M. (2010) · Southern Economic Journal · doi:10.4284/sej.2010.76.4.976 · Cited by 8 · see citing works
Bounded cumulative prospect theory: some implications for gambling outcomes
Cain, M., Law, D., & Peel, D. A. (2007) · Applied Economics · doi:10.1080/00036840701728765 · Cited by 7 · see citing works
Self-citationEstimating the Implied Probabilities in the Tennis Betting Market: A New Normalization Procedure
Candila, V., & Scognamillo, A. (2018) · International Journal of Sport Finance · doi:10.1177/155862351801300302 · Cited by 7 · see citing works
Home advantage in professional soccer and betting market efficiency: The role of spectator crowds
Fischer, K., & Haucap, J. (2022) · Kyklos · doi:10.1111/kykl.12291 · Cited by 8 · see citing works
What drives biased odds in sports betting markets: Bettors’ irrationality and the role of bookmakers
Goto, S., & Yamada, T. (2023) · International Review of Economics & Finance · doi:10.1016/j.iref.2023.03.002 · Cited by 6 · see citing works
Marginson, D. E. W. (2010) · Southern Economic Journal · doi:10.4284/sej.2010.76.4.932 · Cited by 6 · see citing works
Does The Betting Industry Price Gender? Evidence from Professional Tennis
Barrutiabengoa, J. M., Corredor, P., & Muga, L. (2021) · Journal of Sports Economics · doi:10.1177/15270025211071026 · Cited by 5 · see citing works
Longshot bias: insights from the betting market on men's professional tennis
Forrest, D., & McHale, I. G. (2005) · Cambridge University Press eBooks · doi:10.1017/cbo9780511493614.009 · Cited by 4 · see citing works
Recreational versus professional bettors: Performance differences and efficiency implications
Bruce, A. C., JOHNSON, J. E. V., & Peirson, J. (2011) · Economics Letters · doi:10.1016/j.econlet.2011.10.014 · Cited by 5 · see citing works
Measurement of insider trading in wagering markets
Coleman, L. (2007) · Applied Financial Economics · doi:10.1080/09603100600675565 · Cited by 5 · see citing works
Explaining the performance of online sports bettors
d’Astous, A., & Gaspero, M. D. (2013) · International Gambling Studies · doi:10.1080/14459795.2013.826709 · Cited by 5 · see citing works
Relative pricing of binary options in live soccer betting markets
Hofer, V., & Leitner, J. J. (2017) · Journal of Economic Dynamics and Control · doi:10.1016/j.jedc.2016.12.007 · Cited by 4 · see citing works
Time to Unbridle U.S. Thoroughbred Racetracks? Lessons from Australian Bookies
Moul, C. C., & Keller, J. M. G. (2014) · Review of Industrial Organization · doi:10.1007/s11151-014-9418-z · Cited by 4 · see citing works
An Investigation of SVM Regression to Predict Longshot Greyhound Races
Schumaker, R. P., & Johnson, J. W. (2014) · Communications of the IIMA · doi:10.58729/1941-6687.1082 · Cited by 4 · see citing works
Semi-strong and strong form information efficiency in betting markets
Williams, L. V. (2005) · Cambridge University Press eBooks · doi:10.1017/cbo9780511493614.004 · Cited by 4 · see citing works
The election as horse race: betting and the election
Gallagher, M. (2008) · Palgrave Macmillan UK eBooks · doi:10.1057/9780230597990_9 · Cited by 4 · see citing works
Sillanpää, V., & Heino, O. (2013) · Aaltodoc (Aalto University) · Cited by 4 · see citing works
Weak Form Efficiency in Sports Betting Markets
(2023) · American Journal of Management · doi:10.33423/ajm.v23i2.6051 · Cited by 3 · see citing works
Just How Serious is Insider Trading? An evaluation using thoroughbred wagering markets
Coleman, L. (2013) · The Journal of Gambling Business and Economics · doi:10.5750/jgbe.v1i1.508 · Cited by 3 · see citing works
Costs, biases and betting markets: new evidencePreprint
Smith, M., Paton, D., & Williams, L. V. (2004) · RePEc: Research Papers in Economics · Cited by 3 · see citing works
Bookmaker and Pari-Mutuel Betting: Is a (Reverse) Favourite-Longshot Bias Built-In?Preprint
Koch, A. K., & Shing, H.-F. (2007) · SSRN Electronic Journal · doi:10.2139/ssrn.964438 · Cited by 3 · see citing works
Andersson, P., & Nilsson, H. (2015) · Journal of Behavioral Decision Making · doi:10.1002/bdm.1851 · Cited by 2 · see citing works
Outcome Uncertainty and Viewer Demand for Basic Cable Boxing
Butler, D., Butler, R. N., Maxcy, J. G., & Woodworth, S. (2023) · Journal of Sports Economics · doi:10.1177/15270025231156052 · Cited by 2 · see citing works
On the efficiency of racetrack betting market: a new test for the favourite-longshot bias
Jeong, J., Kim, J. Y., & Ro, Y. J. (2019) · Applied Economics · doi:10.1080/00036846.2019.1624918 · Cited by 2 · see citing works
The Conversion of Money Lines into Win Probabilities: Reconciliations and SimplificationsPreprint
Berkowitz, J. P., Depken, C. A., & Gandar, J. M. (2015) · SSRN Electronic Journal · doi:10.2139/ssrn.2658335 · Cited by 2 · see citing works
On optimal betting strategies with multiple mutually exclusive outcomes
Whelan, K. T. (2024) · Bulletin of Economic Research · doi:10.1111/boer.12474 · Cited by 1 · see citing works
Hood, M., & Jewell, R. T. (2022) · International Journal of Sport Finance · doi:10.32731/ijsf.173.082022.01 · Cited by 1 · see citing works
Painful Regret and Elation at the TrackPreprint
Schnytzer, A., & Luppi, B. (2008) · RePEc: Research Papers in Economics · Cited by 1 · see citing works
Payá, I., Peel, D. A., Law, D., & Peirson, J. (2005) · Cambridge University Press eBooks · doi:10.1017/cbo9780511493614.018 · Cited by 1 · see citing works
Self-citationHurley, W. J., & McDonough, L. (2005) · Cambridge University Press eBooks · doi:10.1017/cbo9780511493614.011 · Cited by 1 · see citing works
It Takes All Sorts: A Heterogeneous Agent Explanation of State-Contingent Claims MispricingPreprint
Restocchi, V., McGroarty, F., Gerding, E., & JOHNSON, J. E. V. (2016) · SSRN Electronic Journal · doi:10.2139/ssrn.2858339 · Cited by 1 · see citing works
What Causes the Favorite-Longshot Bias? Further Evidence from TennisPreprint
Lahvička, J. (2013) · SSRN Electronic Journal · doi:10.2139/ssrn.2287335 · Cited by 1 · see citing works
Chance or Ability? The Efficiency of the Football Betting Market RevisitedPreprint
Größ, J., & Rebeggiani, L. (2023) · SSRN Electronic Journal · doi:10.2139/ssrn.4318740 · Cited by 1 · see citing works
Orujov, A., & Jones, L. (2024) · SSRN Electronic Journal · doi:10.2139/ssrn.4799310 · Cited by 1 · see citing works
Hurley, W. J., & McDonough, L. (2013) · The Journal of Gambling Business and Economics · doi:10.5750/jgbe.v1i1.506
Inferring Risk Preferences Using Synthetic Win Bets in Horse Betting 'Exotic' MarketsPreprint
O'Connor, P. F. (2006) · SSRN Electronic Journal · doi:10.2139/ssrn.951071
What Can Bookies Teach Us About Pari-Mutuel Wagering Reform? Applying Australian Lessons to the U.S.Preprint
Moul, C. C., & Keller, J. M. G. (2011) · SSRN Electronic Journal · doi:10.2139/ssrn.1885069
Can Point Shaving in College Basketball Be Widespread?Preprint
Berkowitz, J. P. (2016) · SSRN Electronic Journal · doi:10.2139/ssrn.2842760
Inferring Risk Preferences Using Synthetic Win Bets in Horse Betting “Exotic” Markets
O'Connor, P. F. (2013) · The Journal of Gambling Business and Economics · doi:10.5750/jgbe.v2i1.522
Short and Long-Term Biases in European Football Betting MarketsPreprint
Wikelmann, D., Ötting, M., & Deutscher, C. (2020) · SSRN Electronic Journal · doi:10.2139/ssrn.3672233
Does The Betting Industry Price Gender?Preprint
Barrutiabengoa, J. M., Corredor, P., & Muga, L. (2021) · SSRN Electronic Journal · doi:10.2139/ssrn.3760527
Sports statistics in the data age: betting fraud detection and performance evaluation
Ötting, M. (2020) · Publikationen an der Universität Bielefeld (Universität Bielefeld) · doi:10.4119/unibi/2945724
On Sticky Bookmaking as a Learning Device in Horse-Racing Betting Markets
Zhang, C., & Thijssen, J. (2021) · Journal of Economic Dynamics and Control · doi:10.1016/j.jedc.2022.104525
Separating insider and informed behavior: Evidence from a natural setting
Hegarty, T. (2024) · Southern Economic Journal · doi:10.1002/soej.12690
Efficient market insights and favorite-longshot bias in mixed martial arts betting markets
Miller, K. M., & Nichols, M. W. (2026) · Journal of Economics and Finance · doi:10.1007/s12197-026-09757-x
- Authors
- Cain, M., Law, D., & Peel, D.
- Affiliations
- Bangor University (GB)
- Aberystwyth University (GB)
- ORCID
- Peel, David
- Venue
- Bulletin of Economic Research
- Publisher
- Wiley
- Published
- 2003-06-27
- Volume
- 55
- Issue
- 3
- Pages
- 263-273
- ISSN
- 0307-3378 (ISSN-L)
- 1467-8586
- OpenAlex
- W1999172355
- Cited by
- 75
- References
- 16
- Citations by year
- 2026: 1 · 2024: 3 · 2023: 6 · 2022: 5 · 2021: 4 · 2020: 3 · 2019: 1 · 2018: 6 · 2017: 2 · 2016: 3 · 2015: 4 · 2014: 4 · 2013: 9 · 2012: 1
- FWCI
- 8.08
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- Bulletin of Economic Research (publishedVersion)
- SSRN Electronic Journal (submittedVersion)
- Lancaster EPrints (Lancaster University) (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Sports Analytics and Performance
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Keywords
- favorite-longshot bias, insider trading, sports betting, betting odds, market competition
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
