Efficiency in gambling markets involving spread: a corrected and simplified test

Abstract

A correction is proposed for a test of market efficiency that is commonly applied to sports betting markets. Markets offering spread and totals wagers, such as football and basketball, typically employ the ‘eleven for ten’ betting rule. The previously established test statistic for profitability is positively biased, so it could lead researchers to a false rejection of the efficient markets hypothesis.

^‡ Address all correspondence to Linda M Woodland at the Department of Accounting.

^‡ Address all correspondence to Linda M Woodland at the Department of Accounting.

Notes

^‡ Address all correspondence to Linda M Woodland at the Department of Accounting.