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Are the odds odd? Positive return evidence in German horse race betting

Philipp Heinrich Hoff

Abstract


The article deals with the question, if odds derived from the behavior of bettors in a pari-mutuel setting really reflect the chances of winning for a particular horse in a particular race. Using a unique data set with more than 46,000 race observations from Germany for the years 2001 to 2003 the paper presents evidence on the favorite long-shot bias, evaluates the predictive power of totalizator odds, uses a binary logistic regression model to predict probabilities of winning and finally suggests three wagering strategies that actually yield positive returns in a hold-out oriented analytical setting.

 


Keywords


asymmetric information, binary logistic regression

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DOI: http://dx.doi.org/10.5750/jgbe.v7i2.585

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