Economics of Betting Markets
During the last few decades, commercial gambling has increased substantially throughout the Western world. More people than ever before have access to sources of legalised gambling, leading to bumper revenues for the institutions involved. Naturally enough, this has led to an increased interest in the area of the economics of betting.
This book addresses the issues raised by the continued growth of the gambling sector. How can we model the behaviour of people who seemingly act irrationally? What are the implications of different tax policies with regard to gambling? Are casinos capable of taking money away from state-run lotteries and the causes they fund? Can bookmakers’ odds be influenced in such a way as to make the gambling market inefficient? The authors in this volume provide insights based on data from many different countries, including England, the USA, Australia, Spain and Cyprus.
This volume brings together work which addresses the economic impact of the huge growth of commercial gambling in the Western world, as well as trying to model the cognitive processes which can explain why individuals are prepared to behave in such apparently irrational ways.
This book was published as a special issue of Applied Economics. The academic editor of this journal is Mark P. Taylor.
1. Introduction: economics of betting markets D. A. Peel 2. Bounded cumulative prospect theory: some implications for gambling outcomes Michael Cain, David Law and David A. Peel 3. The Markowitz model of utility supplemented with a small degree of probability distortion as an explanation of outcomes of Allais experiments over large and small payoffs and gambling on unlikely outcomes D. A. Peel, Jie Zhang and D. Law 4. Why people choose negative expected return assets - an empirical examination of a utility theoretic explanation N. Bhattacharya and T. A. Garrett 5. The relative regressivity of seven lottery games Kathryn L. Combs, Jaebeom Kim and John A. Spry 6. Risk attitudes in large stake gambles: evidence from a game show Cary Deck, Jungmin Lee and Javier Reyes 7. Measuring displacement effects across gaming products: a study of Australian gambling markets Lisa Farrell and David Forrest 8. The economics of casino taxation Hasret Benar and Glenn P. Jenkins 9. Do horses like vodka and sponging? - On market manipulation and the favourite-longshot bias Stefan Winter and Martin Kukuk 10. The efficiency of exotic wagers in racetrack betting Marshall Gramm, C. Nicholas McKinney and Douglas H. Owens 11. Predicting bookmaker odds and efficiency for UK football I. Graham and H. Stott 12. Nonlinear modelling of European football scores using support vector machines Nikolaos Vlastakis, George Dotsis and Raphael N. Markellos 13. Sentiment in the betting market on Spanish football David Forrest and Robert Simmons