The Optimality and Statistical Detection of Price Rigging in Betting Markets

Authors

  • Adi Schnytzer Departments of Economics, Bar Ilan University
  • Yuval Shilony

DOI:

https://doi.org/10.5750/jgbe.v1i1.507

Abstract

The purpose of this paper is to determine empirically whether or not there is systematic price rigging in three Australian betting markets: Horse, harness and greyhound racing.  We present a simple model which shows the conditions under which it is optimal for insiders to rig prices by deliberate under-performance in some races.  We then show how an empirical analysis of the relationship between win and place probabilities in conjunction with observed patterns of betting behavior, may be used to establish the presence of price rigging.  It is shown that there is no significant systematic price rigging in these markets.

Downloads

Published

2013-01-02

Issue

Section

Articles