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Odds-setting efficiency in gambling markets: Evidence from the PGA TOUR

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Abstract

This paper describes the gambling market for PGA TOUR events for the 2002 season. The extent to which the odds predict the outcome is examined, illustrating how much information is captured in the odds and whether there are any identifiable biases in the odds. The overall implied profit to the casino is calculated as well as the returns to several naive betting strategies. By splitting the sample based on whether or not Tiger Woods is in the tournament, a “Tiger Woods effect” or a “thin market versus thick market effect” can be examined. On the whole, efficient markets propositions hold up, but the overwhelming share of the variation in the tournament outcome remains unexplained.

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Authors and Affiliations

  1. Department of Economics, California State University, East Bay

    Stephen Shmanske

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  1. Stephen Shmanske
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Correspondence to Stephen Shmanske.

Additional information

Helpful comments were received when the paper was presented in a workshop at California State University, East Bay, and at the Western Economic Asscociation International meetings in Vancouver, July 2004.

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Shmanske, S. Odds-setting efficiency in gambling markets: Evidence from the PGA TOUR. J Econ Finan 29, 391–402 (2005). https://doi.org/10.1007/BF02761583

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  • DOI: https://doi.org/10.1007/BF02761583

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