On the Forecast Accuracy of Sports Prediction Markets

  • Stefan Luckner
  • Jan Schröder
  • Christian Slamka
Part of the Lecture Notes in Business Information Processing book series (LNBIP, volume 2)


Accurate forecasts are essential in many areas such as business and sports forecasting. Prediction markets are a promising approach for forecasting future events and are increasingly used to aggregate information on particular future events of interest such as elections, sports events, and Oscar winners. In this paper, we present the results of an empirical study that compares the forecast accuracy of a prediction market for the FIFA World Cup 2006 to predictions derived from the FIFA world ranking and to a random predictor. We find that prediction markets for the FIFA World Cup outperform predictions based on the FIFA world ranking as well as the random predictor in terms of forecast accuracy.


Prediction Markets Forecast Accuracy Sports Forecasting 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Glosten, L.R., Milgrom, P.R.: Bid, Ask and Transaction Prices in a Specialist Market With Heterogeneously Informed Traders. Journal of Financial Economics 14, 71–100 (1985)CrossRefGoogle Scholar
  2. 2.
    Hayek, F.A.v.: The Use of Knowledge in Society. American Economic Review 35(4), 519–530 (1945)Google Scholar
  3. 3.
    Fama, E.F.: Efficient Capital Markets: A Review of Theory and Empirical Work. Journal of Finance 25, 383–417 (1970)CrossRefGoogle Scholar
  4. 4.
    Fama, E.F.: Efficient Capital Markets: II. Journal of Finance 46(5), 1575–1617 (1991)CrossRefGoogle Scholar
  5. 5.
    Servan-Schreiber, E., et al.: Prediction Markets: Does Money Matter? Electronic Markets 14(3), 243–251 (2004)CrossRefGoogle Scholar
  6. 6.
    Spann, M.: Internet-Based Virtual Stock Markets for Business Forecasting. Management Science 49(10), 1310–1326 (2003)CrossRefGoogle Scholar
  7. 7.
    Plott, C.R., Chen, K.-Y.: Information Aggregation Mechanisms: Concept, Design and Implementation for a Sales Forecasting Problem, California Institute of Technology (2002)Google Scholar
  8. 8.
    Ortner, G.: Aktienmärkte als Industrielles Vorhersagemodell. Zeitschrift für Betriebswirtschaft (ZfB) - Ergänzungsheft 70, 115–125 (2000)Google Scholar
  9. 9.
    Plott, C.R.: Markets as Information Gathering Tools. Southern Economic Journal 67, 1–15 (2000)CrossRefGoogle Scholar
  10. 10.
    Forsythe, R., et al.: Anatomy of an Experimental Political Stock Market. American Economic Review 82, 1142–1161 (1992)Google Scholar
  11. 11.
    Berg, J.E., et al.: Results from a Dozen Years of Election Futures Markets Research. In: Plott, C., Smith, V.L. (eds.) Handbook of Experimental Economic Results (2001)Google Scholar
  12. 12.
    Sunstein, C.R.: Deliberation and Information Markets, in Information Markets: A New Way of Making Decisions. In: Hahn, W., Tetlock, P.C. (eds.) pp. 67–100. AEI-Brookings Press, Washington D.C (2006)Google Scholar
  13. 13.
    Lamare, A.: Hollywood Stock Exchange ( Traders correctly picked 7 out of 8 Top Category Oscar Winners to continue its stellar record, cited (2007) Available from:
  14. 14.
    Pennock, D.M., et al.: The Power of Play: Efficiency and Forecast Accuracy of Web Market Games, in Technical Report, 2000-168. 2001, NEC Research InstituteGoogle Scholar
  15. 15.
    Schmidt, C., Werwatz, A.: How well do markets predict the outcome of an event? The Euro 2000 soccer championships experiment, in Discussion Papers on Strategic Interaction. Max Planck Institute for Research into Economic Systems, Jena, Germany (2002)Google Scholar
  16. 16.
    Volkland, H.O., Strobel, M.: Surprise, surprise - On the accuracy of the 2002 FIFA Wold Cup prediction markets (2007)Google Scholar
  17. 17.
    Spann, M., Skiera, B.: Sports Forecasting: A Comparison of the Forecast Accuracy of Virtual Stock Markets, Betting Odds and Tipsters, Working Paper, University of Passau (2007)Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2008

Authors and Affiliations

  • Stefan Luckner
    • 1
  • Jan Schröder
    • 1
  • Christian Slamka
    • 2
  1. 1.Institute of Information Systems and ManagementUniversität Karlsruhe (TH)KarlsruheGermany
  2. 2.School of Business and EconomicsUniversity of FrankfurtGermany

Personalised recommendations