The Efficiency of Sports Betting Markets in France

Résumé du document

The aim of this thesis is to understand the sports betting market, and more precisely to show how this market forms a simplified framework for observations, close enough to stock markets, to test the informational efficiency theory, and to lead to clear conclusions about its empirical validity.

Extraits

[...] Such an assertion is relevant to the regression analysis carried out later on, because it shows that there is aggregate evidence the efficient market hypothesis does not stand as far as online sports betting in France go. Table Correlation matrix – online sports betting variables. Note: stars denote significant correlation levels between variables. The interactions between the variables above do not establish causal effect, by they do attest to a covariance that may be relevant to the econometric specification proposed later on. In the table above, those statistically significant correlations have been flagged with a star. [...]

[...] A Master's thesis was written at Dauphine in 2008 by Christophe Barraud[12] - Several methodologies used Several methodologies have been used in order to explain the mechanisms of betting markets. First, the most simple one consists in running profit regressions[13]. Second, there exist a series of market efficiency tests[14]. Third, it is possible to run forecasting models to see if they beat the best analysts[15]. Several authors assert that betting markets, especially bets from American football, soccer and tennis, are quoted, sport index and a stock market index presents some similarities. [...]

[...] The main premise of this theory is that prices of financial assets encompass all the available information of both the past and future evolutions of assets. This fundamental value of a financial asset is understood as the actualized value of all the future revenues it will create. This theory grounds itself on two major hypotheses. First, in this setting, the agents use the information by doing rational anticipations. This leads to an hypothesis of informational efficiency. Second, transactions in themselves must have no cost. [...]

[...] We argue in this section that online sports betting represents a small fraction of overall betting markets in France. Given its relative size it is unlikely to have a substantial effect on overall betting market structures. This casts doubt as to the relevance of any comparison between online sports betting on the one hand, and stock market dynamics on the other hand. Nonetheless, online sports betting in France attracts a certain type of users over a particular set of sports and events which makes it particular with respect to other online betting activities, and more generally to other types of gambling. [...]

[...] This creates a number of other criminal elements, thus furthering their illegality. Sports betting has resulted in a number of scandals in sport, affecting the integrity of sports events through various acts including point shaving (players affecting the score by missing shots, we have a recent example with Nicolas Karabatic when he was playing for Montpellier in 2012), spot-fixing player action is fixed), bad calls from officials at key moments, and overall match fixing (the overall result of the event is fixed). [...]