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Mansour, Sridharan Explore Pricing Bias in Sports Betting Markets

A new study by Turner College faculty Fady Mansour and Uma Sridharan examine a sports betting model wherein betting firms attempt to increase their overall return rather than to win individual games, and in doing so they set prices to protect themselves against bettors with inside information. The conceptual approach taken by Mansour and Sridharan assumes two types of gamblers – the “subjective gambler” who bets equally on the favorites, and the “objective gambler” who makes an effort to analyze the particulars of sports contests before placing bets.  Using betting data from an online gambling company on 113 Major League Baseball games and 207 NCAA Football games, the study finds evidence (supporting prior studies) that betting firms, using their knowledge of common bettor biases, set biased prices in order to maximize profits.  More specifically, the study reports that, in the case of a subjective gambler, the company adjusts the betting odds by five and four percentage points for baseball and football games, respectively.  In the case of an objective gambler, the study, which is set for publication in a future issue of the International Journal of Entrepreneurship, reports that the betting odds are adjusted by two and seven percentage points, respectively, for baseball and football games.
 

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