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Abstract
In this empirical study, I compared the results of matches played in the Italian football league Serie A with the odds offered by bookmakers. I found that the market odds were good predictors of the actual game results, but I also found that the distribution of returns for odds' subgroups displayed the so-called favorite long shot (F/L) bias. Given the evidence of match-rigging in Italian football, I investigated if this bias was caused by a strategic behavior of bookmakers who were expecting to deal with insiders. My results support that match-rigging was associated with a larger F/L bias.
Keywords: football wagering, match rigging, favorite long shot bias
(ProQuest: ... denotes formulae omitted.)
Introduction
Wagering on sport events is a very old Italian tradition: In Roman imperial times, the Circus Maximus in Rome drew crowds of more than 250,000 people who were anxious about their bets on, for the most part, chariot races.1 Today, after its de facto liberalization, which occurred in Italy from the year 2000, the volume of wagering on sport events is increasing at a very large average annual rate-about 60% each year from 1998 until 2008-and amounts of almost $4 billion were spent in Italy on sport betting in 2008 (see Figure 1).2 In this study, I examined the Italian soccer betting market, which is by far the most important sector of the Italian sport betting market: 93% of the sport bets placed in 2008 were on soccer events.
My data comprised the results and the odds of soccer games played in the highest Italian soccer league: the Serie A championship. The first dataset consisted of results and odds posted by one bookmaker, Sisal MatchPoint S.p.A. (MP; http://www.sisal.it/ online/Scommesse-Matchpoint), on 6,369 games played from the 2002-2003 season until the 2007-2008 season. The second dataset consisted of the results and odds offered by three bookmakers-MP, Cogetech MisterToto S.p.A. (MT; http://www.mistertoto. it), and SportingBet plc (SB; http://www.sportingbetplc.com)-on 289 games played in the 2007-2008 season.
Football bets are simple financial assets: They have a short and well-defined end point, usually a week, when their value becomes certain. Also, there is no secondary market for bets. These factors avoid bubbles in the football betting market, simplifying the pricing problem. I started my analysis by...