Lancaster EPrints

The Incidence of Insider Trading in Betting Markets and the Gabriel and Marsden Anomaly

Law, D. and Cain, M. and Peel, David (2001) The Incidence of Insider Trading in Betting Markets and the Gabriel and Marsden Anomaly. Manchester School, 69 (2). pp. 197-207. ISSN 1463-6786

Full text not available from this repository.

Abstract

Estimates of insider trading in the betting on individual races, conditional on the Shin model (Economic Journal, Vol. 103 (1993), pp. 1141–1153), are employed in an analysis of the market anomaly observed by Gabriel and Marsden (Journal of Political Economy, Vol. 98 (1990), pp. 874–885) that Tote payments on winning bets consistently exceed those paid by bookmakers. Use of more appropriate statistical methods suggests that the original anomaly disappears, but that another remains: bookmakers pay more generously than the Tote on winning bets on favourites, but less generously on winning longshot bets. This discrepancy is shown to be associated with the incidence of insider trading in the betting on each race, and it is argued that it cannot be arbitraged away because of the bookmakers’ dominant market position.

Item Type: Article
Journal or Publication Title: Manchester School
Subjects: H Social Sciences > HB Economic Theory
Departments: Lancaster University Management School > Economics
ID Code: 55888
Deposited By: ep_importer_pure
Deposited On: 16 Jul 2012 11:44
Refereed?: Yes
Published?: Published
Last Modified: 09 Apr 2014 23:48
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/55888

Actions (login required)

View Item