Demand for live betting: An analysis using state‐space models

Abstract

Sports betting markets have grown very rapidly recently, with the total European gambling market worth 98.6 billion euro in 2019. Considering a high‐resolution (1 Hz) data set provided by a large European bookmaker, we investigate the demand for bet placements during matches and in particular the effect of news. Accounting for the general market activity level within a state‐space modelling framework, we analyse the market's response to events such as goals (i.e., major news). Our results indicate that markets strongly react to news, but other factors, such as the day of the week and the uncertainty of outcome, also affect the stakes placed. We thus provide insights into the behaviour of bettors during matches, which can be relevant for bookmakers, for example to predict future revenues, but also for more specialised tasks such as fraud detection.