The Efficiency of Australian Football Betting Markets

Abstract

This paper examines the efficiency of the two major Australian football betting markets: the Australian Rugby League (ARL) FootyTAB market and the Australian Football League (AFL) Footywin market. Probit and ordered probit models are tailored to the unique structures of the markets. This circumvents some potential econometric problems, and also allows us to test betting strategies in which a bet is placed only when there is a high ex-ante probability of success. Our probit models are successful in predicting game outcomes in both the ARL and AFL. While several of our betting strategies generate significant profits, both insample and out-of-sample, we offer a number of reasons why we are cautious about interpreting these results as conclusive evidence of market inefficiency.

Efficiency of football betting markets: the economic significance of trading strategies

“…While these findings strongly suggest market inefficiencies, there are two attributes of the market structure over the Brailsford et al (1995) sample period that are important when interpreting their results. First, during their sample period, it was not possible to place spread bets on individual games.…”

“…In a prior study of the Australian Rugby League (ARL) betting market, Brailsford et al (1995) document success rates to naïve trading strategies using publicly available information well in excess of those that could be attributed to chance. For example, over the 1989-1995 period, betting on home underdogs in the ARL has a 65.38 per cent success rate.…”

“…Spreads were quoted for each game, but bettors had to correctly predict the outcome in all eight games in the round (a system known as Pick the Winners). While Brailsford et al (1995) argue that there is no reason to believe spreads set for Pick the Winners are in any way biased, the fact remains that their simulated trading strategies could not have been implemented. Second, the Brailsford et al (1995) dataset did not permit an examination of the economic significance of betting on ARL games.…”

“…While Brailsford et al (1995) argue that there is no reason to believe spreads set for Pick the Winners are in any way biased, the fact remains that their simulated trading strategies could not have been implemented. Second, the Brailsford et al (1995) dataset did not permit an examination of the economic significance of betting on ARL games. This is because dividends were not known at the time of placing the bet, but rather were calculated after the game (as explained in Section 2).…”

Testing for Home Team and Favorite Biases in the Australian Rules Football Fixed-Odds and Point Spread Betting Markets

“…They were able to predict the correct winning team in 68 percent of games; Brailsford, Easton, Gray & Gray (1995), who reported a favorite-longshot bias in the AFL. Their success rate from betting on home teams during 1987-1995 was 58 percent, yet the return rate was negative; Bailey & Clarke (2004), who use data from 1997-2003 and present models predicting correctly up to 67 percent of winners, and producing betting profits of up to 15 percent;and Clarke (2005) who demonstrated that individual clubs have home ground advantages to different degrees, non-Victorian teams having a larger advantage.…”