Transactions Costs, Extent of Inefficiencies, Entries and Multiple Wagers in a Racetrack Betting Model

Article Abstract:

In a previous paper (Management Science, December 1981) Hausch, Ziemba and Rubinstein (HZR) developed a system that demonstrated the existence of a weak market inefficiency in racetrack place and show betting pools. The system appeared to make possible substantial positive profits. To make the system operational, given the limited time available for placing bets, an approximate regression scheme was developed for the Exhibition Park Racetrack in Vancouver for initial betting wealth between $2500 and $7500 and a track take of 17.1 percent. This paper: (1) extends this scheme to virtually any track and initial wealth level; (2) develops a modified system for multiple horse entries; (3) allows for multiple bets; (4) analyzes the effects of the track take and breakage on profits; (5) presents recent results using this system; and (6) considers the extent of the inefficiency, i.e., how much can be bet before the market becomes efficient? (Reprinted by Permission of Publisher.)

Management science, Profits, Efficiency, Models, Systems, Market, Profit, Betting, Gaming Industry

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Arbitrage strategies for cross-tracking betting on major horse races

Article Abstract:

A risk-free arbitrage model is used to examine cross-track betting to determine if the potential for arbitrage exists. Research indicates that the potential may exist because cross-track betting enables betters to place bets at one track for races occurring at other tracks. Each track functions as an individual betting pool, so odds can be different from track to track. The suggested model used in the examination demonstrates how cross-track inefficiency may exist and suggests an optimal capacity growth model to take advantage of the inefficiency. A less complicated technique also is suggested for an individual bettor at a single cross track. Research results demonstrate that the model methods would have worked well if they had been applied to several Triple Crown races.

Research, Efficient market theory, Arbitrage, Horse racing, Horse-racing

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Transactions costs, extent of inefficiencies, entries and multiple wagers in a racetrack betting model

Article Abstract:

By using a regression scheme that has been developed to apply to any track and beginning wealth level, it is possible to gain profits by horse race track betting. Through tables and printed equations the race track betting model takes into account multiple horse entries, multiple bets, the track payback portion, or take, and its effect on profit, the substantial cost of breakage, or non-returned funds, the resulting rates of return, and the efficiency of the market.

Methods, Evaluation, Investments, Horse race betting

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