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Risks
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Risks in Gambling
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Risks in Gambling

A special issue of Risks (ISSN 2227-9091).

Deadline for manuscript submissions: closed (1 December 2020) | Viewed by 28801

Special Issue Editors

Dr. Dominic Cortis

E-Mail Website
Guest Editor
Department of Insurance, University of Malta, Msida MSD 2080, Malta
Interests: actuarial science; gambling markets; risk measurement; market inefficiencies; insurance
Dr. Philip Newall

E-Mail Website
Guest Editor
University of Warwick
Interests: behavioural science; dark nudges; gambling; poker; responsible gambling
Prof. Dr. Peter C. Young

E-Mail Website
Guest Editor
University of St Thomas, Minneapolis, MN 55403, USA
Interests: risk leadership; risk planning; insurance; risk management; government risk management
Prof. Dr. Michael Dowling

E-Mail Website
Guest Editor
Rennes School of Business, Rennes, France
Interests: investor psychology; asset pricing; machine learning; decision-making

Special Issue Information

Dear Colleagues,

Risk has become an essential area of research within the financial sector and other areas. The mathematical developments over the past century have given us tools to measure, mitigate, hedge, and take advantage of different risks. Risk, being defined as deviation from the expected, can only be investigated through an enhanced understanding of probability. The early days of probability developed through gambling issues, a chief example being de Fermat and Pascal’s exchange of letters.

The gambling and betting markets can still teach us about risk and financial markets. Not only these markets represent financial markets as a microcosm, but also they are significantly large on their own to warrant interest, as the gross gambling yield (stakes less payouts) for sports betting alone is estimated to be around 50 billion Euro.

In this Special Issue, we welcome research based on the measure and perception of risks within the gambling and betting markets.

Dr. Dominic Cortis
Dr. Philip Newall
Prof. Dr. Peter C. Young
Prof. Dr. Michael Dowling
Guest Editors

Manuscript Submission Information

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Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Risks is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1800 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • betting
  • risk
  • gaming
  • gambling
  • favourite-longshot bias
  • market efficiencies

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Published Papers (5 papers)

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Research

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15 pages, 490 KiB  
Article
The Importance of Betting Early
by Alessandro Innocenti, Tommaso Nannicini and Roberto Ricciuti
Risks 2021, 9(4), 67; https://doi.org/10.3390/risks9040067 - 6 Apr 2021
Viewed by 3481
Abstract
We evaluate the impact of timing on decision outcomes when both the timing and the relevant decision are chosen under uncertainty. Sports betting provides the testing ground, as we exploit an original dataset containing more than one million online bets on games of [...] Read more.
We evaluate the impact of timing on decision outcomes when both the timing and the relevant decision are chosen under uncertainty. Sports betting provides the testing ground, as we exploit an original dataset containing more than one million online bets on games of the Italian Major Soccer League. We find that individuals perform systematically better when they place their bets farther away from the game day. The better performance of early bettors holds controlling for (time-invariant) unobservable ability, learning during the season, and timing of the odds. We attribute this result to the increase of noisy information on game day, which hampers the capacity of late (non-professional) bettors to use very simple prediction methods, such as team rankings or last game results. We also find that more successful bettors tend to bet in advance, focus on a smaller set of events, and prefer games associated with smaller betting odds. Full article
(This article belongs to the Special Issue Risks in Gambling)
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14 pages, 364 KiB  
Article
Hedging on Betting Markets
by Gustav Axén and Dominic Cortis
Risks 2020, 8(3), 88; https://doi.org/10.3390/risks8030088 - 25 Aug 2020
Cited by 5 | Viewed by 6662
Abstract
The possibility to use hedging strategies is an often neglected aspect in the literature on prediction/betting markets, as most papers assume that bettors will bet according to their beliefs about the probability of the outcome of the event, as opposed to the direction [...] Read more.
The possibility to use hedging strategies is an often neglected aspect in the literature on prediction/betting markets, as most papers assume that bettors will bet according to their beliefs about the probability of the outcome of the event, as opposed to the direction in which the odds will move. This ignores strategies that try to buy low and sell high through exploiting price changes, which is an important aspect to incorporate to fully understand market pricing. In this paper, we derive the key mathematical results in using hedging strategies through taking opposite positions to an initial bet after the market odds have changed and show that a profit can be made without explicitly speculating on the probability of the outcomes. We also discuss two sources of inefficiency that can arise when using hedging strategies in practice: (i) the need to pay a fee when using a betting exchange and (ii) the lack of a lay option (the possibility to bet against outcomes) on some markets, and we analyze how they affect the possibilities to hedge. Many of the results have interesting properties when expressed in terms of the naive probabilities implied by the odds. Full article
(This article belongs to the Special Issue Risks in Gambling)
13 pages, 386 KiB  
Article
Comparison of Home Advantage in European Football Leagues
by Patrice Marek and František Vávra
Risks 2020, 8(3), 87; https://doi.org/10.3390/risks8030087 - 21 Aug 2020
Cited by 5 | Viewed by 5504
Abstract
Home advantage in sports is important for coaches, players, fans, and commentators and has a key role in sports prediction models. This paper builds on results of recent research that—instead of points gained—used goals scored and goals conceded to describe home advantage. This [...] Read more.
Home advantage in sports is important for coaches, players, fans, and commentators and has a key role in sports prediction models. This paper builds on results of recent research that—instead of points gained—used goals scored and goals conceded to describe home advantage. This offers more detailed look at this phenomenon. Presented description understands a home advantage in leagues as a random variable that can be described by a trinomial distribution. The paper uses this description to offer new ways of home advantage comparison—based on the Jeffrey divergence and the test for homogeneity—in different leagues. Next, a heuristic procedure—based on distances between probability descriptions of home advantage in leagues—is developed for identification of leagues with similar home advantage. Publicly available data are used for demonstration of presented procedures in 19 European football leagues between the 2007/2008 and 2016/2017 seasons, and for individual teams of one league in one season. Overall, the highest home advantage rate was identified in the highest Greek football league, and the lowest was identified in the fourth level English football league. Full article
(This article belongs to the Special Issue Risks in Gambling)
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19 pages, 1053 KiB  
Article
Neural Networks and Betting Strategies for Tennis
by Vincenzo Candila and Lucio Palazzo
Risks 2020, 8(3), 68; https://doi.org/10.3390/risks8030068 - 29 Jun 2020
Cited by 17 | Viewed by 6772
Abstract
Recently, the interest of the academic literature on sports statistics has increased enormously. In such a framework, two of the most significant challenges are developing a model able to beat the existing approaches and, within a betting market framework, guarantee superior returns than [...] Read more.
Recently, the interest of the academic literature on sports statistics has increased enormously. In such a framework, two of the most significant challenges are developing a model able to beat the existing approaches and, within a betting market framework, guarantee superior returns than the set of competing specifications considered. This contribution attempts to achieve both these results, in the context of male tennis. In tennis, several approaches to predict the winner are available, among which the regression-based, point-based and paired comparison of the competitors’ abilities play a significant role. Contrary to the existing approaches, this contribution employs artificial neural networks (ANNs) to forecast the probability of winning in tennis matches, starting from all the variables used in a large selection of the previous methods. From an out-of-sample perspective, the implemented ANN model outperforms four out of five competing models, independently of the considered period. For what concerns the betting perspective, we propose four different strategies. The resulting returns on investment obtained from the ANN appear to be more broad and robust than those obtained from the best competing model, irrespective of the betting strategy adopted. Full article
(This article belongs to the Special Issue Risks in Gambling)
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Review

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9 pages, 380 KiB  
Review
Are Sports Bettors Biased toward Longshots, Favorites, or Both? A Literature Review
by Philip W. S. Newall and Dominic Cortis
Risks 2021, 9(1), 22; https://doi.org/10.3390/risks9010022 - 12 Jan 2021
Cited by 10 | Viewed by 5193
Abstract
A large body of literature on the favorite–longshot bias finds that sports bettors in a variety of markets appear to have irrational biases toward either longshots (which offer a small chance of winning a large amount of money) or favorites (which offer a [...] Read more.
A large body of literature on the favorite–longshot bias finds that sports bettors in a variety of markets appear to have irrational biases toward either longshots (which offer a small chance of winning a large amount of money) or favorites (which offer a high chance of winning a small amount of money). While early studies in horse racing led to an impression that longshot bias is dominant, favorite bias has also now been found in a variety of sports betting markets. This review proposes that the evidence is consistent with both biases being present in the average sports bettor. Sports betting markets with only two potential outcomes, where the favorite therefore has a probability >0.5 of happening, often produce favorite bias. Sports betting markets with multiple outcomes, where the favorite’s probability is usually <0.5, appear more consistent with longshot bias. The presence of restricted odds ranges within any given betting market provides an explanation for why single studies support, at most, one bias. This literature review highlights how individual sports bettors might possess biases toward both highly likely, and highly unlikely, events, a contradictory view that has not been summarized in detail before. Full article
(This article belongs to the Special Issue Risks in Gambling)
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