The Efficiency of Sport Betting Markets: An Analysis Using Arbitrage Trading within Super Rugby

Matthew Buckle and Chun-Sung Huang

A topic of ongoing interest is the level of market efficiency within sports betting. This paper analyzes the inefficiency embedded in the Super Rugby betting market. Robust methodologies widely utilized in the European football betting market are adapted and applied in our analysis of Super Rugby betting. Surprisingly, one in every three trades was found to provide an arbitrage opportunity, strongly suggesting at least weak form market inefficiency. We provide empirical evidence of differing odds quoted by bookmakers from different geographical areas, and show how such phenomena contributed to the above-mentioned inefficiency. Finally, a simple betting strategy to exploit arbitrage is implemented and analyzed for robust conclusions. Despite testing with varying degrees of assumptions in our practical experiment, positive returns above the benchmark risk-free rate were observed.

Open Access