Estimating the Implied Probabilities in the Tennis Betting Market: A New Normalization Procedure: Comment
In this note, we comment on a recent paper in the journal that proposes a new normalization procedure when converting tennis betting odds to the implied probabilities of each player winning. The new procedure is especially germane for matches in which there is a heavy favorite and where there is concern that traditional conversion methods understate the true probability of the favorite winning. However, in this comment, we argue that the new adjustment, while an interesting contribution, suffers from at least three limitations that make the procedure relatively costly while not materially improving predictions of match outcomes.
JEL Classifications: Z20, L83