By Bill Gaine
Bill is currently completing an MSc by Research at University College Cork.
Greyhound racing is an organised, competitive sport where six greyhounds run around an oval track to pursue a mechanical hare. Dogs wear jackets like jockey silks to help differentiate the dogs in running. It is a sport of speed and at a full flight greyhound can run up to 43mph.
My research applies the efficient market hypothesis (EMH) to anecdotal evidence from greyhound racing. EMH states that asset prices reflect all available information (Downey, 2021). A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information (Fama, 1970).
A longstanding anecdotal belief in greyhound racing is that a dog placed in Trap Four (of the six possible traps) is the "coffin trap" (Martin, 2007). This is because greyhounds have different running styles: some like to run on the inside, close to the rails, while others—known as wide runners—like to be on the outside, clear of the other dogs.
The racing manager draws a railer in trap one, two or three and a wide runner in trap five or six. However, unless a dog in trap four is lucky or superior, it may find itself impossibly sandwiched between two thick chunks of greyhound and unable to run to its ability. This implies that being drawn in Trap 4 reduces the greyhound's chance of winning. The current study investigates if there is an empirical basis for this anecdotal belief.
Does a greyhound who draws Trap Four has less chance of success than if they were drawn in another trap?
A direct implication of the Efficient Market Hypothesis (EMH) is that it is impossible for any person gambling on races to "beat the market" consistently (Davies, 2016). If market prices are formed on a risk-adjusted basis, prices should only react to new information (Angelini, Angelis and Singleton, 2021). Therefore, if bookmakers priced betting markets fairly, all outcomes should total 100%. However, bookmakers factor an "overround" into their odds which is the practice of factoring profit-margin into odds; this is best displayed as a percentage (TimeForm, 2021). Typically, in U.K. greyhound racing, this is around 126% of the market price, so bookmakers factor 26% profit into each race.
Whether or not market prices factor in a race's "Trap 4" element is unexplored in academia. However, betting systems exist, and bettors in sister sport horse racing have attempted to try and beat the market by using data from sources like racing forms to "handicap" races (Hausch, Ziemba and Rubinstein, 1981). Technical systems require less information and only use current betting data bettors attempt to find inefficiencies in the "market" by betting on "overlays" with a positive expected value (Hausch, Ziemba and Rubinstein, 1981).
This research is timely as; betting markets have evolved rapidly in the past ten to fifteen years due to rapid improvements in technology. Thus, areas for academic inquiry are continually growing. Betfair's ability to "lay" along with "make" bets is one of the most fundamental changes in betting in recent years. Traditionally, punters only bet on positive outcomes, e.g., winning a race, whereas today, laying is possible. Laying refers to punters engaging in bets where they want a negative result, e.g., a loser.
Accessing data from more than 80,000 individual races in 2018, this study will incorporate greyhound racing into the growing academic discourse on betting markets, and empirically test EMH. A update of results will follow in early summer 2022.
References
Angelini, Giovanni & De Angelis, Luca & Singleton, Carl. (2022). Informational efficiency and behaviour within in-play prediction markets. International Journal of Forecasting. 38. 282-299. 10.1016/j.ijforecast.2021.05.012.
Davies, A., 2022. Traders' 'gut' feelings separate man from machine - study. [online] www.reuters.com. Available at: <https://www.reuters.com/article/uk-research-traders-idUKKCN11O0ZM> [Accessed 24 February 2022].
Downey, L., 2021. Efficient Market Hypothesis (EMH). [online] Investopedia. Available at: <https://www.investopedia.com/terms/e/efficientmarkethypothesis.asp> [Accessed 24 February 2022].
Fama, E. F. 1970. 'Efficient capital markets: a review of theory and empirical work.' Journal of Finance 25, 383-417.
Hausch, Donald & Ziemba, William & Rubinstein, Mark. (1981). Efficiency of the Market for Racetrack Betting. Management Science. 27. 1435-1452. 10.1287/mnsc.27.12.1435.
Martin, J., 2007. No sense in the middle ground. [online] independent. Available at: <https://www.independent.ie/sport/horse-racing/no-sense-in-the-middle-ground-26272431.html> [Accessed 24 February 2022].
TimeForm, 2021. Overround Explained | What is Bookmaker Margin? | Timeform. [online] Timeform.com. Available at: <https://www.timeform.com/betting/advanced/overround-explained> [Accessed 17 December 2021].
Bill is currently completing an MSc by Research at University College Cork.
Greyhound racing is an organised, competitive sport where six greyhounds run around an oval track to pursue a mechanical hare. Dogs wear jackets like jockey silks to help differentiate the dogs in running. It is a sport of speed and at a full flight greyhound can run up to 43mph.
My research applies the efficient market hypothesis (EMH) to anecdotal evidence from greyhound racing. EMH states that asset prices reflect all available information (Downey, 2021). A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information (Fama, 1970).
A longstanding anecdotal belief in greyhound racing is that a dog placed in Trap Four (of the six possible traps) is the "coffin trap" (Martin, 2007). This is because greyhounds have different running styles: some like to run on the inside, close to the rails, while others—known as wide runners—like to be on the outside, clear of the other dogs.
The racing manager draws a railer in trap one, two or three and a wide runner in trap five or six. However, unless a dog in trap four is lucky or superior, it may find itself impossibly sandwiched between two thick chunks of greyhound and unable to run to its ability. This implies that being drawn in Trap 4 reduces the greyhound's chance of winning. The current study investigates if there is an empirical basis for this anecdotal belief.
Does a greyhound who draws Trap Four has less chance of success than if they were drawn in another trap?
A direct implication of the Efficient Market Hypothesis (EMH) is that it is impossible for any person gambling on races to "beat the market" consistently (Davies, 2016). If market prices are formed on a risk-adjusted basis, prices should only react to new information (Angelini, Angelis and Singleton, 2021). Therefore, if bookmakers priced betting markets fairly, all outcomes should total 100%. However, bookmakers factor an "overround" into their odds which is the practice of factoring profit-margin into odds; this is best displayed as a percentage (TimeForm, 2021). Typically, in U.K. greyhound racing, this is around 126% of the market price, so bookmakers factor 26% profit into each race.
Whether or not market prices factor in a race's "Trap 4" element is unexplored in academia. However, betting systems exist, and bettors in sister sport horse racing have attempted to try and beat the market by using data from sources like racing forms to "handicap" races (Hausch, Ziemba and Rubinstein, 1981). Technical systems require less information and only use current betting data bettors attempt to find inefficiencies in the "market" by betting on "overlays" with a positive expected value (Hausch, Ziemba and Rubinstein, 1981).
This research is timely as; betting markets have evolved rapidly in the past ten to fifteen years due to rapid improvements in technology. Thus, areas for academic inquiry are continually growing. Betfair's ability to "lay" along with "make" bets is one of the most fundamental changes in betting in recent years. Traditionally, punters only bet on positive outcomes, e.g., winning a race, whereas today, laying is possible. Laying refers to punters engaging in bets where they want a negative result, e.g., a loser.
Accessing data from more than 80,000 individual races in 2018, this study will incorporate greyhound racing into the growing academic discourse on betting markets, and empirically test EMH. A update of results will follow in early summer 2022.
References
Angelini, Giovanni & De Angelis, Luca & Singleton, Carl. (2022). Informational efficiency and behaviour within in-play prediction markets. International Journal of Forecasting. 38. 282-299. 10.1016/j.ijforecast.2021.05.012.
Davies, A., 2022. Traders' 'gut' feelings separate man from machine - study. [online] www.reuters.com. Available at: <https://www.reuters.com/article/uk-research-traders-idUKKCN11O0ZM> [Accessed 24 February 2022].
Downey, L., 2021. Efficient Market Hypothesis (EMH). [online] Investopedia. Available at: <https://www.investopedia.com/terms/e/efficientmarkethypothesis.asp> [Accessed 24 February 2022].
Fama, E. F. 1970. 'Efficient capital markets: a review of theory and empirical work.' Journal of Finance 25, 383-417.
Hausch, Donald & Ziemba, William & Rubinstein, Mark. (1981). Efficiency of the Market for Racetrack Betting. Management Science. 27. 1435-1452. 10.1287/mnsc.27.12.1435.
Martin, J., 2007. No sense in the middle ground. [online] independent. Available at: <https://www.independent.ie/sport/horse-racing/no-sense-in-the-middle-ground-26272431.html> [Accessed 24 February 2022].
TimeForm, 2021. Overround Explained | What is Bookmaker Margin? | Timeform. [online] Timeform.com. Available at: <https://www.timeform.com/betting/advanced/overround-explained> [Accessed 17 December 2021].
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