Bookmaker and Pari-Mutuel Betting: Is a (Reverse) Favourite-Longshot Bias Built-In?

Hui-Fai Shing, Alexander Koch

Research output: Contribution to journalArticlepeer-review


A widely documented empirical regularity in gambling markets is that bets on high probability events (a race won by a “favourite”) have higher expected returns than bets on low probability events (a “longshot” wins). Such favourite-longshot (FL) biases however appear to be more severe and persistent in bookmaker markets than in pari-mutuel markets; the latter sometimes exhibit no bias or a reverse FL bias. Our results help understand these differences: the odds grid in bookmaker markets leads to a built-in FL bias, whereas that used in pari-mutuel betting pushes these markets toward a reverse FL bias.
Original languageEnglish
Article number3
Pages (from-to)29-50
Number of pages22
JournalThe Journal of Prediction Markets
Issue number2
Publication statusPublished - Sept 2008


  • Tick-Size
  • Bookmaker Betting
  • Pari-Mutuel Betting

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