ABSTRACT
This chapter examines the properties of two types of sports betting market: index betting and handicap betting. The former type of market has been particularly under-explored in the academic literature. Our specific application is to English rugby league matches over the 1999-2001 period. We test for market efficiency and for specific forms of bias in the setting of spreads and handicaps. Regression analysis suggests that favourite-underdog bias is absent in thesemarkets. However, although we do not observe home-away bias in the index market it appears that bookmaker handicaps do not fully incorporate home advantage. Hence, the index market is found to be efficient whereas the handicap market contains a particular home-away bias. We attempt to rationalise these divergent results. Simulation analysis suggests that a strategy of shopping around for lowest spreads and handicaps can improve betting returns in each market, even to the extent of delivering profits in the handicap betting market.
