Betting in Baseball: Is the Run-Line Market Efficient?
Date
2016
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Haverford College. Department of Economics
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eng
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Haverford users only
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Abstract
This paper explores the baseball betting market to determine if the Run-Line, a specific form of baseball betting, is market efficient. This analysis builds on prior literature that has analyzed other forms of baseball betting, such as the Money-Line and Total. Market efficiency is determined using a standardized Z-statistic through a comparison between the number of expected wins, based on listed pre-game betting odds, and the number of actual wins, based on post-game results, for teams at each individual Run-Line. Additionally, an aggregate test is run to determine the efficiency of the Run-Line market when grouping all Run-Lines together. The results of both the individual and aggregate Run-Line analyses show the market to be highly efficient. No systematic and predictable biases are present; teams win as often as their betting odds imply. The lack of predictable biases, coupled with the transaction costs of baseball wagers, makes it difficult to achieve sustained profits betting on the Run- Line.