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What Does a Concept Attract? The Case of Gaming in Macau
No full textThis paper examines herding behavior among Hong Kong investors using announcements of the opening of new casinos in Macau. The results show that there is a difference in the herding behavior toward these “Macau concept” stocks before and after the change in investment sentiment regarding Macau. Similar results are also revealed for the impact of announcements related to the Macau concept. Furthermore, investors in general herd more on selling than on buying upon a corresponding announcement. The evidence that is documented in this paper also suggests that there is herding around exceptional price and trading volume movements in the trading of Macau concept stocks
LONG-TERM PREDICTION MARKETS
No full textMost prediction markets focus on events with a short time horizon such as forthcoming elections. Contracts are typically traded for periods measured in weeks, but rarely exceeding a year. There is great interest in using prediction markets for events with a long time horizon such as climate change outcomes. This paper develops an analytic framework for exploring the time horizon limitations of prediction markets and suggests a simple, practical solution: the market operator must invest cash holdings in a diversified financial portfolio that generates returns that reflect individual traders’ heterogeneous attitudes towards risk and return. The analytic framework identifies how the presence of an opportunity cost for investors reduces market liquidity through a participation constraint and biases the equilibrium price through an inherent money-at-risk asymmetry between long and short positions in a prediction market. This paper explores continuous outcome markets, which are relevant for science-related long-term predictions, along with familiar winner-takes-all markets
A HIERARCHICAL BAYESIAN ANALYSIS OF HORSE RACING
Get PDFHorse racing is the most popular sport in Hong Kong. Nowhere else in the world is such attention paid to the races and such large sums of money bet. It is literally a “national sport”. Popular literature has many stories about computerized “betting teams” winning fortunes by using statistical analysis.[1] Additionally, numerous academic papers have been published on the subject, implementing a variety of statistical methods. The academic justification for these papers is that a parimutuel game represents a study in decisions under uncertainty, efficiency of markets, and even investor psychology. A review of the available published literature has failed to find any Bayesian approach to this modeling challenge.This study will attempt to predict the running speed of a horse in a given race. To that effect, the coefficients of a linear model are estimated using the Bayesian method of Markov Chain Monte Carlo. Two methods of computing the sampled posterior are used and their results compared. The Gibbs method assumes that all the coefficients are normally distributed, while the Metropolis method allows for their distribution to have an unknown shape. I will calculate and compare the predictive results of several models using these Bayesian Methods
The Link Between Information and the Favorite-longshot Bias in Pari-mutuel Wagering Markets
No full textThis paper examines a database of more than 45,000 greyhound races over an eight year period at Dairyland Greyhound Park to test for and examine the nature of the favorite-longshot bias. While the longest odds dogs are collectively found to be over-bet for the sample as a whole, the bias is found to diminish after the introduction of Off-Track Betting. Further, maiden races, among inexperienced dogs, are shown to exhibit the traditional favorite-longshot bias, while non-maiden races do not. These results may help explain why researchers have found the bias at some tracks, but not others
WHAT ATTRIBUTES ARE SOUGHT BY CHINESE CASINO VISITORS WHEN THEY VISIT A CASINO?
No full textUnderstanding what attributes are sought by casino visitors during their visit to a casino can enable casino operators to enhance the quality of service elements. This study assessed the important casino attributes that casino visitors seek when visiting a casino. The study also seek to identify the major segments of casino visitors with similar preferences for casino attributes, and determine whether difference(s) may exist between segments in terms of trip behavior and socio-demographic characteristics. Using the benefit segmentation approach, quantitative data were collected from 371 Chinese casino visitors. Four distinct segments of Chinese casino visitors were identified; namely games customers, casual tryout customers, employee service customers, and casino goers. Two segments were actually concerned with gaming specifically. Based on the findings, we established that casinos need to identify strategic segments and allocate adequate resources to achieve the competitive advantages of each segment. Casinos also need to develop innovative products or services for particular segments whose members may not see gaming as the main reason to visit casinos. This research highlights the need to use benefit segmentation to understand the visitors to casino properties
LOTTERY AS A RETAIL PRODUCT
No full textIn this study we examine whether the volume of lottery sales is positively related to the volume of other retail product sales. We find that retail sales are more significantly related to lottery sales than to any other macroeconomic variables. This result is consistent with the hypothesis that the lottery is similar to any other retail good. Among the retail products we include in our data, lottery sales are most correlated with the sales of food and beverage products. The results show that there is a unique aspect that distinguishes the lottery from other retail products. The most intriguing result is that lottery sales are inversely related to the level of income, meaning that people with lower income tend to participate in more lotteries, which can be interpreted as the lottery’s income supplementary function. We also find that lottery sales are mainly determined by the residents earning between 50,000 a year, implying that the lottery does not appeal equally to all income groups. Finally, lottery sales are negatively related to the number of African-American residents, positively related to the number of Hispanic residents, and negatively related to the number of White residents. These results suggest that the lottery appeals differently to people of different ethnicities
A COMPARISON OF SIMULTANEOUS KELLY BETTING STRATEGIES
No full textIn this paper we consider the problem of Kelly betting on simultaneous games, and the relative performance of betting strategies that use multibets compared to those that do not. We develop a simulation model based on the Dirichlet distribution to test the performance of three Kelly betting strategies using the empirical odds distribution from the 2007-08 English Premier League Season. This model allows us to control for the size of a bettor’s edge and the noise of this edge. The simulation results suggest that the Kelly using multibets of all levels outperforms the portfolio optimisation approach of betting on single game outcomes only. We also provide a discussion regarding the practicalities of implementing the strategies
Is casino gaming a productive sector? A conceptual and cross-jurisdiction analysis
No full textCasino gaming has been one of the world’s fastest growing service sectors since the 1970s. Different from the traditional service sectors which are theoretically extensions of physical goods production in an economy, casino gaming is a form of entertainment service intending to satisfy a specific form of human desire – to pay for a chance to win. Despite the practical difficulties in measuring the economic output and input of casino gaming, data released by the industry suggest that this is a very productive sector. In principle, while social costs associated with the provision of casino gaming may downgrade its productivity, promotion of investment, production and consumption of non-gaming services should be reckoned as part of the productivity of modern casino gaming
EVALUATING THE EFFECTS OF GAME DESIGN ON LOTTO SALES: A CASE STUDY FROM SPAIN
No full textIn February, 2005 the Spanish National Lottery Agency (LAE) made several modifications to the design of one of its lotto games. The entry fee was not changed but the familiar 6/49 format was replaced by 5/54 + 1/10. This considerably lengthened the odds against winning a share of the grand prize. However, extra lower tiers of prizes were added and a guaranteed jackpot of €5m introduced. The change in rules provides an unusual opportunity to study the effect on sales of features of lotto games other than entry fee and pay-back rate. The changes in design appear in this case to have allowed the operator to achieve higher and more stable sales. Reasons for this are explored through estimation of demand models. Results indicate that gains to the operator had been achieved by better satisfying players’ preference for skewness in the distribution of returns
Just How Serious is Insider Trading? An evaluation using thoroughbred wagering markets
No full textThis paper quantifies the extent and changes in insider trading in the Melbourne racetrack betting market using a unique, long term dataset. Wagering markets share many of the characteristics of other financial markets, and are simple, with good data and a designated endpoint. Thus they are an excellent natural laboratory to study what is probably happening in qualitatively similar conventional markets. Results of this paper provide statistically significant support for hypotheses supporting the existence and increase in level of insider trading, and suggest that around two percent of betting is by insiders.Research for this paper was supported by a grant from the Economics and Commerce faculty at the University of Melbourne, and was conducted very efficiently by Andrew Saunderson. Dr Ian O’Connor provided excellent assistance with analysis of data. I am grateful for valuable comments from the Journal’s editor and an anonymous reviewer, and from delegates to the 2004 Australasian Finance and Banking Conference where an early version of this paper was presented. All remaining errors and omissions are mine