Is timing everything in horse betting? Bet amount, timing and bettors' returns in pari-mutuel wagering markets

Abstract

Noise trader models suggest that ‘smart money’ profits from uninformed speculators. This paper investigates how rates of return are associated with the timing of a bet and the amount staked in a pari-mutuel horse betting market. We employ a novel data set measured at the level of individual bettors on the Finnish monopoly operator’s online platform. Our findings suggest that, relative to other bets, late high-stakes wagers are more profitable. This implies that, along with timing, bet sizes should be accounted for when analysing market efficiency.