Abstract
This paper evaluates the efficiency in online betting markets for European (association) football championships. The existing literature shows mixed empirical evidence regarding the degree to which betting markets are efficient. We propose a forecast-based approach to formally test the efficiency of online betting markets. By considering the odds proposed by 41 bookmakers on 11 European championships over the last 11 years, we find evidence of different degree of efficiency among markets. We show that, if best odds are selected across bookmakers, seven markets are efficient while four markets show inefficiencies which imply profit opportunities for bettors. In particular, our approach allows the estimation of the odd thresholds that could be used to set a profitable betting strategy both ex post and ex ante.
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