Late Money and Betting Market Efficiency: Evidence from Australia

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Marshall Gramm
C. Nicholas McKinney
Randall E. Parker


 This paper examines the empirical importance of late money on market efficiency in horse race gambling. Our inquiry into the effect of late money on parimutuel pools uses data from Australian thoroughbred horse races over the entire 2006 racing season and includes every race at all thoroughbred tracks. This amounts to 14,854 races with an average of 10.37 starters per race. The evidence overwhelmingly supports the hypotheses that late money is smart money and late money improves market efficiency.

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