Publication:

Behaviour of the over-round in tennis betting markets

By understanding how the over-round is constructed, this work draws a parallel between financial and sport betting markets, where the over-rounds work analogously to bid-ask spreads in stock exchanges. As in financial markets, when the probability of facing better informed investors increases, bookmakers increase the over-rounds or market spreads in sport betting markets. In this sense, assuming that in the WTA circuit the adverse selection costs are higher than in the ATP circuit, the paper examines if over-rounds in WTA games are higher than in ATP games. The logic works as follows; if less information on WTA players is publicly available, is not unreasonable to think that the chances of confronting a better-informed bettor are higher for bookmakers in women’s tennis games (information asymmetries), leading us to believe that WTA games should exhibit higher spreads than ATP games. In short, the study confirms this hypothesis and it displays significant evidence suggesting that in professional women’s tennis games, bookmakers impose higher overrounds than in professional men’s tennis games. Furthermore, based on the study’s findings, the paper presents a concluding discussion on the wage gap between men and women professional tennis players.