BETTING VOLUME AND MARKET-EFFICIENCY IN HONG-KONG RACE TRACK BETTING

The Harville formula provides an analytical basis for the arbitrage pr icing relationship between the odds on 'win' bets and the odds on 'qui nella' bets in parimutuel betting markets. This study employs this rel ationship and high frequency time series data on the evolution of the betting odds from Hong Kong race tracks to test the hypothesis of bett ing market efficiency and to examine the role of the volume of belting . The non-stationary odds data are analysed using Johansen's maximum l ikelihood cointegration techniques to test the condition for market ef ficiency. The volume of betting is found to be a significant determina nt of the degree of market efficiency across races but not within race s.