The application of ranking probability models to racetrack betting

Article Abstract:

The betting system developed by Hausch et. al. (1981) calculates the probabilities of winning by public's win bet fractions and forecasts ranking probabilities using the Harville (1977) model. This approach, known as the HZR system, has been proven to generate positive profits at several racetracks in the US and Canada. A discount model is presented that modifies the HZR system to improve the approximation of ranking probabilities. This model is applied to the HZR system using data sets from the Meadowlands and Atlantic City in New Jersey, Hong Kong and Japan. Results suggest that the use of the discount model with appropriate r in the HZR system results in better estimates of ranking probabilities and available profit.

Gambling systems, Horse race betting

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Renting ideas

Article Abstract:

Owners of ideas maximize their income by combining fees and royalties, and royalties are used more often in exclusive licenses than nonexclusive licenses. A combination of fees and royalties increases complexity, but it does not increase revenue. The use of royalties can be explained by viewing royalty pricing as an efficient tax that maximizes the joint value of a group of customers. Royalty pricing can also be viewed as a performance bond that penalizes the owner for selling ideas. Rental income is reduced if the owner fails to perform.

Analysis, Royalties, Royalties (Intellectual property), Economic rent, Exclusive licenses

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An exception to the risk preference anomaly

Article Abstract:

Risk aversion is implied by the theory of risk-bearing. This implication has usually been rejected in favor of 'risk-loving' behavior in previous studies of horse race betting. Data from Hong Kong horse track wagers are examined using the techniques from these previous studies, but a somewhat different result is found. Bettors in Hong Kong seem to be either risk neutral or risk averse. A comparison of Hong Kong and North American horse race betting shows a much higher volume of betting per race in Hong Kong.

Risk assessment, Gambling, Risk-taking (Psychology), Risk taking

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