Tote arbitrage and lock opportunities in racetrack betting

In this: publication
By this: publisher
In this Subject: Finance
By this author: David Edelman ;&nbsp; Nigel O&#039;Brian

Authors: David Edelman; Nigel O'Brian

Source: The European Journal of Finance, Volume 10, Number 5, October 2004 , pp. 370-378(9)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

A game-theoretic approach to the investigation of arbitrage opportunities based on combinations of exotic wagers for the same event is described. This situation is also known as a 'lock' or 'Dutch Book'. The technique is applied to recent totalizator data from Australian thoroughbred races. It appears that such opportunities appear fairly regularly, at least according to published final dividends for various bet types. The method is demonstrated in some detail on a particular example.

Keywords: dutch book; lock; arbitrage; zero-sum game; minimax; totalisator; pari-mutuel; gambling; bet; wager; racetrack