Time to Unbridle U.S. Thoroughbred Racetracks? Lessons from Australian Bookies

34 Pages Posted: 15 Jul 2011 Last revised: 8 Jun 2016

See all articles by Charles C. Moul

Charles C. Moul

Miami University of Ohio - Department of Economics

Joseph M. G. Keller

Independent

Date Written: January 1, 2014

Abstract

We consider a policy reform relaxing price controls in American pari-mutuel wagering on horse racing by examining bookie behavior in Australia's fixed-odds gambling sector. Descriptive regressions indicate that bookmaker takeouts (the effective prices of races) vary substantially and systematically with race characteristics, though in sometimes counterintuitive ways. Estimates of an explicitly reduced form model of bookie takeout, however, qualitatively match both intuition and prior findings in the literature. Counterfactuals using these estimates suggest that regulatory reform that permits racecourses to alter takeout across races would increase variable profit by 3-6%.

Keywords: regulatory reform, gambling, horse racing

JEL Classification: D22, L13, L83

Suggested Citation

Moul, Charles C. and Keller, Joseph M. G., Time to Unbridle U.S. Thoroughbred Racetracks? Lessons from Australian Bookies (January 1, 2014). Available at SSRN: https://ssrn.com/abstract=1885069 or http://dx.doi.org/10.2139/ssrn.1885069

Charles C. Moul (Contact Author)

Miami University of Ohio - Department of Economics ( email )

Farmer School of Business
Oxford, OH 45056
United States

Joseph M. G. Keller

Independent ( email )

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