The behaviour of Alberta gamblers: Evidence from the tote at Northlands Park

Abstract

We analyzed more than 500 races run at Northlands Park horse track in Alberta, Canada. Bettors are revealed to place their bets in a way that is inconsistent with the maximisation of expected monetary returns. In contrast to nearly all of the previous literature on betting market inefficiency, we find that bettors overbet the favourites and underbet the longshots: Where other researchers find that bettors have a preference for risky bets and the ‘thrill of hitting the longshot’, we find that Alberta bettors have a preference for the bets that have yield the highest frequency of wins even though the average return is lower. The behaviour of Alberta bettors is consistent with a betting strategy where one aims to have the lowest rate of decay in one’s game bank or alternatively the lowest price per hour for an active gaming participant at the track.