A Reexamination of the Efficiency of the Betting Market on National Hockey League Games

Abstract

A recent paper byWoodland andWoodland examines the efficiency of odds betting on professional hockey games, finding that actual returns on underdog bets consistently exceed expected returns and evidence of a reverse favorite-longshot bias. This article corrects the Woodland and Woodland calculation of bookmaker commissions for unchanged money lines. The authors’ revision substantially lowers the commission and thus is potentially important for tests of efficiency. The article also examines the impact of changes in money lines, which further reduce commissions but raise actual returns. The impact of these revisions on tests of efficiency is examined using the Woodland and Woodland sample. In general, the authors show that their revised no line change test statistic is a more stringent test of efficiency than either the Woodland andWoodland test statistic or any reasonable line change test statistic. However, the authors’ revised test statistics continue to find the inefficiency documented by Woodland and Woodland.