The racetrack : a scientific approach

Kreel, Larry

The racetrack : a scientific approach

Master Thesis

1993

Publisher

University of Cape Town

Department

Department of Statistical Sciences

Faculty

Faculty of Science

Abstract

Horseracing and its associated activity of gambling invites academic research of a multidisciplinary nature. Economics, psychology, mathematics and statistics are all fields that have investigated the two topics. In 1976 economists discovered a new body of data on which they could test their theories. For many years psychologists have investigated human behaviour in gambling situations. Mathematicians have developed optimal betting strategies. Statisticians have assisted in all the investigations as well as utilised decision theory, probability theory and regression analysis, in their own right, within the discipline. Why do academics devote their time to this subject? The furthering of knowledge in general in the above fields is important. Also, because the possibility of making money with relatively little work exists, people from all walks of life will be drawn to the intellectual challenge of finding winners. Researchers know that in order to derive money making systems, research on an academic scale is necessary. The amount of data available is phenomenal and although much of it is utilized by the public, some of it is not and that which is, is not always used in a consistent manner. The research in this work concentrates on all four fields mentioned above. A general, overview of the work done in each section is as follows. In chapters two and three, the betting market is examined within the framework of the efficient markets hypothesis. Tests of the three well known forms of efficiency are performed. In chapter four, within the framework of the expected utility hypothesis, the behaviour of gamblers is analysed. The investigation concentrates on behaviour observed at the racetrack, but draws ideas from other gambling situations as well. In chapter five, an investigation is made into horseraces, considering a race to be a sports event. This will consider the competing horses as athletes and will try and identify which fundamental factors are most important in determining the victor of such a race. In chapter six, some statistical theory, which has simple applications in horseracing is examined. In chapter seven, the economics of racetrack management is investigated.