Faculty of Economics and Business Administration Publications Database

Sports Betting as a New Asset Class – Current Market Organization and Options for Development

Rohr, Peter
Schweickert, Uwe
Volume: 22
Number: 2
Pages: 169 - 192
ISSN-Print: 1555-4961
Link External Source: Online Version
Year: 2008
Keywords: Sports betting; Regulated Market; CCP Clearing; Inter-bookmaker Platform; Market Microstructure
Abstract: New asset classes are originally distributed via over the counter channels; mostly negotiated, traded, and settled on a bilateral and ad-hoc basis. Subsequently, the demand for organized market services grows alongside trading volumes, number of market participants, and distribution reach. This paper focuses on sports betting as a new asset class and uses the analogies between the development of traditional and new asset classes as a framework to extend market organization. The first section motivates sports betting as a new asset class based on its economic relevance. In Sect. 2, the European market is described by product design, distribution platforms, and regulatory environment. In Sect. 3, we discuss the dimensions of market model, technology, and regulation as prerequisites to develop organized markets. Against this background, we compare the value chain in financial and sports betting markets to identify and describe three options for development: a regulated market environment, an inter-bookmaker platform, and central counterparty clearing services.