Efficient market adjustment of odds prices to reflect track biases

Many financial markets feature biases that reflect the economic value of uncertain contingent claims. Racetrack parimutuel betting is one such market for which sufficient data is available to examine such biases, with an estimated $10 million wagered annually in North America alone. Racetrack configuration results in an advantage for horses that break from post positions near the rail, especially when a track has a small circumference. Data from 3,345 races involving over $300 million in 1982, 1983, and 1984 wagers on exotic and win bets at Vancouver's Exhibition Park confirmed that a bias exists, but that price adjustments fully negate any potential gains resulting from the bias.