IS RACETRACK BETTING ON EXACTAS EFFICIENT

A test of the efficiency of an exotic racetrack betting market-the exacta-is examined. Although a prior study found that the exacta failed the efficiency test, that result is shown here to depend on a biased estimation procedure. Similarly, this biased estimation procedure can vitiate a conclusion that exacta markets are attracting 'smart money' (holders of insider information) in an attempt to avoid revealing their information to the betting public.