Suspense and Surprise: The Role of Bookmakers’ Spreads

Uncertainty in a competition's final result can affect the event's demand via suspense and surprise. Based on a sample of more than 50,000 professional tennis matches, this paper shows how information from bookmaker prices, implied probabilities, and price spreads contain relevant information that explains the uncertainty in the final results of the matches. There is a negative relation between the implied probability for the favorite and the different measures of match result uncertainty proposed and a positive relationship between the spread and these measures when the bookmaker sets prices based on information. This second relation disappears when the bookmaker sets prices based on betting volumes. The results have potential implications both for organizers in scheduling matches with higher levels of uncertainty and for punters in setting strategies that predict the exact result of a match.