Adverse Selection and Jockey Hot hands in Thoroughbred Racing in Australia.

  • Robert Wrathall

Student thesis: Doctoral Thesis


The thoroughbred horse racing industry is similar in many ways to other markets. For example, it shares many of the attributes of financial markets. Specifically, it comprises regular traders with access to publicly available information, a smaller number of expert traders well versed at bringing together this publicly available information to make positive returns and a few traders who appear to operate with private information. The industry is of academic interest in its own right since it is flushed with changing information sets and, importantly, has incentives in place to ensure participants generally strive for success. For these reasons the thoroughbred racing industry has provided a natural environment for research in various fields - Economics, Psychology, Finance Mathematics and Statistics. This thesis contributes to that body of work by specifically exploring two phenomenon – adverse selection and hot hands in the context of the Australian thoroughbred industry.

Initially, we investigate whether there is an element of adverse selection in the thoroughbred yearlings that breeders choose to bring to auction verse those they choose to retain and race themselves as homebreds (horses retained by their breeders for racing). The underlying argument is that breeders may utilise private information, not available to other potential thoroughbred owners in making this choice. Our investigation considers two questions. First, is there evidence in the racing careers of homebreds verse nonhomebreds that indicates the former are of higher quality? A positive answer would be consistent with the notion that breeders have the private information hypothesized. Second, regardless of the answer to the first question, is there evidence that bettors (in Australia) believe that homebreds are in fact of superior quality to otherwise comparable nonhomebreds?

Second, we extend the empirical analysis of hot hands in sports to horse racing, by looking at the occurrences of winning streaks in the racing records of a sample of jockeys riding in Australia. We compare the actual number of occurrences of each winning streak with the corresponding expected number, given the overall wins and rides of that jockey. After examining this evidence, we draw two main conclusions. First, if we consider jockeys collectively, grouped by strike rate, the evidence indicates the presence of hot hands across almost all strike rates. This suggests that an observer who didn’t distinguish individual jockeys beyond their strike rates could easily conclude that jockeys had hot hands. Second, if we consider jockeys individually, we find that the majority do not exhibit hot hands. But a significant minority do, although they vary in terms of the number of consecutive wins required to trigger hot hands and the lengths of the streaks for which hot hands persists.

In the final chapter we use a different methodology and a wider data set (more than 999 000 jockey rides) to explicitly consider the influence of situational variables on jockey winning streaks. Rather than comparing the actual number of streaks with an expected number based on the jockey’s strike rate, we estimate the effects of a past sequence of wins on the odds of a jockey winning on her next ride, taking into account situational variables intended to capture the relative quality of the horse and jockey (relative to the others in the field) and aspects of the race itself. Specifically, we:
(a) Distinguish intensity, frequency, and duration effects of an initial win by a jockey (in a sequence of wins) on hot hands and subsequent wins.
(b) Identify and estimate the marginal effect of an additional win (in a sequence) on the likelihood of a jockey winning on her next ride.
(c) Identify and estimate the total effect of a sequence of wins on the likelihood of a jockey winning on her next ride.
Date of Award2022
Original languageEnglish
SupervisorGulasekaran Rajaguru (Supervisor) & Rodney Falvey (Supervisor)

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