The House Doesnt Always Win: Evidence of

We examine Australian horseracing bookmakers responses to late scratches, in-stances in which a horse is abruptly withdrawn after betting has commenced. Our observed bookies exhibit anchoring on the original odds and fail to re-adjust odds fully on the remaining horses after a scratch, thereby earning lower pro\u85t margins and occa-sionally creating nominal arbitrage opportunities for bettors. We also examine which horsesodds bookies adjust after a scratch and demonstrate diminished pro\u85t margins even after controlling for these endogenous adjustments. Our results indicate that bookiesadjustments recover approximately 80 % of lost pro\u85t margin but that bookie