On determining probability forecasts from betting odds

We show that the probabilities determined from betting odds using Shin's model are more accurate forecasts than those determined using basic normalization or regression models. We also provide empirical evidence that some bookmakers are significantly different sources of probabilities in terms of forecasting accuracy, and that betting exchange odds are not always the best source, especially in smaller markets. The advantage of using Shin probabilities and the differences between bookmakers decrease with an increasing market size.