The Tennis Serve Clock Started Ticking and Betting-Market Inefficiencies Followed

In 2020, men’s professional tennis players began facing a 25 second limit between the end of a point and the start of a new one. This rule change constrained players’ behavior, as previously they were allowed unlimited time between points, and is exactly the kind of idiosyncratic shock the Efficient Market Hypothesis predicts could lead to inefficiencies in tennis betting markets. We use easily obtained data from about 11000 men’s professional tennis matches and a straightforward algorithm to show it was possible to experience a 30-percent increase on returns to betting in the time period following the implementation of the rule change. However, as is consistent with the idea of efficient markets, the opportunity to exploit inefficiencies closed, as betting markets wised up to the implications of the rule change. We show markets were slow to understand that returns to younger and taller players increased with the serve clock.