Academics worried that their students are spending too much time in the pub and not enough in the library might consider pointing them in the direction of the betting shop.

Responding to news of the launch of a US company that lets students bet on their own grades, British bookmaker William Hill said it has been accepting such bets for years.

The US company, Ultrinsic, was set up last year by two former students at New York University and the University of Pennsylvania and is now expanding to another 34 campuses across the US, including Harvard and Princeton universities.

Jeremy Gelbart, president of Ultrinsic, told Times Higher Education that the odds were calculated for each student using an algorithm that took into account their academic record and the difficulty of their course. He said students were trusted to supply correct information but it was checked before payouts were made. "We have only had a few cases of people trying to trick us so far," he said.

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Mr Gelbart said universities' official response so far had been "wait and see" but individual academics had expressed enthusiasm. "Professors think anything that makes their job easier sounds great. This way they don't need to motivate their students and can concentrate on teaching," he said.

But he added that he did not yet know what percentage of students who backed themselves to succeed actually did so.

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He denied that allowing students also to buy failure "insurance" could encourage some to deliberately fail as potential payouts would be capped at far lower figures than college fees.

British bookies Coral and Ladbrokes said they would not allow students to bet on their own performance because of the difficulty of setting the odds, the potential for corruption and students' ability to influence the outcome.

But Graham Sharpe of William Hill said he had been accepting such bets for more than 20 years and had not come across any "skulduggery".

"They are not usually large bets and they give people a lot of satisfaction," he said.

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paul.jump@tsleducation.com.