Betsham

As somebody who likes to “back and lay” on UK horse racing, I was more than annoyed, when having placed a bet on a UK horse race, Betfair’s software malfunctioned, meaning that I was unable to lay off my bet as was my intention. To those of us that engage in backing and laying, the result of the race is irrelevant; we are trading on price movements and price movements alone. It was my belief (mistaken) that the contract that I had entered into with Betfair, would ensure that at all times Betfair would provide me with the means to back and lay, and that where it was unable to do so, the company would rule that as a proper market had not been formed on the race, my bet would be declared void, and my stake monies would be returned. Alas, this was not so, as the following reply from Betfair makes clear;“As the site was not available to any customers between 2 – 4pm, no bets were placed during this time and as this was due to matters beyond our control, our terms and conditions (11.3) state that:We are not liable for the failure of any equipment or software howsoever caused, wherever located or administered, or whether under our direct control or not, that may prevent the operation of our betting services, impede the placing of orders for bets or the matching of bets, or prevent you from being able to contact us. In particular you should be aware that if you place a bet with the intention of subsequently placing a separate bet to reduce the liability incurred by the initial bet, there can never be a guarantee that the Exchange will be available at the point you wish to place the subsequent bet." As it happens, the race concerned was the 2.45 at Fontwell, which somewhat contradicts Betfair’s statement that; "As the site was not available to any customers between 2 – 4pm, no bets were placed during this time." That aside it would seem that I have been snared by Betfair’s all encompassing exclusion clause, to the effect that; "In particular you should be aware that if you place a bet with the intention of subsequently placing a separate bet to reduce the liability incurred by the initial bet, there can never be a guarantee that the Exchange will be available at the point you wish to place the subsequent bet." I do not accept that this exclusion clause is fair or equitable, and accordingly I shall seek legal advice as to its efficacy. In the meantime, I will no longer use my Betfair account. Betfair are rumoured to be lining up for a 1.5bn flotation; it is a disgrace that they do not have back up servers to prevent their site from crashing. When such an occurrence does take place, it is in Betfair’s interest to return all bets. Betfair, the revolutionary betting company, have much to learn about the concept of goodwill. I would also be interested to know whether betfair are insured in relation to such market failures, and whether the Gambling Commission would consider fining Betfair each time such a failure occurs.

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Price Wise

bmnewlogo The Racing Post's Pricewise put up Khachaturian for a race at Doncaster on January 30, at the best-price of 12/1. There was only one problem, twelve hours before the newspaper hit the streets, the horse was already backed down to 10/1 in most places. By 10pm on the Friday evening only Sportingbet still had the horse at 11/1. By the time C4's horse racing programme the Morning Line came on air at 8pm on Saturday and announced that Khachaturian "Pricewise's Selection" was being supported, he was a best-price 10/1. Week after week we have seen the same pattern; somebody somewhere is getting hod of the Priceiwse selection and backing the horse long before ordinary punters have had the chance to buy the newspaper. For the past three months I have monitored betting activity on the Pricewise selections, noting which traditional bookmakers are cutting them first and seeing on what betting exchanges the money suddenly builds up for the selection. It is hardly rocket science to determine which horse is Pricewise and accordingly hedging behaviour, coupled with bookmakers running for cover quickly drives the price down. I posed a messgae regarding this phenomena to the betfair Forum, but for some reason the so called moderators did not see fit to publish it (...). Pricewise is historically one of the Racing Post's key assets; a situation that sees his recommended prices already gone by the time that the paper hits the street, is hardly in the paper's best interests. One imagines that it would not be too difficult to work out who the culprits are that are leaking news of Pricewise's selections through backing it with particular bookmakers. Perhaps in the interests of fair play, betfair could also do a little bit of historical research to highlight just who their clients are that seem to have the magic Pricewise touch. Pricewise is dead..long live Pricewise.

 

Market Arbitrage

Unlike most of the existing literature on sports betting, which concentrates on arbitrage within a single betting market, this paper from Franck, Nüesche and Veerbeck, breaks new ground by examining inter-betting market arbitrage; that is, it examines arbitrage opportunities that arise through combining bets with traditional bookmakers and on the betting exchanges (ARBS). Using the posted odds of eight different bookmakers and the corresponding odds traded on Betfair for 5,478 football matches played in the top-five European leagues during three seasons, the authors found only ten intra-market arbitrage opportunities. However, what was most significiant was that they found 1,450 cases in which a combined bet at the bookmaker odds as well as at the exchange yielded a guaranteed positive return. Further analysis revealed that inter-betting market arbitrage opportunities emerge from different levels of informational efficiency between the two betting markets. In other words they find that bookmaker odds are less informationally efficient than betting exchange odds.

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Europe Endless

PartyGaming has announced an exclusive, five-year agreement to provide an online gaming platform for poker and casino games in Denmark for monopoly provider Danske Spil. The Danske Spil Group achieved turnover of DKK 10,955m in 2008, and allegedly has 500,000 registered online customers. The agreement will allow the monopoly provider to strengthen its hand in the area of poker and casino games ahead of the partial liberalisation of the Danish betting market, planned for 2011. Whilst many will be quick to laud PartyGaming for entering into this B2B deal, it could be seen as a clear admission by the company that it does not stand much of a chance of breaking into the Danish market on its own (something that the likes of Ladbrokes are attempting to do). It would seem that Paddy Power have reached a similar conclusion vis a vis the French betting market, having recently signed a strategic deal with the current French monopoly betting provider the PMU. These deals will only serve to strengthen the hand of the monopolist companies, when their betting markets are finally thrown open to outside competition.

Recommended

Wise Words

""Don’t bet unless the odds are good value . . . a matter of individual judgement. Bull said: “If I’m offered only evens about what I judge to be a 6/4 chance, I do not bet. If I can get 2/1, I bet. And 3/1 about the same horse is a bet with a capital B.” "

- Bull




True Probabilities

"The empirical results confirm our expectation that nominal betting exchange odds have more predictive value than bookmaker odds, due to the lower degree of favourite-longshot bias in the former. After adjustment for bias the exchange odds continue to hold more information concerning race outcomes than bookmaker odds, particularly for horses exhibiting low levels of price divergence. The fact that such horses are disproportionately found in high liquidity races adds weight to this result". ("Do Bookmakers Predict Outcomes Better than Betters?" - Smith, Paton and Vaughan Williams (2009).

Odds and Sods

Bookmaker odds may not only reflect the dealer’s true prediction of the outcome but also his (profit-maximizing) response to the expected (biased) demand. As Levitt (2004), Forrest and Simmons (2008) and Franck, Verbeek and Nüesch (2008) suggest, the bookmakers actively shade prices in the presence of a partly irrational betting audience in order to increase their profit." Prediction Accuracy of Different Market Structures – Bookmakers versus a Betting Exchange." - Egon Franck, Erwin Verbeek and Stephan Nuesch).

Today's Arb

Macmar - Exeter - 15.05.

Topping on Exchanges

The relationship between William Hill and the betting exchanges has not been a good one. On January 29, 2003, David Harding on the subject of Betfair's impact on the the over-round said; "Some racecourse markets now return overrounds of only 1.2 to 1.3 per cent per runner. That is not sustainable. I cannot have a price mechanism for 50% of my business being desecrated. In a recent interview with Betview magazine Ralph Topping, Hills' current head said of the exchanges; "'I call Betfair the choirboys of the betting industry – “look at us we're so innocent” – actually the exchanges are the biggest Masonic lodge there is. They're a massive secret society where illegal gambling is taking place. What would throw a spanner in the works is if William Hill came up with an exchange model which could be offered in our betting shops or through our telephone business."

Intelligence

Book of the Month

High Frequency Trading Most punters lose. Most punters don't want to admit they lose. Most punters think that they know best. Many punters are prepared to pay up for get rich quick schemes; to buy the advice of tipsters and to buy the latest tome from the latest professional punter who has deciced to share his pearls of wisdom with us. Most punters are ignorant as to the inner workings of the betting market. This classic book, available in paperback for the first time, goes some way towards opening the door. Paul Twomey, for example, focuses upon the efficiency of the horse racing spread betting market. He highlights situations where one can use signals in the fixed odds market to make profits in spread betting, highlighting the fact that the market makers at the spread betting companies are less influenced by developments in the broader betting market, than by the make up of their own individual books. (One wonders to what extent they are more influenced by the moves occurring on the betting exchanges?). Throughout the book, there are a number of little nuggets of information, which should be of interest to any serious punter. These include, the fact that late bettors are best identified as profit maximisers; the fact that above average returns can be obtained by backing all horses trading at less than 1.4 to 1.0; the fact that there is a best time to bet the favourite; how the behaviour of bettors in later races differs significantly from those in earlier races; how higher returns can be earned by playing "rare" numbers in the lottery; those situations where bookmakers may (falsely) believe that inside information is most at work; the perceived presence of insider traders operating in lower grade horse races, etc...We are also introduced to the notion of "Qarbs" - quasi arbitrage opportunities. The "Qarb" strategy involves exploiting price differentials amongst all of the prices offered up by the different spread betting companies. The apparent success of the Qarb strategy leads to the conclusion that; "This finding casts doubt on a hypothesis that market-makers who set quotes out of line with the prevailing market view do so because they possess better (even privileged) information, or that they are able to process a given set of information more effectively than the market as a whole."

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Cheltenham Market Movers

Understanding market moves is a science, mostly undertaken by only a few skilled betting market vigilanties. The majority of the crowd get caught up in noise and shoal trading. Cutting edge betting market arbitrageurs operate only at the margins. In betting on the Dubai World Cup there has been a small move for Richard's Kid; whilst in the Kentucky Derby betting market some money reported offshore for Super Saver. In betting on the Supreme Novices Hurdle Dunquib is now a best-priced 5/6 (Power). In betting Neptune Novices Hurdle, there was some activity regarding Fionnegas. In betting on the RSA Chase Betting Ladbrokes were noted cutting Pandorama, Inchidaily, and The Nightingale. Betting on the Champion Bumper Hidden Universe in now a best-price 8/1. In betting on the World Hurdle each-way thief activity surrounding Time for Rupert, whilst in the Triump Hurdle betting market further support for Westlin Winds.

2010 Dual Qualifiers

Bettingmarket.Com - Blind idealism is reactionary + idealism for idealism's sake leads one down a blind alley.