The Smart Money

Not the post-holiday restart to trading that I was looking for, with the Dodgers inability to hold a two run lead in the ninth on Monday night turning a would-be profitable day into a losing one, and the Cubs losing by one run last night. Just 16 trading days for me in August, and with football just getting started, and baseball still thin on liquidity, any profits are likely to be thin.

September typically sees profits pick up though, and I’ve learned to be patient. Limited opportunities isn’t all bad, as my day job promises to be extra busy for the next few weeks, and I need some time to get the Elo ratings caught up with the matches I missed while I was away.

I was also behind with my e-mails and missed the first few tips for the new season from Football Elite. No recommended bets yet, (hardly surprising given that there is no form to go on yet) and of five short-list selections, we have one winner at 3.38, with three draws and one loss. Early days, but this service has a good track record.

Back to the book I mentioned last post, The Smart Money, by Michael Konik, and a big part of the story (if not most of the story) is concerned with the issue of how to get bets on when the sportsbooks / bookmakers know that the source of the bet is a 'wiseguy' or a 'sharp' - in other words a 'knowledgeable sports bettor'.

Although the book talks about bets in the thousands, which is something most of us don't make too regularly, it seems that the bookies in the UK are making it ever more difficult for punters to get decent sized bets on. Not surprisingly, they know what type of custome they want and the type they don't. Reading the Betfair Forum, there are numerous posts whining about accounts being closed or seriously restricted.

It's nothing new, and one wonders why so many Betfair account holders would be betting with bookmakers at all. In a word - arbing - and it's not a surprise that bookies are now (allegedly) using ieSnare as a tool to identify such account holders.

It shouldn't be a sin to arb, but bookies are not charities. The bottom line is that they are in business to make a profit, and if they identify accounts that are unprofitable for them to maintain, they will close them down. As I wrote in September last year, when Ladbrokes wrote to me in 1992 to tell me that my account was being closed, I was rather proud of the fact. Not quite in same league as Joseph Jagger (the man who broke the bank at Monte Carlo) but it was a pleasing feeling on some level to have my business terminated, especially as my success had nothing to do with arbing, although I did compare the available prices across bookmakers using my Racing Post each day.

It was a time consuming hobby which soon fell by the wayside with the demands of a young family, and I moved on to other things. Then the Internet took off, and by being very selective with my bets, I managed to upset Mr William Hill and had my account closed in 1999 I believe. After that I messed about with trading options and futures and some shares before finding Betfair and other exchanges around 2004.

For all my bleating about the Premium Charge, Betfair really does offer a superb opportunity to be consistently profitable from Sports Betting for the simple reason that at least for now, they do not ban winners. They might charge them more, but I'd rather pay them 20% of winnings than make nothing. (For the record, it should be noted that I haven't actually had to pay the Premium Charge since March!).

In "The Smart Money", it is said that the sportsbooks in Vegas come up with their opening lines and allow a few 'sharps' to bet limited amounts into the line before the casino offers the line to the public. If all the 'wiseguy' action is on one side, the line will obviously be adjusted accordingly. One comedian on the forum actually came up with this gem of a story:

Then, in June 2006, I received the account-closed letter. I spoke to a "trader" who ummed and aahed over the reasons, but basically stated that in the past, my bets had been useful, particularly to the on-course reps, to find out what was fancied and what horses were "live" or being backed. "But now," he went on, "we've got Betfair, like, and y'know, well, your business isn't any use to us any more, like, sort of ..."

Er, this is William Hill we're talking about, a company with a revenue in 2009 of £997.9 million. Somehow, I find that story just a little hard to believe.

Companies such as Pinnacle Sports do post opening 'overnight' lines with smaller limits, which allows them to

shape their lines according to the betting activity of 'sharp' bettors without exposing the book. According to executive Simon Noble, these early, low limit bets ultimately allow Pinnacle Sports to offer betting limits with confidence as high as $50,000 or more on selected games with their low margin pricing model [-105/-104 ($1.95-$1.96) prices on head-to-head match odds and spreads, significantly undercutting the standard -110 ($1.91)].