Friday, 31 December 2010

Ace Puzzle


Courtesy of "Betting The Odds - The Hidden Mathematics Of Sport" by Rob Eastway and John Haigh, comes this little puzzle - a doddle for sharp-minded readers I'm sure.

You are at home with the TV in the background and the sound turned down. You notice that Andy Roddick is in the middle of a match with Andy Murray and Roddick is serving. He serves an ace, and goes on to serve five more consecutive aces.

At this point you turn the sound up, to hear that Murray currently leads the match. What is the match score at this point - in sets and games?
A Happy and Winning New Year to all.

Gambling: Then And Now


Courtesy of USA based Forbes, here's a well-written commentary on the legalisation of Internet gambling, looking back on the history of opposition to gambling (religious busy-bodies) as well as presenting a sensible view on the subject with some salient facts in the face of continuing illogical opposition.

In 1388 Richard II passed a statute requiring people to buy items necessary for the martial arts and to stop spending money on "casting stone, and other importune games." A century and a half later, Henry VIII passed a law against gambling on the grounds that it diminished military ability because people spent leisure time gaming rather than practicing archery. Or so the bowyers, fletchers, stringers and arrowhead makers claimed in their petition. If you cannot compete, then get the government to outlaw the competition and disguise your motives with patriotic or moral outrage.

The Puritans condemned gambling because they opposed "idleness." The Massachusetts Bay Colony in its first year of existence outlawed not only the possession of cards, dice and gaming tables, but also dancing, singing and all "unnecessary" walking on Sundays. The Blue Laws of Connecticut in 1650 denounced gambling because it fostered too much "unfruitful" time.

Only in 1737 did the Massachusetts legislators change anti-gambling laws, noting that lawful games and exercises are innocent and moderate recreations.

Unsurprisingly, religious institutions often fought gambling. It was competition for people's leisure time, for their small change, and for their view of life too. Buying $10 worth of lottery tickets meant betting for better life on Earth in contrast to $10 on alms that implied bets for a better afterlife. Religious institutions eventually wanted all gambling outlawed, except for Church raffles and bingo in Church basements.

By the 20th century new interests emerged to attack the gambling industry. In the 1920s the New Jersey Chamber of Commerce opposed gambling on two grounds. First, it argued that retailers and established sources of entertainment such as movie theaters lose business during the racing season. Second, petty crimes "increase enormously."

Closer examination reveals that crime is linked more with tourism than with gambling: Large, transitory crowds provide easy prey and criminals disappear more easily in crowds. People may preach for competition in principle, but companies do not like it in practice and will fight with words to crush it.

In Florida opponents of the liberalization of gambling laws included Disney World. With casinos commissioning family friendly Cirque du Soleil, Disney's opposition is not that surprising.

Some anti-gambling crusaders argue that the industry is a drag on a nation's cultural aspirations. These opinions are also unfounded. Opera and ballet flourished when casinos financed them, including St. Carlo and La Scala. The casino profits essentially paid for new ballets and new operas. A remnant of the arrangement survived in Monte Carlo.

Las Vegas has updated this once customary financial and entertainment combination. It has supported everything from cabaret acts to Cirque de Soleil, Celine Dion, Andrew Lloyd Webber and Steve Wynn's impressionist art collection.

A recent study has found that 86,000 Quebecois spend a median amount of $856 gambling online per year, mostly unmarried males under 44. The average amount is a much higher $9,903 because of a few high rollers. These numbers are misleading, because these players likely get back a rough average of 50% as winnings.

Allowing for the adjustments, these gamblers spend $35 and $412 per month, hardly more, respectively, than going out for a movie, a few cans of beer or a good restaurant with a good wine or, for that matter, an orchestra seat at the Metropolitan Opera.

Just as there are alcoholics, diet-obsessed anorexics, sex addicts and workaholics, there is no doubt that a minuscule percentage of people are addicted to gambling. Yet, while the alcoholic beverage, food and diet industries are all subject to regulation, gambling is singled out for special condemnation.

People know Dostoyevsky's classic novel The Gambler, which describes a weak man who promises himself every evening to abandon his addiction, but cannot. Few know that Dostoyevsky himself was passionate about gambling and worked feverishly to pay down debts necessary to pursue his passion.

He wrote his best novels, Crime and Punishment, The Idiot, The Possessed and The Gambler during the time he gambled. He married, and by 1871 he stopped gambling. His creative period ended.

Although there have been plenty of movie adaptations of Dostoyevsky's novels, we do not know of one that shows him overcoming his gambling problem and settling into calm domesticity. But "calm domesticity" does not sell TV shows or movies. The gambler who gets into debt, commits crime and jumps out of high-rises does. There will always be isolated tragedies. Exaggerating fears and fictionalizing the past can ruin the future.

Worrying about youth and potential addiction has merit, but there are solutions. Software is available for identification, verification and automatic monitoring to warn or to discipline the player. Controlling compulsive behavior may be easier online than off-line. There is nobody to tap them on the shoulder to suggest they should call it a day in a dark, land-based casino.

Why is Internet gambling back on the political agenda now? Money. Falling revenues are Mothers of Invention in business and for governments.

Legalizing online gambling and regulating it properly would help establish an already thriving global industry, attract investment, retain entrepreneurs and brains specialized in this business, while increasing employment and tax revenues, just as it currently does in London. If the U.S. wants a thriving new industry, then it should not just legalize internet gambling, but de-monopolize it and, as with all industry, hold the companies accountable for their actions.

Fink Tank


Looking ahead to this weekend's Premier League games, the value bets appear to be West Ham United at 2.1 v Wolverhampton Wanderers with Sunderland at 1.92 v Blackburn Rovers worthy of mention. I have West Ham -0.9 and Sunderland at -0.74, and Sunderland have come in from 1.99 in the last 36 hours or so. 1.99 was available on Thursday morning. West Ham have actually drifted slightly, so you win some, lose some with these movements.

The one strong draw is the game between Stoke City and Everton. Strong draws in the EPL continue to be 'strong' and are hitting at 38.1% currently.

I've recently started using the Fink Tank website to compare my expected goal superiority numbers. Rather than use goals in their rating model, Fink Tank uses Shots On Goal, which as I have written before is a much better option. It's noticeable that they tend to rate the away team stronger than I do, but with big-priced away wins such as Wolves win at Liverpool this week, Wigan, WBA and Newcastle at Arsenal and Blackpool at Newcastle, following their value picks overall is profitable this season. Last season's profits came from the home selections though, so how reliable these numbers are is still open to debate, but it's always interesting to see other ideas and ratings.

Wednesday, 29 December 2010

Playing The 0-0


A nice win tipped up here for the Minnesota Vikings at Philadelphia Eagles last night which puts the Premium Charge ever closer. I checked the account, and if Betfair draw the line for the week at midnight, then a four figure profit that was settled at 00:07 on Monday may well have been the proverbial straw. Not complaining though.

Inspired by Ben, I am putting together a spreadhseet to monitor as best I can, the status on a day-by-day basis, and it's giving me a new, and very liberating, attitude towards losses. With a view to adding in a few 'losing' bets, I have backed 0-0 on the Correct Score market at 21 and layed No Next Goal at an average of around 18.5. It's not exactly Slicer's miracle (albeit non-existent) bet, but it should work. I also jumped on the Under 2.5 goals which is a bet that usually makes me nervous, but with the attitude that the worst that can happen is that I lose, (and thus reduce the profit on which I pay the PC) I am far more comfortable letting the bet run.

As we approach half-time, the game is still scoreless, and the 0-0 is down to 6.0 making me wish I'd never bothered laying it off on the Next Goal Market! While any result means a win on one market, and a loss on another (good for PC), a four figure win and corresponding loss would be a much bigger help!

Ooh - Drogba just hit the post!

Sunshine In December


Many thanks to Ben who patiently and clearly explained how backing at close to value can indeed reduce the Premium Charge for someone who is 'in the penalty' as they say in basketball. The strategy he outlines can certainly increase the bottom line, although if you are in and out of the Premium Charge zone, care needs to be exercised before employing this strategy. Of course, after all this, the Premium Charge didn't apply! Yet. I am on 20.06% now, down from 20.4% last week, which means that I'm probably just one decent win away.

No big win last night, when the Utah Jazz failed to come back from a nine point deficit. It seems they need to be down double-figures before they come back and win.

I did make some on the Monday Night Football games between Arsenal and Chelsea and later between the Atlanta Falcons and New Orleans Saints, and today's football was a winner with West Ham United v Everton finishing a draw at 3.45, although Fulham turned the form-book upside down to win at Stoke City. There's more football in a few minutes when the first NFL weather postponement in 80 years is re-scheduled for two days later. Philadelphie Eagles are very short v the Minnesota Vikings. A little too short methinks.

December is now my best month since January of 2009. Not just the most profitable but I am also the proud winner of Rob The Builders's Gambling Cos Building's Up The Spout Quiz. I believe first prize is a holiday for two to somewhere sunny, so I look forward to receiving my tickets and expense money in the near future.

Tuesday, 28 December 2010

Premium Punting



Ben had a comment on my last post, which has left me a little confused. He wrote:

Your calculations are wrong. Remember that the "punter" is not trading out of a position. Therefore, with true odds of evens, they are going to win half of these bets and lose half of them.

So, to get a true picture you need to consider the total profit after placing one winning bet and one losing one. Next, remember that you only pay PC if your ordinary commission is lower than 20% of your total winnings. [My commission last week was 4.33% of Gross Profit, well under the 20% needed to avoid it]

You'll find the situation is much improved when you do the sums correctly.

More importantly, this means that your "punters" are generally not the people who end up paying PC. It is the traders, or those that green up, who will run afoul of it. Your blog post has missed the point.
Well, the point of the blog post was to highlight that a value bet doesn't depend on the price alone, but rather on the commission rate that people are on. The bleating about the Premium Charge was a bonus!

Unfortunately, Ben doesn't say which calculation he thinks I have wrong. I admit that I tend to write on this subject from my own situation, but I don't see anything wrong with what I wrote.

Yes, punting on evens shots, I will win 50% and lose 50%, but the losses don't help increase the charges paid other than the 'implied commission' on them. They do reduce the winnings on which I pay the charge, but it's the charges that I need to increase, not the winnings that I need to decrease - that would be simply cutting off my nose to spite my face. I'd rather pay 20% on winnings of £1,000 than 20% on winnings of £500.

My profits from trading far outweigh those from "punts" and I suspect that like most traders, losses are (usually) rare and small since I cut them short and let the winners run. I say usually, because there are the occasional disasters where trading out isn't possible, and I take a hefty hit, which is why I've been spared the Premium Charge since March.

I agree that in theory, if I could find enough value punts, and had the balls to put big enough money on them, then I could increase the total charges to 20% of my gross profits, but finding value pre-game is not easy, and as I have written before, while I have no problem putting four or five figures on in-play, I'm not comfortable punting with the kind of money I would need for this tactic to work. Whoever came up with the idea of the Premium Charge certainly did a good job on the loopholes.

Finally, I liked the NBA.com headline concerning the Orlando Magic team bus that illustrates this post.

Monday, 27 December 2010

Uneven Playing Fields


I'm not sure if the Premium Charge will kick in again this week or not, (the uncertainty is another annoyance with the whole thing), but one of the side effects of the PC is that it significantly affects the price at which a bet can be considered 'value'.

The commission structure on Betfair starts at 5% but can be as low as 2%. (I'm not aware that lower rates are available, but I may be wrong). Then of course, there are the PC payers who pay at 20%.

Leaving aside for the moment the debate on whether a 'true' price exists in sports, imagine a coin toss, where the true odds are evens, or 2.0 in exchange terms. If your commission rate is 5%, then you need to be able to back at 2.06 for this bet to be value after accounting for commission. If your commission rate is 2%, then a price of 2.03 (a price that is available on BETDAQ) is needed for the bet to be value, and if you are on 20%, then you need a price of 2.26. These are the prices you need for value if your bet is a "punt", by which I mean that you are in it for the lifetime of the bet.

Since it is extremely unlikely to be a common occurence that a 2.0 shot is available at 2.26, a Premium Charge payer might as well forget about "punting" on Betfair.**

However, as an entry with a view to trade, a Premium Charge payer would most likely take a price of say 2.08, if he believes that there is a reasonable expectation of being able to lay this bet to a 2% commission bettor at 2.03, or at 2.06 to a 5% commission bettor.

But a PC payer is at a distinct disadvantage here. While a 5% commission bettor may take 2.08 with a view to laying it off at 2.06 or better still 2.03, he can still expect to be profitable in the long run even if he is unable to lay off. The PC payer does not have this safety net.

** For some, who need a very slight increase in commission paid to avoid the Premium Charge, this might be a profitable strategy, but for someone who has had six profitable years, the extra commission on "punts" at borderline value, at least with the stakes that I would be comfortable with, is a drop in the ocean and no use for PC avoidance. Unless the extra commission takes you above the 20% line, then winning more on punts just increases your charge, and losing punts just means you've lost money! Last week, for example, my total charges amounted to 4.33%. It would take more than a few "punts" to get that number up to 20%.

Sunday, 26 December 2010

Away Day


Boxing Day was kind to away teams with 50% of today's games in England and Scotland ending up as away wins. My very limited betting action today came out ahead with Bolton Wanderers winning at 2.22 but the forecast draw of Newcastle United v Manchester City not panning out.

A bit of a disaster for SG with his suggested lays of Manchester United, Stoke City, Manchester City and Tottenham Hotspur all losing bets, and no luck in the draw at Wolverhampton Wanderers v Wigan Athletic.

With no draws in the Premier League, Peter Nordsted's Drawmaster obviously also came up short today. For the record, his predictions were for draws at Newcastle and Wolves as well as Aston Villa v Tottenham Hotspur.

Wolves not only dropped to the bottom of the table, but they are also now the worst team in the EPL ratings. Wigan and Fulham make up my bottom three.

More games ahead on Tuesday and Wednesday, and West Ham United v Everton is the strong draw pick. Stoke City look value at 2.04 v Fulham.

Friday, 24 December 2010

All Quiet On The Trading Front


Today is probably the quietest day on the exchanges that I can remember. No football that even slightly interests me, no NBA games on the schedule, and as you all know I am not into four-legged 'sports'. I did have a small pre-game play on the Dutch Cup game yesterday between Ajax Amsterdam and AZ Alkmaar to lock in a whopping £10.82 after commission, but Xmas Day's Al Ahly (Cairo) v Arab Contractors game I shall be leaving alone. There's an Adriatic League basketball game going on as I write involving teams with too many 'z's in their names, always a red-flag, so nothing more than a small dabble on this one.

'Tis the season for chestnuts (roasting on an open fire), so here's an old chestnut posed on the Betfair Forum a few days ago:

Do the most successful sports traders " Green Up " as soon as it is able ? or do they let the investment run longer depending on the bet.
This is a topic that frequently comes up, and it's interesting to read how some people justify this. My opinion is that unless you are in the very fortunate position of being able to lock in a significant sum of money, (in which case the loss of value could be considered an insurance premium) you should never trade out by offering a poor value (to you) bet to do so. If your stake is appropriate, and your bet is value, then you are just reducing your profits long-term by offering a value bet to someone else. One person posited this:
Suppose I am on 5% commission, and I can back heads for 2.04. If I don't green up, my expected return per toss is:

= (0.5 * 1.04 * STAKE * 0.95) - (0.5 * STAKE) = -0.006 * STAKE.

Despite backing at value, my 5% commission means that I lose 0.6% of my stake each toss.

However, if I green up at evens just before the coin is flipped, my expected return is:

= (0.5 * ((1.04 * STAKE) - STAKE)) * 0.95 = 0.019 * STAKE.

And even if I lay off my bet at 2.02 before the coin is flipped, my expected return is positive:

= (0.5 * ((1.04 * STAKE) - (1.02 * STAKE)) * 0.95 = 0.0095 * STAKE.
This logic seems to me somewhat flawed. Assuming that you are on 5% commission, why would you ever back at 2.04 in the first place? Commission has to be factored in before making the bet. This is a losing strategy as the comment shows. Yes, it would be profitable if you could lay-off at 2.02 every time, but where is the 'greater-fool'** to be consistently found? Admittedly, there could be a zero (or much reduced) commission person out there for whom a 2.02 back is value, but backing at 2.04 on 5% commission is simply a poor play in the first place, and you are likely to end up as a bagholder.

It's a common mistake for traders to see a profit, and close out their position simply because it's a profit. It makes no sense to do that. Cut the losses, and let the winners run - not the other way around. For anyone arguing that it's good to take any profit for 'psychological reasons', I'd say that they are either over-staking or just not suited for trading.

A Merry Xmas to all.
** The greater fool theory (also called survivor investing) is the belief held by one who makes a questionable investment, with the assumption that they will be able to sell it later to "a greater fool"; in other words, buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to someone else at an even higher price.

Reversing Polarity


Although the research was done on losses in the more traditional financial markets, some of the findings of a study into rumination (definition: contemplation or reflection, which may become persistent and recurrent worrying or brooding) apply very well to the less traditional financial markets, i.e. betting exchanges. Something to consider when the inevitable losing run comes along.

Researchers have found that there are two kinds of rumination -- analytical and experiential. The former can actually be constructive, says Sonja Lyubomirsky, psychology professor at University of California, Riverside, and author of 'The How of Happiness'.

"Rumination can help you find out what's important", she notes. "When your goals are not being met, or not progressing as fast as you expect, that leads to self-focus -- you ask why so you can address it. You dwell on things that aren't going well in your job; maybe a colleague makes more money and it's unfair. But it might lead you to do something about it, like ask for a raise or change something you're doing at work."

The other kind, experiential rumination, can exacerbate depression, impair problem-solving, and erode social support, as friends and family grow weary of constant negativity. It's most common in people who are already depressed.

"What we've found is, if we induce people to ruminate and they're already a little distressed, it makes them feel even more overwhelmed and pessimistic," Lyubomirsky explains. "[Experiential] rumination is the opposite of problem solving -- instead of taking it step by step and going from A to B to C, it's like going in circles."

These ruminators are more self-critical, more likely to blame themselves for their current problems and express reduced self-confidence and optimism in overcoming those issues, researchers found. When presented with hypothetical negative life events, they choose gloomier and more distorted interpretations, minimizing their successes and over-generalizing from their failures.
To me, the above just seems a more academic way of saying what I said a few posts ago. My acronym is ALMO™.

Accept the loss. Learn from the loss. Move On from the loss.

While some losses are more painful than others, it's my experience that the pain isn't directly related to the size of the loss, but more to a subjective opinion of how good the the bet value was. The fact that one should never be betting with money that you can't afford to lose is a given, so the amount should always be withing our comfort level. Value bets don't always win though. We all know that, and a losing bet that was value is acceptable. What isn't so readily acceptable are the 'ill-considered' (or just plain 'bone'head') plays, where the bet was never value, but just a gamble. Those are the losses to Accept, Learn from and then Move On from.

Thursday, 23 December 2010

Predictable Jazz


Santa came early. The Utah Jazz didn't quite cover the spread, but they came back from a double digit deficit yet again, this time 15, resulting in a four figure profit and vaulting December into second place behind January in the 2010 Monthly Stakes race. December is usually good, but this is (to date) the best yet. I don't want 2010 to end. Better not speak too soon though - there's still time!

Or maybe not. The fixture list over the coming days is looking very sparse. No football until Boxing Day, and the NBA has it's usual quiet Thursday (just 3 games) followed by an unusually quiet Friday - no games at all! I may have to let my hair down for once. Metaphorically speaking of course.

I haven't run the numbers for most of the upcoming games yet (plenty of time for that it appears), but I did look at the EPL games. Strong draw: Newcastle United v Manchester City. Value Home: Bolton Wanderers (2.22) v West Bromwich Albion.

SG's on top of it already with the following selections for the weekend. Draws: Blackpool v Liverpool and Wolverhampton Wanderers v Wigan Athletic; Home Lays: Manchester United; Away Lays: Stoke City, Manchester City and Tottenham Hotspur.

Wednesday, 22 December 2010

Oakland Traders


Two for three from the football in France tonight, with Bordeaux failing to win, which was bad, but Toulouse managing to lose (which was good), and a draw at 3.3 in the Brest v Olympique Marseille game.

The German Cup also saw some matches today, including a repeat of Sunday's league fixture between Stuttgart and Bayern Munich. On Sunday the game finished 3-5, and tonight it ended 3-6, after being 3-5 at 90 minutes. They don't play each other this weekend though.

The Utah Jazz are in action in a few minutes, giving 6.5 points to a pretty poor Minnesota Timberwolves team who have lost six in a row, and are under 50% at home. The best bet of the day might well be in the New Jersey Nets at New Orleans Hornets game where the Under 183.5 looks good. The Nets are always low scoring, and the Hornets are in something of a slump losing 7 of their last 10 after a strong start to the season.

For some strange reason, (my mind is like god in that it works in mysterious ways), I was sat at work today thinking about trading and comparing it to American Football. Specifically, since August, it's felt like I'm pinned back on my own five yard line after being sacked back in March. There's little room for manouvre, and progress is limited to safety-first bets (the running game) rather than looking for the riskier, but higher paying bets (the passing passing game). Now that I'm on the 30 yard line, it feels like I have more options, and of course, the confidence that comes with a promising drive isn't to be underestimated. Now if I can just avoid that interception...

On the topic of trading, I liked this line from the Sports Trading Life blog:

It's better to be out of a trade wishing you were in, then in a trade wishing you were out.
Very good advice.

Winter Solstice


Another comment, this one from Mouldhouse who said:

Congrats on getting to a new high. Shows a lot of mental toughness to go almost 300 days since reaching a new high; 99.9% would be questioning if their edge had gone, or whether they were just making a lot of small gains and the occasional massive loss (which of course a lot of traders do).
I can honestly say that I never doubted my edge. Confidence was dented, and in that always wonderful thing called hindsight, over-staking was clearly a problem, but I gave myself a stern talking to, went back to basics again, and crawled my way back. OK, that sounds a little melodramatic, but it's what you have to do after a poor run. Accept it, learn from it, and move on from it. Mouldhouse continues:
I've never gone anywhere near 300 days before reaching a new high - in fact I've never gone over 60. I'd suspect you and most traders actually work a comparatively small edge, but the amount of iterations that you can perform in one day/hour/session/event means they add up to a decent sum over the long term; but like anything with a sub 5% edge, you can have sustained periods where you tread water.
A maximum of 60 days draw-down is great. One of the factors was that the losing run came at the end of my supposedly strong season of NBA, and with no NFL, NBA or proper football in store for a few months, it was always unlikely that I would recover in anything like 60 days. Baseball is slow (in more ways than one) and too many people know more about cricket and tennis than I do, which admittedly is not hard. No edge = no bet. A sustained period treading water?

The latest Premium Charge update shows my charges now down to 20.4%, and the dreaded charge is inexorably headed back to my account. A few hours ago, the Golden State Warriors came back from a double digit deficit at the Sacramento Kings who traded as low as 1.01 much too early, and the large green on that game won't help. But I'm not complaining. The top six most profitable months are those of October through March so I need to make hay while the sun shines.

French Football tonight, and Bordeaux at 1.67 v Lens look tasty to me, and a lay of Toulouse at 3.65 away to Valenciennes. Brest v Olympique Marseille looks the best bet for a draw at 3.3. Bon chance.

Tuesday, 21 December 2010

Making Lemonade


Laidback writes:

Hi Cassini. Been following the blog for some time now and found it very interesting. As you say, I like the fact that it isn't a P&L blog as so many which are stop getting updated as soon as the going gets tough.
One question if I may. I've been following the Bundesliga lays with interest, but when it first started out in early September your preliminary research indicated a basic system of laying odds on top league clubs in Germany, France and England at 1.3 or over. I know England and France weren't as profitable but is there any reason why you appear to have dropped them altogether?
Basically, I prefer to use my ratings, rather than use a 'system' blindly, and it's simply more profitable to use my ratings in every top league but Germany's. The numbers over the past four seasons all showed profits here blindly laying at 1.3 to 1.99, and the Bundesliga is in (pun intended) a league of its own for 'wacky' results, and so I try to turn this to my advantage as much as I can and let my ratings take second place on these matches. If the ratings give me lemons, I'll make lemonade.

December's good run (nice to close ot the year on a high - this is currently my best month since February, which was a long time ago), continued last night with a profit on the Chicago Bears, who beat the Minnesota Vikings in Minnesota's first outdoor home game in nearly 40 years. The roof of their stadium collapsed under the weight of snow a few days ago!

With the Betfair Premium Charge page for last week showing charges at 20.51%, I anticipate the Premium Charge will soon become a factor again. I have been using BETDAQ where possible, but in my opinion they just haven't seized the opportunity and have a poor selection of in-play events and an interface that I still find clunky to use. I have no problems with pure punts on there, but money is easier to make in-play, and for that, I need in-play events, a smooth interface, and the obligatory edge of course.

Not Fair!


I wrote on 7th October this year that

He [Derek McGovern] also sheds some light on the odds-on draw phenomena found in Italy. Liam Brady has this to say: When a draw suits both teams in Italy, the game will end in a draw. It's all to do with the mentality of the Italian people. They see nothing wrong in such an arrangement.
Apparently some people on the Betfair forum don't read this blog. Albinoleffe v Piacenza in Serie B yesterday saw the draw price at around 1.5 pre-game. £5,160,650 was matched on the game, of which £4,841,537 was matched on the draw. 'Only' around £300,000 was bet on either Albinoleffe or Piacenza. Alarm bells anyone? It shouldn't be hard to see how this game will play out, and the game ended as a 3-3 draw. I have no sympathy for anyone laying the draw at 1.5 or anywhere close who then claims 'fix' and expects Betfair to declare the game void. Somehow I doubt that they would have been crying foul had the result not been a draw. The only people I do have some sympathy for are those who layed it at 3.0+ in the expectation that the game would be 'normal'. Anyone getting involved in this game when the draw price was odds-on knew exactly what they were doing or they have no business betting. Laying the draw just doesn't make sense to me. If there are no goals you lose, and if there is a goal, the price on the draw isn't going to move, because there is a good reason the pre-game price was so short.

Sunday, 19 December 2010

Back On Top


Today's postponements included the Genoa derby, where Sampdoria were identified as value by both myself and Football Elite. With the winter break starting in Italy, this game won't be played until next year now. None for five for the 'strong' draws with four going to the away team. The 'weaker' picks were profitable with one of the the three that survived the weather coming in at 3.4 - Chievo Verona v Juventus. One of the two other draw possibilities mentioned, Sochaux v Bordeaux (3.25) also came in.

Profits from the home value picks that survived the weather, winners were Lazio (2.04), Catania (1.96), Sunderland (2.28) while there were losses with Deportiva La Coruna, Osasuna and Olympique Marseille.

Two out of three winning lays this weekend in the Bundeliga with Bayer Leverkusen failing to win today at 1.49, following Werder Bremen (1.66) yesterday.

I don't often discuss specifics on P&L for reasons explained many times, but I did mention an horrific April this year in this post. The key part for those who can't be bothered to click the link is this:

To say that April was disappointing for me is, to borrow David Icke's phrase, a bit like saying that it's a littly chilly at the North Pole. The pounds came off, but more from my balance than from my body.

My second worst month ever, April was my first losing month since last April, and I suspect that's not a coincidence. In fact, three of the last four Aprils have seen losses, and when you consider that 'only' 9 of 56 months have seen overall losses, for three of them to be April suggests that a long Easter holiday at this time of year is called for. I'm beginning to wish I hadn't moaned so much about the Premium Charge. I almost miss it these days.

So April comes to a close, and I draw a line in the spreadsheet and start again, battered and bruised a little, down but not out. Handling losses is still a tough nut to crack. As much as I tell myself that I still have a very healthy balance, and try to kid myself that losses are from 'house' money, and not 'really' my money, losses still hurt. (And it really IS my money!) Losing is unsettling. Every time I have a bad run, I fear that the markets have changed and the profits aren't there any more, but every time (at least so far) I've been proven wrong, and there's no reason why this time will be any different. There will be a certain re-grouping taking place though. Yes, to win £129,000 would be nice, but as my son pointed out - £1,290 is still a lot to lose if it doesn't work out and it's time to get back to basics and rebuild a little confidence before throwing four figures around again. May will thus most likely be a quiet month.
Well, the bad run actually began in March which while it finished in the green, included a four figure loss in the days following St Patrick's Day (including one ill-considered £3k bet on College Basketball). Anyway, to cut a long story short, 296 days after that big loss, the account on Betfair is finally back to a new high. I've had long drawdowns before, but the previous longest was a 'mere' 227 days in 2007, and this one seemed even more difficult to bounce back from. May wasn't as quiet a month as I'd predicted it would be, but the Summer was, with no months showing four figure gains from June through September. Talkbet posted today that a previously successful, albeit automated, system is no longer profitable, and the markets do seem to be becoming more efficient. He wrote yesterday that
I think with the end of the year fast approaching this might well be the time to decide on where I go from here, it may well be the end of this blog, it's certainly no fun writing up losses day after day.
I hope Talkie continues with his blog, he's been around for a while now, but the attrition rate among blogs that are requested to be added to this one is, to my mind, remarkably high. I guess that many are started with the blogger full of optimism thinking that blogging will somehow 'help their discipline' but the truth is that if you are indisciplined, the fact that you are a blogger isn't going to change that. Time after time I read posts along these lines:
Following a poor weekend, not thinking straight at all, a couple of in play trades later and my trading bank is now down to £29.19 it was lower but I have recovered a little bit today,but it is shocking to looking at my spreadsheet to see that I have gone from £140 to £29 in just over four days. Whether I end up at zero and have to go and get a real job or if I recover and maybe get my bank going again we will wait and see. I know all the rules in my head and how I want to play the markets but sometimes when it goes bad I am able to block out all common sense and go straight to gambling mode. Hopefully this is something I can avoid in the future, lets see how it goes then.
How long before the blog that quote was taken from ceases to be maintained and drops off the radar? Where is there mention of the time being spent researching ideas in the search for an edge?

This is the 884th post on my blog, some are embarrassing to look back on, some not so bad, but because I don't obsess over P&L, it's not so hard to write something most days. Besides, most days are profitable - 78.4% of them over almost five years to be precise. I don't like losing. The losses can be painful when they do come along, but even when the worst of them come along, I keep it all in perspective. This is a hobby for me - winning is a bonus, and losing isn't the end of the world. In fact, in many ways, the money is secondary to the thrill of the challenge of solving the exchange betting puzzle.

The SPOTY show doesn't interest me from a betting perspective, but I was pleased to see Sir Frank Williams receive his award. His attitude to adversity is an example to us all, and the next time you take a big loss on here, remind yourself how insignificant that really is in the whole scheme of things. "[Williams] attitude to his disability is simple - it's his own fault he ended up that way so he had better just get on with it". We could all learn from that attitude. Accept the mistake, learn from it, and move on.

Finally, a quick thank you to Rod Hull whose post I came across on the Betfair Forum last night. In response to the question "Anyone know of any good betting blogs?" he very generously replied with "Start with Green All Over and go from there, that is probably the best one, or one of anyway". Good advice!

Saturday, 18 December 2010

Snowed Under


Of the sixteen teams left in the Champions League, no less than 14 come from the five leagues I follow. No surprise that the majority come from these five, but I am slightly surprised that other 'strong' leagues such as those in Portugal, Russia, Netherlands and Turkey are not represented. Not surprisingly, things are spread a little more evenly in the Europa League with 22 of 32 from the 'lesser' leagues. It's all good though. I adjust the ratings when teams from the five leagues play each other, which adds a little interest and while I don't have a lot of reason to be confident in their 'predictions' yet, (the initial values were based on UEFA's Coefficient for the leagues), they are actually proving to be quite accurate, and more importantly, profitable.

Forunately the weather didn't affect the Sunderland v Bolton Wanderers match, which finished with the 'expected' one goal home win. The supremacy was actually -0.92 and 2.28 was a great price. Football Elite also had Sunderland as a Recommended Bet. We also had Deportivo La Coruna in common, as a Short List selection for FE, but this finished 1-1. FE also has Short List picks of Espanyol and Levante although my numbers didn't agree and I left them alone, dodging two losers. I find myself making my own selections these days, and then adding to them if Football Elite concur. If FE have selections that I don't have, then typically I'm taking a small interest on the Recommended Bets and just watching the Short List picks from the sideline. We disagreed on the just ended Real Sociedad v Valencia game. I had this as a weak draw, while FE went for Real Sociedad as a Recommended Bet. Matt's Recommended Bets are on a hot streak right now, but I left my draw bet alone. In the end we both lost, with Valencia scoring a 90' goal!

Pete Nordsted's Drawmaster picks this weekend were all lost to the weather. He had Wigan Athletic v Aston Villa (a 'weak' draw for me) as well as Birmingham City v Newcastle United and Chelsea v Manchester United.

Bundes'lay'ga selection Werder Bremen was a winning lay at 1.66, but in-form Schalke '04 had no trouble beating Koln 3-0.

More action tomorrow, though not in England, where all scheduled games are postponed.

Anyone know where the photo above was taken? The caption reads "1938: A football match in progress in the snow" which is what could be described as 'stating the bleedin' obvious'.

Friday, 17 December 2010

Derby della Lanterna


Strong draws this weekend are St Pauli v Mainz '05, Stuttgart v Bayern Munich, Real Sociedad v Valencia, Malaga v Atletico Madrid and Cesena v Cagliari.

Weaker draws are Wigan Athletic v Aston Villa, Blackpool v Tottenham Hotspur, Chievo v Juventus, Almeria v Getafe and Borussia Moenchengladbach v Hamburg.

Toulouse v Lorient and Sochaux v Bordeaux are also worthy of mention.

Home value picks are Lazio (2.04) v Udinese, Catania (1.96) v Brescia, Sunderland (2.28) v Bolton Wanderers, Lens (2.16) v Caen, Olympique Marseille (2.2) v Olympique Lyonnais, Deportivo La Coruna (2.14) v Gijon and Osasuna (2.02) v Real Zaragoza. I also have Sampdoria (2.76) as value in the Derby della Lanterna, even if home advantage is somewhat diluted.

SG has just one bet this weekend, Lay Tottenham (1.7) @ Blackpool.

Thursday, 16 December 2010

Damp Squib


Plenty of comments about the Betfair results and continuing share price slump, but I thought this one from the Guardian was one of the best.

It turns out that the really duff float of the year from Goldman Sachs wasn't Ocado (shares down 11%) but Betfair, which stands 24% behind the starting line after today's weak first-half update. In terms of trading results, Ocado has at least produced what was expected of it –the scepticism relates instead to the valuation of a loss-making business. By contrast, investors in Betfair have a disappointing number to point at – growth of just 1.6% in the core betting exchange in the second-quarter of the financial year.

Some high-rolling poker players have disappeared; horse-racing is declining in popularity; and gamblers are risking less when budgets are tight. These are minor complaints: it's just that there is a lot of them.

The risks were covered in the prospectus, of course, but suddenly Betfair doesn't look like the reliable, all-conquering powerhouse its fans thought it was. It looks vulnerable to the ebbs and flows that affect all gambling stocks. And it looks as if the shares, £13 at flotation, were priced for perfection.

At 990p, Betfair is obviously a more enticing prospect. Today's trading numbers were a setback but not a disaster: the core British business is well established and should still churn out decent sums of cash. But there is little clarity on the adventures into new territories – the US and financial markets – that were the other factor behind the princely float valuation.

California will allow exchange wagering on horse-racing from May 2012. Fine, but let's see how the conservative, and powerful, American horse-racing lobby reacts. It is also far too early to say how the LMAX financial exchange will prosper – it's only been open for a few months.

Until the picture becomes less fuzzy, putting a fair value on Betfair is an exercise in educated guesswork. There is room for honest disagreement.

From the point of view of Goldman and Morgan Stanley, the sponsors to the float, the concern will be the behaviour of the insiders, Betfair's long-standing investors who still dominate the register. The first lock-up agreements come off next autumn. If the shares still stand well below £13 then, it would be embarrassing for the investment banks if there's a rush to sell.
Gambling Online reported that
The latest set of financial results published by Betfair PLC today has revealed that the site’s poker revenue has plummeted since their switch to the Ongame network.

The results for the six months from May to October 2010 saw a decline in earnings from both poker and horse-racing, and although a full breakdown of figures has not been forthcoming, the company did release a statement describing the size of its fall.

“Games growth has strengthened but poker has continued to show significant year-on-year declines following its migration to the Ongame network,” the statement read. “In the second half we will continue to improve our customer offering and address challenges in poker with a number of product enhancements and initiatives”.

However, it should be noted that the company’s overall growth has still risen – albeit not by the margin that they would have liked – by 27 percent to $213.3 million in the same period, with the rise being largely the product of some “robust performances in football, other sports and skill games” across the entire Betfair network.
No surprise that horse racing is declining in popularity. This isn't the 1960s. There are far more interesting sports to invest on these days! "Robust performances in football". Well, hardly surprising with a World Cup just behind us, but the future for Betfair shareholders doesn't look too green in my opinion. After the years long build up to flotation, it's really been a damp squib.

Red All Over


Widely reported, but here in case anyone missed it:

The Scottish Football Association have confirmed that the Association of British Bookmakers are investigating irregular betting activity regarding the red card shown to Motherwell midfielder Steve Jennings in Tuesday night's Clydesdale Bank Premier League defeat by Hearts at Fir Park.

Reports claim irregular betting patterns surrounded the dismissal of Jennings, who, after being booked by referee Stevie O'Reilly in the early stages of the game for a foul on Kevin Kyle, was shown a straight red with seven minutes remaining after O'Reilly turned down a penalty claim.

The statement read: "Following information received from the Association of British Bookmakers (ABB), we are aware of alleged betting irregularities surrounding a sending-off incident in the Motherwell v Heart of Midlothian match on Tuesday, 14th December, 2010."

The statement continued: "At this stage, we are not in possession of the facts regarding the allegations and are waiting for further information from the Scottish Premier League in due course.

"Once we are in possession of all of the facts we will be in a better position to provide more detailed comment on the matter.

"In the meantime, we will be working with our colleagues at the Scottish Premier League to establish the details surrounding this incident."

It is understood that several bets were put on a red card being dished out at Fir Park, including one from a new account opened in Liverpool, where a £500 bet was placed on a red card at odds of 10/1.

Motherwell were not available for comment.

Jennings was shown a straight red card after putting his hand on referee O'Reilly's shoulder and speaking to him about a rejected penalty claim after Marius Zaliukas had won the ball from Alan Gow.

Well caretaker boss Gordon Young was not sure whether Jennings had been punished for comments or the touch on the shoulder and said: "I wouldn't like to comment on that because I don't know the circumstances."
A strange coincidence that Jennings is from Liverpool...

Wednesday, 15 December 2010

Trading Football


Eddy at Trading Times wrote a post a few days ago which I only just got around to reading, but is worth a mention. He wrote:

I have read the X-Club manual a couple of times over but will need to do a lot of practise for a long time before I can get my head around all the stuff. One thing did hit me last evening when I watched an Argentinian match on Betfair. I went onto the forum and read what peoples thoughts for the match were. One guy had put £300 on over 1.5 goals. No goals were forthcoming so after about twenty five minutes he said that he had taken a red book of £60 because he didn't want to lose his £300. Now this guy will never make money as far as I can see. You cannot do your homework, decide on a course of action and then bail out because the required result isn't hit within twenty five minutes of your trade. In reality just one goal would have given him the opportunity to get out with a profit, or break even if the goal comes later on (within reason). To my mind he was over-staking and out of his comfort zone because otherwise while bail out? If he had bet £100 he would probably of let the trade run a lot longer than just panic. To compound his logic he said at half time he would lay the 0-0 full time result to get his £60 back. So as happens to all of us the game finished 0-0 and he lost £571.
This post triggered a few thoughts, one being 'don't believe anything you read on a forum' and another being that anyone UK based is highly unlikely to have any sort of an edge on an Argentinian football match.

A stake of £300 in itself isn't a huge bet - it all depends on the size of the bank, and I don't necessarily agree that trading out for a loss was a bad decision "to bail out driven by panic". One lesson successful traders need to to learn is to cut losses and let winners run, so if the strategy was to back the Over 1.5 goals expecting an early goal, then once that goal didn't materialise, it's ok to accept that the trade wasn't a good one, and to trade out. 

Trading football doesn't suit me too well, so my profits come from identifying value pre-game and letting the games play out. I do trade occasionally, but for the most part I accept that the price is usually right, and that any trading is usually for small sums for interest and entertainment rather than serious money-making. To my mind, football just isn't suited to trading. Price movements, with small exceptions, are too predictable, driven for the most part by time and infrequent scoring. 

Compare with basketball, which has frequent scoring, and usually hot streaks by one or other teams, and a price chart that seldom moves in one direction for long. Yes, teams do come back from behind in football, but while I prefer football as a spectator sport by some distance, for trading, it just doesn't afford the same opportunities. Supposedly, some find steady profits easy to come by from football, but for me there are easier and less stressful ways of making money.

Tuesday, 14 December 2010

Player Manager


The final action of this weekend's football is complete, and another win for the home value picks as Manchester United picked up the 'expected' one goal win over Arsenal. I also had the Unders in this game, thinking that 2.0 was excellent value for a game between two closely matched teams, a fixture that has gone Under 2.5 in the Premier League have 19 Unders in 36 meetings, but a viewpoint not shared by fellow blogger Blue Orange who somehow had the Over 2.5 goals priced up at a surprising 1.31.

I recommend a bet or 2 on the under/overs markets. Betfair have over 1.5 goals at 1.31 but I rate it at 1.12. The over 2.5 goals is up at 2.0 but I rate that at 1.31 so that's what I'll be going for.
Whether the calculations fail to compensate for the seven goals in the Blackburn Rovers game or what I don't know, but there's no way 1.31 (76.34%) can be close to value in a game like this. I'm not picking on Blue Orange by the way - he had a much better pricing and opinion on the Tottenham Hotspur - Chelsea game where he wrote
The goals markets on Betfair have odds similar to my own the only stand out odds are the under 3.5 odds of 1.4 when I believe them to be 1.28. I'd put money on under 3.5 goals and also lay Chelsea at 2.34 as these odds are far too low for a team with bad recent form and away from home.
or indded on the Newcastle United - Liverpool match:
...you could back over 2.5 goals at 2.12 as my odds have that result at 1.68.
Still on football, but a different topic - Echo Sports have come out with something that may be of interest to some of you. Not to me, as personally, the 'pure' fantasty sports seems like a big waste of time, time that can be much better spent actually making money from sports, but this is slightly different.
Player Manager Mashes the eBay and Betfair Business Models To Create A New Generation of Social Betting
Player Manager - http://www.playermanager.com - is a new and unique product based on the English Premier League that allows those who like to bet on player performance to profit from their skill every week. Leading independent football blog Soccerlens describes Player Manager as "taking the game beyond the limits".

The emergence of eBay in the mid-90s allowed individuals to place a "maximum bid" on an item so that eBay could automatically bid for it on their behalf. Betfair's introduction of an open-market betting exchange in 2000 allowed individuals to set their own prices on bets. Now, ten years on, the eBay and Betfair models have been blended to create the next evolution of social sports betting.

Participants in Player Manager create one master-list of Premiership players, setting a maximum bid for each of their selected players that can then be tweaked each gameweek. Like eBay, players are auctioned automatically to the highest bidder in order to create teams and, like Betfair, the price of players is effectively being determined by the punter, not an intermediary.

Compared to your office fantasy football competition, players receive points for real-life sporting occurrences (e.g. goals) but that is where the similarities end. The beauty of Player Manager is that it takes the same amount of time and effort to generate multiple teams as it does to generate one. This innovative model has the effect of spreading risk and profit potential across as many teams as the manager wishes at the push of a button. Teams cost just £1 each and results are paid out every gameweek.

Player Manager, which uses the innovative NEOVIA Payment Network™, is the brainchild of the CEO and Founder of Echo Sports, Jason Bryant. After 16 years in the Financial Services industry spent across Australia, North America and Europe, Jason decided to combine his experience of the trading floor with the regular football player auctions he was running in the City of London's leisure and dining establishments.

"Traditional fantasy football games represent low chances of winning against a great number of participants," said Bryant. "They just weren't providing the pay-off potential given the odds and effort required."

"We've removed as much friction from the experience as possible, whilst ramping up the intelligent gameplay," Bryant continues. "Our automated player allocation process allows you to get on with your life whilst profiting from your skill. I believe that we have created the next-generation of pay-to-play sports gaming."

Sunday, 12 December 2010

AFC West



Another stellar weekend from Football Elite, who followed up their Friday night pick of Hannover '96 with two winners on Saturday in Aston Villa (2.22) and Udinese (2.16). The latter two I had already identified among my seven home value picks, four of whom were winners with Manchester United (-1.09) still to play. Up 1.58 points on these so far. The draw bets made small losses this weekend, with the strong hitting at 1 in 4 for an overall loss of 0.5 points and the weak draws 3 from 11 for a loss of 0.8 points. Tottenham v Chelsea was perhaps a fortunate break for once. Such is the nature of football that the line between success and failure can come down to one play. Sometimes they go for you, sometimes against, and there's no point in agonising over each unlucky break. If your selection process is good enough, and as I have quoted before "to get worked up over individual bets, is as unproductive as a casino manager worrying over the outcomes of individual pulls of the slot machines".

For Football Elite, that's seven consecutive strikes, and they are, or rather he is, certainly in a rich vein of form right now.

Peter Nordsted's Drawmaster picks went one for three this weekend, for another profit, with the same Tottenham Hotspur v Chelsea pick that came in for me, although Newcastle United v Liverpool and Bolton Wanderers v Blackburn Rovers both went to the home teams. Perhaps we both underestimated the 'Pardew factor'.

The latter game was SG's draw pick, so no joy there for him. His four lays all came in though, (Stoke, Liverpool, Birmingham and WBA) and good results for Sports Betting Universe with three from four of the top selections coming in at 2.5, 2.5 and 1.95 and backed up with good price wins on Hercules, Udinese and Lorient. Bragging rights to me (and Matt at FE) for the Aston Villa pick, but kudos to SBU for the Schalke '04 win at Mainz '05. As he pointed out, Schalke '04 are in good form right now, and up to fourth in my ratings for the Bundesliga, but although the form adjustment made me cautious, as with Villa, I thought the home side might have enough. Win one, lose won, and with the win at 2.22, I'll take that any day.

No football trading today due to work commitments, but I was home in time for some of the NFL. Laying the first touchdown continues to pay dividends, and the Chargers returned to form with a 31-0 win over a Matt Cassel-less Kansas City Chiefs team. Having already traded at a rather short 1.01 to win the Division, the Chargers play three poor teams in the final weeks of the regular season - 49ers, Bengals and Broncos are a combined 10-29. The Chiefs play three losing teams too, but better ones, with the St Louis Rams actually leading the NFC West with a losing record! Combined, the Chiefs' opponents are 17-22 and the Chiefs / Chargers tie-break currently favours the Chargers.

Gambling Habit


A Catholic nun broke one of the Ten Commandments by embezzling $850,000 from a suburban New York City college and gambling it away in Atlantic City, according to federal prosecutors.

As chief financial officer at Iona College in New Rochelle, N.Y. from 1999 to 2009, Sister Marie Thornton, 62, bet her six-figure income and school money away during frequent trips to Atlantic City, federal prosecutors said.

Thornton was arrested Thursday and pleaded not guilty in federal court in Manhattan. She was released without posting bail.

Sources confirmed to MyFoxNY that a former Iona basketball coach has said that Sister Marie definitely had a gambling problem.

Students, who pay $28,000 a year for tuition, shook their heads at the thought of a nun violating one of the holy Ten Commandments.

The indictment charges she turned in fake bills and used her college credit card to steal money.

A statement on the Iona College website clarifies that Iona College was not indicted, but rather a former employee.

The statement also says that Iona College has gotten the most of the money back, though sources say insurance repaid the money, not sister Marie, who bet all her money on black.

When Iona fired Sister Marie last year, it publicly said she left for medical reasons. The college also never asked law enforcement to investigate. It only came out after Iona filed losses in its income tax return.

Sources say Sister Marie is cloistered at the Sisters for St. Joseph Order, near Philadelphia. Part of its mission statement is "to raise consciousness about all forms of poverty."

Sister Marie faces 10 years in prison if convicted, but her lawyer said he expects a resolution fair to all parties.

I love the line that "students shook their heads at the thought of a nun violating one of the holy Ten Commandments". To many of us, the idea that students, or anyone, would be surprised that a Catholic figure of authority would be engaging in illegal or immoral behaviour might come as a surprise, but "Iona College is an academic organization in the tradition of the Christian Brothers and American Catholic higher education" - (i.e. not a real college at all - science and thinking are not encouraged).

And the "college also never asked law enforcement to investigate". Imagine! A religious institution trying to cover up crimes? Has this happened before?

I'm wondering if I can insure myself against any betting exchange trading losses? It would bring a whole new meaning to the term 'premium' charge.

Adelson's Checker Shadow


The poll on the colours of squares A and B is now closed, and as almost half of you guessed, the answer is that both squares are the exactly the same colour. From Wikipedia, the same color illusion — also known as Adelson's checker shadow illusion, checker shadow illusion and checker shadow—is an optical illusion published by Edward H. Adelson, Professor of Vision Science at MIT in 1995. The image depicts a checker-board with light and dark squares. The optical illusion is that the area of the image labelled A appears to be a darker colour than the area of the image labelled B. However, they are actually exactly the same colour.

Saturday, 11 December 2010

BET:LSE

From the Wall Street Journal:

Nothing Betfair Group says at its maiden results on Tuesday is likely to end the controversy over its valuation. Seven weeks after its high-profile London-listing, shares in the U.K. betting group are trading below their £13 ($20.50) offer price. Analysts value the business at anywhere between £4.45 and £16 a share. Four out of five independent brokers rate the shares a "sell." One of the syndicate banks, Morgan Stanley, now warns that the price doesn't reflect the risks and recommends that investors wait for a better entry point. That is good advice.

Peter Webb


I imagine that most longtime Betfair traders have heard of Peter Webb, and this interview with him may be of interest to some of you out there.

Former channel man Peter Webb has become one of Betfair's leading customers and bets a quarter of a billion pounds annually on horseracing alone. He also sloshes a good amount on the X Factor market.

The ex Compaq and Medion man finally left the UK's computer distribution channel in 2003 to make a full time go of trading on the betting exchange. He says: “I doubt there's many people earning more than me on Betfair – it's substantial by any terms.”

Webb trades the exchange the way a City trader plays the financial markets. He puts around £20,000 into individual horse races (where even a snowy weekday race at Wolverhampton can attract more than £500,000 on the exchange). As there can be four race meetings in a day and seven races at each of them, it is easy to see how his turnover gets so high.

Here' how it works. Webb will back Dobbin to win (say at 5.0, which is the same as 4 to 1). If, then, the odds to back Dobbin not to win (this is called laying) fall below the back price (say 4.0, or 3 to 1) and Webb makes this bet then he has made a profit no matter what happens in the race.

The exchange keeps track of his net position so he's free to re-bet his capital immediately. If Dobbin's lay price goes up, he's stuffed. Webb makes lots of trade in this manner, on several horses, before a race starts. The odds movements don't tend to be as extreme as this example.

When there's racing in the UK, Australia and the US he'll be up at 2am working the Australian market. The UK business is usually between 2pm and 5pm, and then the US comes online at 9pm until 1pm.

Webb starts trading 10 minutes before a race starts and closes all his bets 10 seconds before the off. “Most of the money arrives five minutes before it starts,” he says. When the race starts, he no longer has any financial interest in its result, he's off to trading the next race.

“When I looked at Betfair all I could see was opportunity,” he says. “I dabbled around on several markets, and with several strategies. Horse racing stood out because of the amount of money that went through it, so I started to work really hard at understanding it.”

Webb's approach has nothing to do with knowing form or horse bloodlines. “My lack of knowledge has really helped. I'm looking at the price of a horse and estimate where the price will go. My role in the market is as an arbiter of value and whatever I do I do before the race starts – I don't believe I'm better at predicting the form than anyone else.”

This sort of thinking might be familiar to anyone who's made money not from taking a view on the absolute merits of a given technology or piece or kit - but rather on how prices are likely to move over time.

Webb will also bet major football matches, where he can put £50,000 to £70,000 through the market, and where the price changes aren't as rapid. There are also 100 dog races a day which he can trade. “Football, horse-racing and tennis are the big three markets. I've also been providing a lot of the liquidity for X Factor - people would be horrified about how much of that market was me.

These opportunities pop out of the woodwork at all times. I think the exchange is beautiful – I look at it and it speaks to me,” he says.

Webb opened an account with Betfair seven days after it first went live in 2000. He heard about it while knocking around the First Tuesday meetings of the original and glorious dotcom boom.

He deposited £1,000 and his first-ever bet (position) was placed with £5. He says he's never had to put more money in, and currently has £250,000 in his account. He doesn't need more because unlike the financial markets, Betfair settles trades immediately. A relatively small sum placed in a market can be leveraged very quickly, by closing its position then rebetting it.

Webb's last proper job was launching the Medion PC brand into the UK and managing accounts selling it such as DSG and Aldi. He builds his own PCs (and uses six monitors to trade), and upgrades them every six months. However, he says Medion is good value and he'd buy them now. “Sometimes you work for companies and think 'I wouldn't touch that',” he recalls.

He started in the distribution business straight from school working for Portsmouth distributor Softly Softly. He worked at Compaq, account managing its retail division, and had an office round the corner from legendary UK boss Joe 'Meat Packer' McNally. “I have worked with most if not all the top manufacturers of consumer technology products and their respective channel partners,” he says. “Dixons, Tesco, Wallmart, Aldi, Toys R Us, Sony, Panasonic, Samsung, Hewlett Packard, Intel, Microsoft.” He's also worked with Tech Data and Netcom Internet.

Webb won't say how much profit he makes on his Betfair trading, but stresses that each trade is only netting tenths of a per cent profit, and the line between making money and losing it is very fine. But he himself suggests £40,000 a month wouldn't be unreasonable for some top Betfair traders. Another reason to be cagey around money is that gambling profits aren't taxable in the UK – but profits from trading activity can be.

Webb is also behind a Betfair trading product called BetAngel and says he doesn't want anyone thinking that using this is route to getting rich quick. “You have to work at it,” he says.

BetAngel acts as a Bloomberg-type information screen for the betting exchange with a touch of the eBay sniping technology, says Webb. “It's a trading tool and allows you to place orders quickly. We borrowed ideas and technology from financial markets, and it allows 'fill kill', stop losses, and charting.”

Webb funds its development through subscriptions. He also runs courses in Betfair trading, which engenders the classic get-rich-quick suspicion of "Why tell anyone else, if you're making so much money?", he says.

Webb says he just enjoys meeting people and talking about his business. “I'm a social person and trading is a lonely business. When I first started doing courses, they came off the back of the software. I didn't think trading would last very long – I thought I had three or four years in it – so software and training was a bit of an insurance policy.”

Gambling and the gaming business is afforded quite a low status by many people (Reg readers among them), and at the heart of Webb talking up his business is that he wants his performance to be recognised.

“Having worked so hard and so long on this, I just want some legitimacy added to it,” he says. “Spread betting is considered normal and what we do here is exactly the same. Rather than the price of oil to go from here to there, we're looking on the price of Yojimbo [a horse racing on the day of the interview] to go from here to there."

In 2006, Webb did some financial shows with Betfair. The betting exchange's name wasn't proving a draw and Webb says he only got any attention when he started putting up financial-style market charts and explaining how he would trade the position. “The next slide would say the 14.10pm at Wolverhampton,” he says.

“I consistently get people saying what I do is not possible. I've been doing it for 10 years and still get that.”

Webb is also a financial investor and a big fan and shareholder of billionaire Warren Buffett's Berkshire Hathaway business (a single share of which is currently priced at $120,000). The backbone of Buffett's business is insurance. At one shareholder get-together, Webb asked Buffett how he reconciled his anti-gambling views with his risk-related business.

“When I look at the insurance industry I see an industry based on probabilities and people not knowing those true probabilities. Money is being made for the house in the same way I see it being made in the gambling industry,” said Webb.

“Gambling involves creating risk that doesn't need to be created,” replied Buffett. “If you want to go out and gamble on where a little ball is going to fall on a wheel that's revolving, that's a created risk. You can watch a football game without betting on it, but you can't live in a house on the Florida coast without having a risk that your entire investment can disappear. But I hope that you're right and that the house wins in both cases.”

Webb does have his battles with the Betfair house and thinks he should be treated better by them than he is. He doesn't have an account manager, which he thinks strange, and the business has introduced premium charges for customers placing or editing more than 1,000 bets an hour, or making large numbers of data requests within the same second. Which is exactly what he does.

“Betfair's argument is that people like me, who make money consistently, should help fund acquisition of new customers,” says Webb. “But I'll put through millions a week, all at my own risk.”

The newly floated business has changed a lot since he first joined. “It's much more like a traditional bookmakers now. The Utopian dream has faded,” he says wistfully. A bit like the channel perhaps?®