Derivative Markets

The Golf Bettor posted an excellent comment, and to leave it in the comments section would be sacrilege. Here is his comment on my suggestion that betting -0.25 or whatever doesn't help the bottom line too much, and he has an interesting perspective on the subject:

I thought I would post my thoughts on betting derivative markets versus the outright markets particularly in football. I would argue that all those with healthy unrestricted accounts with all the bookmakers and are in the serious but non professional gambler category will be best served by betting the 1:2:x markets. Sadly this state of affairs does not necessarily last forever.

Ultimately as stakes are increased and you begin to employ bookmakers from farther afield you realise that bookmakers offering Asian Handicaps on football have significantly higher limits particularly if their business originates in Asia. A respectable firm like SBO bet will lay a much larger bet on the handicap than the outright and this is simply due to the fact that the Asian market bets much more on the handicap. These firms in Asia routinely lay off liabilities with each other and systematically open arbitrage opportunities basis the sharp flow from certain marked accounts and agents. This is a huge volume business with tiny edges.

Now when you reach the point where you can only bet football matches with the likes of Betfair, Pinnacle, 12Bet, 188Bet, SBO bet etc. etc. you find not only that you get much smaller stakes on the outright but also that when you take the best prices from all of them you are betting into a 102.5% market at times. Whereas when you take the best prices from those firms Asian handicap markets you can bet bigger bets and maybe bet into a 100.5% market. So you reduce the “spread” you pay and also end up reducing your draw-down. You then start to think that with the reduced draw-down you can afford to stake even larger and the next thing you know you are on the phone to a man in Indonesia asking for 20 grand on Yeovil +0.75.

This scenario is even further exaggerated on Tennis where the limits on the handicap are far higher than the outright in Asia. Many US facing books are the same as well with their US sport offerings. Now whether a small tipster based in the UK offering tips to those who are going to place £50 maximum on their tips need to both with this is another matter.

Incredibly bookmakers in the UK have started to stream Asian Handicap prices straight from Asia and are happy to lay all comers on it happy in the belief that it is a perfect market. Never mind the fact that Betfair is seeded by the Asian lines as well. I hear Bet 365 will lay several million pound bets to certain VIPs on Asian lines simply because they believe they are that much harder to beat. Those who are currently involved in the gold markets will know that just because a market is liquid and frequently traded does not mean that there are barriers to profiting. On a separate note it is also wise to remember that pricing by the herd is not always right.

Thanks for that. I'm not sure I will ever reach the point where I am asking for 20 grand on Yeovil Town, (wouldn't 20 grand BUY Yeovil Town?) although this season might have been a good one to do that. I guess several services are catering to some whales out there.

The last day NBA markets proved interesting as usual. I mentioned yesterday that the big question of the night was whether the Los Angeles Lakers or the Utah Jazz would make the play-offs and that Utah played first. With their loss against Memphis, the Lakers were through whatever happened in their game, and the drift on the Lakers price from 1.78 to 2.44 as the Jazz crumbled was an easier way to trade the earlier game.

The Lakers were still better served with a win and thus face the fading San Antonio Spurs rather than the top seeded Oklahoma City Thunder, but the 'MUST-win' factor was no longer there. It was a little surprising to me that the NBA didn't have simultaneous tip-off times for dependent games, but TV no doubt had a big say in the matter. The Lakers v Houston game turned out to be one of the best games of the season, with the Lakers coming back from 11 points down to lead by 3 before a buzzer-beating three pointer tied it up and the game went to overtime but not before some people thought the game was over...

The Unders (203.5) market had also traded at 1.01 before jumping out to 1.35 or so. Lakers -2.5 only traded at 1.03.

In the end, all three sets of premature 1.0x backers got away with it, as the Lakers won a low-scoring game 99-95. Roll on the play-offs.