Tuesday, 21 January 2014

Sporting DataGate

More developments on the story that refuses to go away, except on the Betfair Forum where a thread on the topic has been pulled by the powers that be and contributor Ballabriggs has been banned.

Betfair have not just censored the ballabriggs account from the forum, they have closed it too.
It's ok to leave the company knowing how the markets operate inside out, who wins, and how they win. It's ok to set up an external company, betting on Betfair markets, using courtsiders sent not just to places where it is legal to bet in-running, but also to places like the Australian Open and the US Open.

It's ok to send young 22 year olds putting them at the risk of prosecution to these places.

BUT. It's not ok to talk about it.

Betfair have to realise the enemy isn't the messager, it's the people straining at the very edges of legality, offering very poor out of date value to Betfair customers, which in turn does wound Betfair profits.

There is now a 2nd investigation in the news today, this time into a cricket courtsider.

http://www.theage.com.au/victoria/british-citizen-investigated-for-illegal-betting-at-domestic-twenty20-match-20140120-3146c.html
While there isn't much about this topic that is amusing, there was a comment on Ballabrigg's ban that did bring on a smile:
I think Betfair have outsourced the forum management to Sporting Data.
Mark Iverson sent me a link to a radio interview conducted by Sporting Data CEO Steven High. The interview explains who their clients are, or rather aren't. They have none. They have directors, and they use the data themselves, so the clarification number one posted on their web site last week is at best misleading.
"The set-up is a little obscure in that we have a company who itself does not bet however we are directors of that company and on our personal accounts we bet but the reason for that is to comply with UK gambling regulations and become as tax efficient as possible".
 Anonymouse stepped away from the cheese to say this and this:
Betfair have never given a monkeys, and this time they may have gone too far. If the Australian regulator works out what has been happening, it would be no surprise for Betfair to lose their Australian license for all in-running sport.
So the three ex Betfair employees send someone to courtside, and then bet on their own accounts from London. Great. Stay classy Betfair.
Emp chipped in, with:
I don't think there's anything unfair about getting faster access to information that is in the public domain than others. I also think that if you are gambling your money on events, morally speaking, regulator aside, it's your job to ascertain what the conditions are and decide if and when you want to place bets. I have no sympathy for those who can't be bothered to find this out, or for those who can but can't get access to this fast information and hence want others not to have it, so that they can be profitable.
If you can't access this info, develop a method that can withstand being 10 seconds late on info, it really isn't that tough.
I agree it's morally speaking unfair that plenty of bettors don't have PC or Super PC due to negotiated benefits, but it's a private company and they are not required to provide you with a platform to mint money. I've seen similar levels of entitlement from poker players on Poker Stars and I can't agree with it.
I fully agree with Emp on his first three words. The rest of his comment, not so much. Does he believe that trading should be a test of skill, person A pitting their wits against person B, or should the markets be more scrappy and about who can gain a big enough technological edge to ensure victory? If you believe the latter, then fine. It's every man for himself, but then what happens? Word will get out that the markets are unfair, and liquidity will fall, and when liquidity falls, Betfair make less money, and as a public company, they have a duty to maximise profits for shareholders. There's a reason why financial markets are regulated, and why London and New York are financial centres rather than Kabul or Baghdad, and there's a reason that the Gambling Commission took a close look at in-play betting in 2009. Emp might not care, but the GC might.

Whether you have sympathy for people who get caught out isn't the issue. As a reputable company offering a platform for individuals to trade against each other, there is an expectation that, as much as possible, the contest is a fair one. It is clearly not a fair one if the same three accounts are winning most of the time with an edge, not from knowledge of the sport and game-reading, but because they are one point ahead. The comment "If you can't access this info, develop a method that can withstand being 10 seconds late on info, it really isn't that tough" is laughable. As has already been discussed, it is not impossible for the Average Joe to win with sharks in the market, but it is a lot harder, and if your method with a 10 second handicap works, imagine how much it would make you if the market were a fair one. If you are not actually losing money, it is still costing you money in reduced profits. Emp mentions Poker, and it's a little like playing Poker against someone who has already seen the flop, or the turn or the river cards. You can win, but long-term, it's not very likely unless the guy with the advantage is absolutely clueless.

John Walsh raised the same point in a comment:
I don't want to take away from the discussion about Sporting Data, but I would like to address the part of G's comment about the ordinary punter having any chance.
I mainly trade the North American sport markets. The most liquid of those are NFL and NBA. When trading I assume that there are court siders. In fact I use them to figure out how much lag is in the feed that I am getting. For the NBA my feed is usually 10 seconds later than bets coming in, which would mean it is 15 seconds behind the action unless someone has a privilege of not being required the full 5 seconds delay on bets, which is another debate. For this reason I limit my betting to breaks in the action, which can be frustrating when I see an opportunity I'd like to jump in on but know I'm at a disadvantage if I do so I stay disciplined (a very important trait of any successful trader). Through experience and knowledge of the game I believe the ordinary punter can be successful. I use some in-play models but I don't think they are required to be successful. Cassini written much on this blog about being successful at betting in-play in the NBA. Odds get too short on teams that just finished a big run. Let's say Sporting Data is using their model and betting on the team that is a favorite at a certain point in the game and backing for what they feel the odds should be. Now you get others betting in the market that make bets that are for lower odds, lets say they are scared to miss out on what looks to be a winner. This is an opportunity where knowledge of the game and experience betting in-play comes in to play. In fact Sporting Data may have helped you get better odds because they are putting down large amounts that aren't getting fully matched and creating fear in the market.
If I have a television feed that is within the 5 seconds of live action I will put bets out there that if a team scores points the bet may get matched by someone reaching too far for a bet.
Meaning if odds were around 2.00 I would lay the team with the ball for 1.50-1.90, depending on what point of the game it was, and if they made a three the bet may get matched. If it doesn't it's not a big deal and if it does I would feel I got value.

The three-point shot is more popular now more than ever in the NBA. This creates more variance. It makes it harder for models to work, such that Sporting Data are using.

The NFL can be similar. If you look at the regular season game between the New England Patriots and the Denver Broncos. Denver was leading 24-0 at the half and were a huge favorite. I took that half time opportunity to make a huge bet on the Patriots. Teams constantly make adjustments through the game but half time gives coaches/players the largest amount of time to make adjustments. Bill Belichick is one of the best at making those adjustments. If the Broncos were down by a big score at half time I would have looked into betting on them too.
There is a point in a game if a team has a big lead that they will start to think about being conservative and using the clock. They may not stay aggressive and throw the ball as much because a deflection could mean an interception or a touchdown for the other team, an incompletion means that the clock stops. Comebacks are common in the NFL.
So G I feel there is chance for an ordinary punter in these markets to be successful. I'm an ordinary punter. I may use some in-play models but I rely on knowledge of the game and experience in the markets to get an edge.
Take my word on it that television feeds are not anywhere near 5 seconds of live action (I've been to NBA games), and betting on breaks in the action is akin to betting pre-game. The game state is known, although someone court-side will be able to see if LeBron James is hobbling off to the dressing room, or Aaron Rogers has dislocated his shoulder while the rest of us watch commercials. Speaking of game state, here is another reason why long-term, the presence of someone one play ahead of you will cost you money.

Here's a little graphic I drew up at the beginning of the 2013 baseball season.
Note how much the odds change after an out. If someone has that information, you really are up against it, unless you are Emp, in which case a model should turn this handicap into a winner. "It really isn't that tough".

And substitute an 'out' in baseball for a three-pointer in basketball, or a touchdown or turnover in the NFL or a home run with the bases loaded. The fast money will take anything of value before you even see the play - it really is idiotic to think that someone with fast data isn't hurting the average trader. Yes, you can still profit, but it is still costing you money, and it is ultimately costing Betfair and its shareholders, money.

Unfortunately the next Betfair shareholders meeting doesn't appear to be until next September, but shareholders, and I would say account holders too, have a right to know if certain accounts are protected by a special arrangement from Premium Charges and if all bettors are subject to the same delays. Sporting Data does not have an account we are told, the bets are all made from personal accounts. Are ex-staff accounts exempt of certain fees?

And what will the watching Gambling Commission recommendations be if it shown that in-play "irregularities" benefiting former employees have continued un-addressed for at least three years?

And finally, from the Australia Financial Review comes this, and apologies for the long post, I'll take a break tomorrow (probably).
Betting syndicate defends actions of courtside analyst
JESSICA GARDNER
The British employer of the man arrested courtside at the Australian Open on January 14 says the betting syndicate has been sending its ­workers to the tournament for the past three years and despite losing on the match in question, was on track to make a profit from the tennis ­tournament.
Sporting Data director Steve High claimed his employee Daniel Dobson had done nothing illegal by relaying information on the outcome of individual points back to the company in Surrey, just outside of London.
This information was used to take advantage of a delay in the fluctuation of odds on betting exchange Betfair.
Mr Dobson, 22, was arrested on Tuesday after the round one match between Australian Nick Kyrgios and German Benjamin Becker.
He is alleged to have “engaged in conduct to corrupt a betting outcome” by using an electronic device in the pocket of his shorts, which was linked to a smartphone, to send the information to Sporting Data.
But Mr High said he believed laws under which Mr Dobson has been charged have been applied inappropriately. “To have criminal charges pressed was unthinkable to us,” he said.
“We were shocked that the police got involved. Obviously it’s in the hands of the court, but we’re still strongly of the opinion it’s not illegal.”
Victoria Police declined to ­comment while the case was before the court.
Mr High said Sporting Data first sent one of its ‘data analysts’ to the Australian Open in 2012.
At the 2014 tournament the company has three paid analysts including Mr Dobson. The other staff members have stopped working ­following the charges.
Mr High would not disclose Sporting Data’s overall financial details, but he revealed that the company had laid bets of £74,346 ($139,000) on the Kyrgios v Becker match. The company had 148 bets matched on Betfair, but lost £2763. On a betting exchange, every bet laid is matched by another punter willing to take the opposite outcome. The exchange takes a commission on winning bets.
“Obviously we lost on this one and actually we were having a pretty poor tournament even before Dan was pulled in,” Mr High said. “I think we were still marginally up overall for the tournament though and we still expected a good profit for the tour­nament.”
A Betfair spokesman would not comment on individual punters, but said the total bets matched on the exchange for the Kyrgios v Becker match reached $776,461 (£423,627).
At a press conference following the arrest the Victoria Police said Mr Dobson’s employer was using the information to place bets on ­individual points. This is known as micro or spot betting.
But Mr High said the company was only laying “in-play” bets on the outcome of a match. It is illegal for Australian operators to offer micro-betting. In-play betting is allowed on the outcome of a match, but not via online platforms. Punters have to ­telephone a wagering company instead. Many international jurisdictions allow online in-play betting.
Mr High was previously employed by Betfair in the United Kingdom as a senior product manager until 2009. While working at a smaller betting start-up he developed an automatic trading tool and started Sporting Data with two other directors in 2011.
The company uses mathematical models to predict how the odds on the outcome of a match will fluctuate after a point is won or lost.
By knowing the outcome of a point faster than it is relayed either on a television broadcast, or updated on a betting exchange, the company can decide if the odds offered are out of line and as such could provide an arbitrage opportunity.
Mr High said Sporting Data approached Enetpulse, the Danish company engaged by international tennis authorities to sell live result information to betting operators like Betfair, about also paying for the data but it refused. The company could not be reached for comment.

A number of gambling experts said sophisticated punters often use un­licensed wagering operators because the markets available on matches between relatively un­known players aren’t deep enough to be lucrative. Mr High denied his ­company used illegal operators and only used licensed betting exchanges Betfair and ****.
“I don’t have the contacts to know who they would be and to trust them to pay up,” he said of illegal operators.
Mr High said Sporting Data would fight the charge against Mr Dobson, and was paying his legal costs. The company had taken advice in the United Kingdom twice before in the past to ensure their use of courtsiding was legal. Mr High said his data analysts acted covertly, such as hiding the electronic devices, because the company knew it was violating the terms and conditions of spectator tickets. “We have had people ejected from other tournaments. We want to be as discrete as possible,” he said.
This was the first time a Sporting Data employee had been charged with a criminal offence, despite the company sending staff to all four of the grand slams and other tournaments. Mr High said tennis most suited the company’s mathematical models, but they had begun testing football and cricket as well.
Mr Dobson has been charged under laws introduced last year by the Victorian government that make it an offence for anyone to “engage in or facilitate any conduct that corrupts or would corrupt a betting outcome of a sport or racing event resulting in financial advantage”.
“The court case may well have the affect of confirming we are [operating within the law], but I’m not going to want to go through this experience again,” Mr High said.
He is considering legal action against Channel Seven’s Today Tonight, after what he said were incorrect reports about his company. Today Tonight sent a television crew to his home and tried to interview his wife, he said.
“I didn’t know much about ­Channel 7 before but I know I’m not a fan now,” he said.
Mr High said he was reconsidering having employees courtside, but also said it was unlikely that tennis authorities could stamp out the practice. “I think maybe the tennis authorities should consider other ways of working with us and we could have a grown up discussion about courtsiding,” he said.
Tennis Australia did not respond to requests for comment.
Interesting to see that they are now looking at beating the clock in, I mean 'testing', football. Cricket, I think we all knew about.

14 comments:

Thatwasthepension said...

This courtsiding isn't fair to the casual Betfair traders but it's within all legal rules. If you think the financial markets are better, forget it. The series of cheating spottet last year by the Nanex team should open the eyes of all financial traders. A good entry point starts in this post: http://www.nanex.net/aqck2/4436.html
It's only the tip of the iceberg i belive.

tyttetrading said...

Great post, and great topic. Not sure I understand this part:

" It is illegal for Australian operators to offer micro-betting. In-play betting is allowed on the outcome of a match, but not via online platforms. Punters have to ­telephone a wagering company instead. Many international jurisdictions allow online in-play betting"
If thats the case, where does the in-play liquidity on Betfair during the AO come from?

Best regards
Tytteboevs

John Walsh said...

I'm sure that my television feed is different being in Canada.

You bet on the NBA. Are you implying that your feed is more than 5 seconds delayed but place bets during the action anyway?

Anonymous said...

Good articles Cass..

I believe SD are probably set up as a company so that they can employ people, pay them properly and the relevant tax etc. The data is then sold to themselves basically, acting as a betting syndicate, buying the data from SD the company. Betting syndicates not needing to pay tax.. or depending on how they have it set up, they might be betting on their own individual accounts, risking own cash.

The liquidity in the Aus Open is still being provided by remaining courtsiders (imo not many, maybe one or two) and internet feed users (bet365 etc).. net feeds are fast enough to allow you to cancel before you get 'sniped' by courtsiders. Net feeds are still going to be preferable to enetpulse anyway as their info, although it is probably quicker, will have mistakes and also delays around hawkeye challenges.. Though I guess if folks like SD have an automated strategy, they could put safety measures in place. The human eye is superior.

Is it possible for the ordinary punter to win on tennis in play ? Yes. In play more so than pre off.. there's plenty of value, most of the bigger market makers and value bettors use staking calculations which end up playing around the current sentiment... sentiment is emotional, and so there are plenty of emotional cul de sacs the market goes down you can find to exploit if you are patient. At other times, the market is very 'mathematically correct' with tight spreads...maths lacks reality and judgement, if you are good at reading body language or you know particular player attributes then a bet at market price can still have an edge, or at least, a temporary one. Liquidity is really good in this respect.

Regarding courtsiding in general.. It has cost me a very very large amount of money over the years - I have been sniped 100s (maybe more) times by these guys... It's my mistake, and for the most part, the platform's fault for making it possible, and not the guys exploiting it (moral / ethics aside).. just my opinion, however I accept, I am well informed of the situation, ordinary punters will not know the effect this has to any edge you thought you had over time. I think many moons ago I wrote a blog post saying that when you run a platform, you have platform running responsibilities that bookmakers do not have. That is the ensure there is a level playing field for all your users, and total transparency and best execution in the markets (cross matching is horrific). Betfair have flunked these responsibilities, instead, choosing to play their bookmakers license card when it suits them. Platforms have specific regulation to prevent conflicts of interest (stock exchange?)...Betfair does not need to play by those rules.

puntdotcom ...continued..

Anonymous said...

...continued..

Personally I find point to point fluctuation sniping to have some minor shades of grey, I'd rather them do 'something' to make sure it didn't happen, it would be lovely to be able to relax trading these markets, solutions are not readily forthcoming though. The problem with point to point stuff is, there is still room for opinion on price, did you intend to leave you money up? did you fat finger it? did you get carried away or suddenly form a strong opinion on who would win..? You could legitimately place some of these snipey looking bets.

A very large issue for me, was the period of time when courtsiders could grab the entire depth of market after the match point had ended and before even Betfair could suspend the market - that is totally wrong on every level. They have become much better on this in recent times. Betfair response to this was to again suggest that they must allow for people guessing, for chance and opinion.. why could this not be someone guessing that player B was going to win the point? ....The issue is, previous point odds can easily be 1.1 or higher (Wawrinka last night was 1.67 on match point).. they are never going to bet at 1.01 unless they 'know'. Saying that there was an example last week with MP odds of 1.2, courtsiders swiped everything down to 1.01 only for there to be a late call from the umpire, they ended up with 20k at 1.01 and 02 on their books. I'm sure this wasn't enough discouragement though.

Could they use the incoming bet feed to suspend? Could they display it for users perhaps? Their issue with this (besides whether it is technologically possible) is probably that traders might well just cancel everything when unknown quantities are coming in taking their bets.. even on tight spread action. Matched volumes could go through the floor. It would certainly be fair though..? and they are called, BetFair.

puntdotcom

Anonymous said...

Emp is completely right in his statement. If you want to trade in the markets (financial, sporting, name your arena) then it is beholden on you to ensure that you know what you are doing. That means knowing what the latest state of play is as much as it means being able to work out what the correct value is given that state of play.

I am not sure if you have been following the finance markets recently (i.e. over the past decade!) but there has been an exponential growth in High Frequency Trading. This is where the big banks spend ever more money to get over lower latency feed and market access. Market access used to be measured in hundreds of milliseconds. It has now got to the point where if you are not working to nano second response times you are history. In the light of that then I guess the multi second sporting data latency we are talking about here is an outright joke.

Sporting Data obviously have an edge you don't have. I think the forums need to either work out how to regain that edge or stop complaining.

It seems to me that a lot of the punters who are complaining now are people who have historically done well out of their (value) edge but are now concerned that they are losing it to the low latency players. I don't recall these historically succesful people complaining about the money they were taking off the mug punters who didn't have their value edge in the past.

Adapt or die.

Anonymous said...

@tyttetrading,

The statement is almost right. If I correct it I imagine that would answer your question. It should really be:

"It is illegal for Australian operators to offer micro-betting. In-play betting is allowed on the outcome of a match, but not via online platforms FOR AUSTRALIAN PUNTERS. AUSTRALIAN Punters have to ­telephone a wagering company instead. Many international jurisdictions allow online in-play betting"

So the answer to your question is "from punters not in Australia"

Anonymous said...

I appreciate there's a big intersection on the Venn diagram of Betfair punters and people who wear foil hats, but what would lead someone to believe that just because someone once worked for Betfair that they get any sort of special arrangement?

The people at Sportingdata left Betfair in 2009, since when Betfair's entire management team, every single solitary one of them, has been replaced. Why would Betfair's current management want to give away money to people they've never even worked with?

Hejik said...

You would appear to have ruffled a few feathers with your cynicism Cassini.

Sultan has got a right paddy on and won't publish my comments (very polite and very fair questions) which is hardly in the interests of fair-play, I'm sure you will agree.

With no right to respond with a contrary opinion on his blog, I figured I'd little option but to raise the question here where readers will hopefully follow his link.

I hope I haven't overstepped.

Emp said...

I'd like to address a lot of what you said since you think it's so very ridiculous. I have quite a few observations.

1)It seems somewhat rude and is definitely incorrect to say that I don't think.

2)Betting during a break is most emphatically not the same as betting pre-game, because in sports other than football, prices don't move in that smooth Poisson distribution based manner. Prices that are efficient pre-game can become inefficient during the game (certainly in some sports at least).

3) On the possibility of winning methodologies, a few questions and some observations.It's obviously true that being able to bet after every point is better than only during breaks, but I'm not sure why not being able to do so would cripple all methodologies except those of the people doing this strategy (which is what you imply when you say that only those same accounts will keep winning).

4)If your point is that no one would bet if they knew these sharks were doing this, I assure you that's not true...plenty of people just enjoy gambling and many of them are OK with it being slightly -EV or not as profitable as it would without those tactics. Being first to the info just doesn't seem all that heinous to me, given that even without court-siding, feeds would be assymetric depending on where in the world you live.

5) As some have mentioned, info isn't as a matter of fact symmetrical in financial markets either, and leaving aside stocks, in currencies and commodities,(where insider trading is perfectly legal) there is wild information asymmetry and this doesn't seem to have dried up markets or killed non-shark participation.

6) In the market I really know- cricket, court-siding can be profitable if one did it, but it doesn't hurt market viability at all. To begin with, if one's looking at Betfair, it's pretty easy to tell what a sudden change in odds represents in terms of the action that happened. You'd have to be utterly stupid to see the price change from 2.24 to 1.75 and not realize a wicket has fallen. Recognizing inaccuracies in the adjusted price is more than sufficient to be massively profitable.

I think this is significant because cricket is the best sport for in-play betting and court-siding doesn't even begin to affect the functioning of the market (which isn't even primarily on Betfair).

I would disclaim though that the best approach to cricket-betting is based on hugely in-depth knowledge of the players and not mechanical trading type approaches. In other words, in-play value betting.

Emp said...

I also want to point out additionally something I missed out:

I don't agree with your distinction of this information as being "unfair" but edges created by use of Poisson Distributions, Markov Chains and highly simulated computer models (which most big sports-betters now use and which no recreational punter would ever be able to use or recreate due to financial barriers) as being fair.

Can you please explain a) how automated and algorithmic betting models and the like are fair but this isn't b) how it's fair for me to be watching with binoculars from a high-rise building and placing my bets (definitely possible on most cricket grounds) but not courtsiding and c) assuming courtsiding was banned, why would it be fair if my TV feed was on a 5 sec delay and yours on a 15 sec delay?

Anonymous said...

Basically unless you can afford a data collection infrastructure delivering light speed latency and you can ignore/tolerate any copyright breach fines on that data, then you are going to lose.

Anonymous said...

You only need ultra low latency if your edge is really just about getting into the market quicker than everyone else. If you have a different type of edge that is latency tolerant then you are fine.

Most people would say that the most successful "trader" in the financial markets is Warren Buffet. Probably as far away from the high frequency setups as it is possible to get.

As I said before: adapt or die.

Anonymous said...

Not sure if that 'fair' question was directed at me emp, but to be clear, during a match I'm fine with folks playing with the fastest data - the platform rules allow it, people will do whatever it takes to take out inefficiencies and do this as quickly as possible. Adapt or die as someone else says.. it's just a fact of life (or platform).. Personally I find these guys quite useful at times as I can get a nice price when I spot that they have been able to get some action.

Any comments I made on fairness relate solely to the same speed used once the match has finished in live time, and before betfair can suspend. That is wrong and unfair imo, there's no prospect of the other side ever winning..

Matt @punt