Sunday, 9 March 2014

Cod Help Us

A few comments on my 'fast-data' post, with some people still missing the point, and having explained the issue as well as I can, one can only assume that this is intentional. Either that, or I am not being clear, and that is hardly a credible explanation given my 'A' grade English Language 'O' Level from a few years back. OK, quite a few years back...

Danny Murphy gets it, writing;
I think it's high time we got some answers from Betfair about the activities of Sporting Data.
There is a clear conflict of interest here because as Sporting Data must be paying 60% PC Betfair have an economic interest in this company flourishing. Why have a bunch of smallish traders paying 20% PC when you can have a factory trawler ship harvesting everything and returning 60%?
No doubt Betfair are giving Sporting Data every assistance so they can make more and more money.
I liked the fishing analogy. I like cod and chips too, but as most readers will know, years of commercial overfishing and poor management resulted in near extinction and the closure of the North Sea cod fisheries.
The single best example of the ecological and economical dangers of overfishing is found in Newfoundland, Canada. In 1992 the once thriving cod fishing industry came to a sudden and full stop when at the start of the fishing season no cod appeared. Overfishing allowed by decades of fisheries mismanagement was the main cause for this disaster that resulted in almost 40,000 people losing their livelihood and an ecosystem in complete state of decay.
Slowly the stocks recovered, but the parallels with trading on Betfair are easy to see. If poor management continues to allow an inadequate delay, the purpose of which is, as Betfair themselves say, is to protect customers and liquidity...
Bet placement on in-play markets carries a time delay to allow customers to cancel unmatched orders on the system when there is a change in market conditions. This delay protects both backers and layers and leads to greater liquidity.
...then at some point, liquidity will fall. Betfair recognise this fact. Slow traders will tire of losing bets to fast traders, with slow and fast their relative feed times, not a reference to intellect, and they may scale back their activities, or they may pull out altogether, but the net result is more illiquid markets, with large gaps, and it's downhill from there. Gappy markets, not worth bothering with, even less liquidity until there's money on both sides at 1.01 and 1.02 and that's it.

Some comments question the legality of communication the score, and as has been stated clearly here and elsewhere, this is not illegal. In this day and age of instant communication, it's unrealistic to think that an 'event' will not become common knowledge until someone authorises its release.

This is not the issue. The issue is that for those of us who love in-play trading, it's in our best interests that the markets are as liquid as possible. This means that the delay needs to be sufficient to ensure that the majority of 'normal' traders can be confident in their ability to cancel bets before the 'minority' fast-data traders are able to use their (perfectly legal) advantage.

A second concern is that the Gambling Commission might well rule in-play betting inherently unfair, and it will be banned and become the domain of less regulated companies. The GL is already not exactly in full support of in-play, and examples like this are hardly going to help the cause.

On a separate note, Anonymous wrote:
The main problem I have with all this is not while the match is taking pace, but that Betfair effectively facilitate the matching of bets after an event has been decided. i.e. customers are betting on an impossible outcome.

Incidentally this is the same during, for example, a game of football when all correct score outcomes are left open for betting whether they are still possible or not.
Having placed a bet while distracted on a team that had already lost several years ago, I am aware that the failure to Suspend matches as soon as they are over, or remove impossible outcomes, can cause problems, but in some sports, it's not over when it appears to be. Game winning shots can be reviewed and the outcome changed, or time can be added back on the clock, allowing the defeated team to win.

Another Anonymous misses the point, writing:
Someone will always have an edge with data and as they should. Court siding is open to everyone.
I read that Sporting Data turned over 150k in a match and actually finished up losing 2k. The big bad company provided all that liquidity and lost money.

Sweeping 1.01 aside I will put my models up against courtsiders. Fast data doesn't always mean smart prices, wait on the edges and punish their greed.

Build a bridge and get over it.
Please re-read what the issue is, and just so you know, one example of a loss means absolutely nothing, even if the story is true. Having an edge doesn't mean winning on every market. Your models may be the best in the world, but the point is that the presence of fast-data traders is reducing your profits, even if you are still able to make profits, but you won't be able to make anything if the markets dry up as traders give up or if in-play betting is banned.

To be clear, the issues are that Betfair is allowing an insufficient delay on certain in-play markets which protect the interests of at least one company (Sporting Data) which was set up by former Betfair employees at the expense of the majority of 'normal' traders, a management decision which will ultimately reduce liquidity and consequently corporate profits (not in shareholders best interests) and may lead to the Gambling Commission recommending a ban on in-play betting as it becomes impossible to argue that in-play betting is fair (and a ban would not be in most of our interests).

4 comments:

Anonymous said...

No idea why you are desperate for increased bet delays, the change to 8 seconds in football has negatively impacted liquidity.

Time to use that big head of yours and think of a better solution.

Cassini said...

I think it's up to Betfair's management team to think of a better solution, rather than me. Increasing the delay is one option, but there are others.

Betslayer said...

I think whatever the solutions, the market place is now very different and liquidity is very shallow...2 million on big football matches is well down...and I think its clear to anyone that trades inplay that the money now is smarter money and gaining an edge is almost impossible (and thats from two traders who have made this pay for 10 years!)

Danny Murphy said...

I think the responsibility lies with the ATP and WTA aswell as Betfair. The ATP and WTA run the tournaments so they should be responsible for what happens with the data ie the score. It's very simple, either they have copyright and can ban and fine people accordingly, or they allow it to be freely available. They could easily allow Betfair a feed directly from the umpire, which we could then all see.

This does seem to the the most ridiculous problem. Betfair customers should be asking why Betfair can't provide this service when the bookies are receiving this data.

You can't blame people for courtsiding because they are only trying to get something that ought to be available to everyone. I think rather than try and pretend it doesn't exist the ATP and WTA should encourage it, it would be great fun and if it was welcomed I'd personally love to give it a go.

After all, there is a 25 sec gap between points and about a minute or more between games so plenty of opportunity for those not at the match to get involved, especially if the score updates were available in real time.