Wednesday, 20 January 2016

Groth Pwofits

As the latest Tennis Fixing revelations continue to play out in the media, Sports Illustrated's Jon Wertheim has an interesting interview with blogger Scott Ferguson. Click on the link for the full report, but I found this exchange interesting:
Jon Wertheim: Either way, the integrity of competition is undermined and eroded. But do you have a sense of what is being fixed? Points? Sets? Games? Matches?
Scott Ferguson: Matches. There is precious little in betting on individual points, sets or matches. It can be done, but not via the big betting exchange, and thus any success on such markets will be very short-term as those accounts will be closed or restricted faster than a Sam Groth serve. 
Really? While I agree that the fixing in question is related to matches, I'm not sure about the last part of Scott's answer.

Perhaps I'm missing something (it does happen) but I've not seen anything anywhere to suggest that winning accounts on Betfair ("the big betting exchange") are being  closed or restricted at all, never mind with any speed.

There are clearly still court-siders at events (not just tennis) all around the world these days, and it's not unreasonable to assume that the syndicates funding their travel, accommodation, tickets, expenses and pay are not loss-making charitable institutions.
It was the same thing with Betfair, once Gale decided to have 25 courtsiders flying around the world every week, you cant realistically compete against someone who is 5 to 15 seconds ahead, and betting 10k+ every point before you see a point won or lost.
Not to mention that if such consistently winning accounts were closed or restricted, there would no longer be a need for Premium Charges. These are specifically the types of accounts that were targeted.

Betfair made the decision to allow the practice to continue, and take between 40% and 60% of the profits, rather than deviate from their "We Encourage Winners" mantra:
Betfair give you all the guidance you need, and we encourage winners! We don't ban or cut back as is the case with many bookies who limit stakes or close accounts if anyone 'dares' to beat them. It doesn't matter to Betfair, because we take no position in the markets.
Introducing the Premium Charge to deal with consistently winning court-sider syndicates seemed a bizarre decision at the time.
In 20 years working in financial markets I’ve never heard of any other exchange that charges larger or more profitable users a higher percentage fee. In fact, every other exchange that I am aware of uses the opposite basis for charging fees and provides volume discounts. The reason that most exchanges do this is simple: the main driver of profit for an exchange is the level of turnover, and a key driver of turnover is the liquidity available.
The difference is that while insider trading is illegal in the financial markets, court-siding - its equivalent in the betting markets - is not.

Betfair could (one might argue should) have closed those accounts engaged in this activity easily enough, but as became known later, former Betfair managers were behind at least some of these winning accounts. Draw your own conclusions about that.

Incidentally, I did confirm that accounts risking nothing to win a penny have been closed:
i have been using the .01 no lose, but i cannot see how it is fraudulent strategy
While penny pinching is annoying, it's nowhere near as annoying as paying Premium Charges. I hope Scott is right that consistently winning court-sider driven accounts are being restricted or closed, and as a former employee he knows more about Betfair's affairs than I do, but from the outside I'm not seeing or hearing evidence that they are.

Scott says later in the interview that "Money is the root of all evil". Not exactly correct - the actual quote is:
"For the love of money is the root of all evil". 


Marty said...

I think his comment should be interpreted differently:

"It can be done, but not via the big betting exchange, and thus any success on such markets will be very short-term as those accounts will be closed or restricted"

He's saying that because you can't fix+bet anything other than matches on the exchange (perhaps for liquidity reasons) you must do it elsewhere, and elsewhere the accounts will be "closed or restricted". I suspect you would not disagree with this.

Having said that I'm not sure he is even correct - I would still have thought betting at bookmakers would be a good source of liquidity. If you are able to fix a tennis game you should be able to get access to some unflagged bookmaker accounts. Also not all books follow the UK model of closing accounts at the first sign of a winner.

James said...

"i have been using the .01 no lose, but i cannot see how it is fraudulent strategy"

Where does that quote come from?