Goal Mine

Does nobody study my spreadsheets? An audit of my XX Draw results uncovered a serious discrepancy, which cost me six point in profits, yet nobody noticed! The error has been corrected in the latest update, which combined with the two losers in Italy last night, drops the ROI on the season to just 4.83%. Not too shabby after a few hundred bets perhaps, but after just 30, nothing to write home about. Not that there would be any point, because hardly anyone in my family understands anything I write about in this blog. My son does, and possibly a nephew, but that's about it. A few games tonight, but a summary of midweek so far appears to be a loss in France (Bonnie Tyler anyone?), a matching profit in Italy, and a small profit in Spain. I'll update the final totals after tonight's games, and publish them, but for now these are close enough:

With over 300 bets already this season, it won't be too long before I have over 1,000 bets, and the ROI will start to be meaningful. Right now, it's up and down like a whore's drawers, but as George said in a comment on Monday,

"If you can support a 5% ROI edge over 1500+ bets, you are sitting on a gold mine, my friend..."

My own gold mine would be nice, but while there's a long way to go I suspect, the 'prospect' is exciting.

To address some of the other points raised by George, here are his comments:

Very useful to see your season-to-date stats. Lots of blogs focus only on the latest round of matches. Signal/Noise is so low that even a decent edge (pos or neg) is not obvious unless you have a large number of bets to study (250 is my rule of thumb). In your season-to-date stats, assuming zero edge, your results are 82nd percentile. Can't make it into an academic journal article, but practically very very good. What do your 10/11 season stats look like?

The value system only started late in the season for 2010-11, a trial in the EPL to iron out any spreadsheet issues, and while they were very profitable (Match Odds +12.9 from 26 bets. Over/Under +7.75 from 14 bets) I'm not going to include them in the running totals. Far too small a sample. George's second comment:

At what point in time and over how many bookmakers do you select the odds that go into your records? I have a bit of a problem with FE on this issue. If the target is good replication of the tipped bets, then a tipster (I am not saying you are one) should limit himself/herself to 4-5 big-limit, big-payback bookies (perhaps review them annually). Otherwise, there is a bias there, which in reality wipes out a significant part of the perceived/reported edge. Or one can simply report different edges for different contexts e.g. early-market (low-limit) edge, pinnacle-only edge etc. By edge, I always mean ROI%.

There is nothing sophisticated about the odds I enter - quite simply they are those that are readily available on Betfair. (Occasionally if the spread is 2.12 - 2.18, I will enter 2.15, if it is 2.12 - 2.14, I use the 2.12 as the back price although I will look for the 2.14 when I place my bet). I use the Betfair prices for two reasons - 1) Since a number of selections are Lay bets, this obviously limits my options to the exchanges and while occasionally BETDAQ may be a tick higher, it's not often and 2) I have no problem getting my bets accepted on Betfair whereas bookies would be a different matter. The prices entered are those at the time I happen to pull them, usually a couple of days before the matches, but occasionally closer to kick-off, for example weeks like this one where there are midweek games. For the Over / Under markets, prices can be a little soft if I try to pull them too early. George (the Third):

Why are you not looking at the Asian Handicap markets? As far as I am concerned, if there is liquidity there, I will dig for an edge. Asian handicaps is where the liquidity is. I think I saw something from you about the mismatch of incentives of teams on spread/handicap markets, which you don't like. Don't see how that's relevant. If your system finds value, then obviously it overcomes the incentives problem. If one cannot find value, then yes, the funny incentives could be used as a reason for not digging further, I guess.

I do not find much liquidity in the Asian Handicap markets, at least not those on Betfair or BETDAQ. This is primarily an academic exercise right now. If an edge appears to be there in a few weeks, I will reassess, but right now I'm not looking at running before I can walk. Appreciate the comments George. And then there was a comment from my NFL Chat-room friend Average Guy, who asks

Hi Cassini, does your stake vary with the calculated value. If the value % is higher is the stake higher ?

Right now I'm just backing (or laying) the value selections (10% edge or more) for a small flat stake, but after a few weeks, I'll look at whether I would be more profitable adopting a Kelly style approach to my staking. Clearly the number of value bets I am finding is too many, but it's a useful 'churn' to offset the Premium Charge, which incidentally hit me again yesterday. It shouldn't be a problem next week though - this week hasn't been a good one so far, and just makes the charge that much more annoying. Had the losses of this week happened a few days earlier, then I wouldn't have had to pay the charge at all, yet just because an arbitrary line is drawn on a Sunday night, and I won before the line, and lost after it, I have to pay. As I wrote earlier in the week, betting isn't like that. Wins and losses are not evenly spaced. Oh well, whining about it doesn't seem to do any good, so I shall shut up.

Vive la Différence *

It’s typical of betting really, that after a cold spell of 16 XX Draws without a winner, we then hit two in a row, and we have two more selections tonight. Bordeaux v Lille finished 1-1; a winner at 3.35, and anyone laying Bordeaux at 2.98 made a little extra as well. France continues to be weird. For the second round of matches in a row, the Over 2.5 is value everywhere - well almost. In 8 of the remaining midweek games the Over is value, while yet again, a value selection is found in every single Match Odds market. My expectations of goals are clearly more than the market's, but it worked out for the best at the weekend, and this game (investing, not French football), is all about differences of opinion, and my opinion is based on the statistics.

A profitable outcome in Italy too, where my concerns about the accuracy of Novara’s rating were dispelled as they beat a very poor Internazionale team whose rating is in rapid decline. An example of how easy it is to ignore the numbers, and be led astray by the names. Only two seasons ago, Novara was playing at the third level of Italian football, while Inter were dominating Serie A.

In the remaining midweek games in Italy, the spreadsheet suggests the following bets are value:

Not quite so good in Spain again, with Osasuna failing to win at 2.82, and the lay of Villareal (1.7) going down. Real Sociedad were our one winner in La Liga, beating Granada by 1-0 – only two goals more needed for the Over 2.5 goals to be a winner! Here are the rest of tonight's selections:

The two XX Draw selections are posted at Gold All Over together with the latest update.

* Coincidentally, an interesting article on la différence in today's Telegraph. Bonne chance.

Bad Informaion

From Sports Book Review:

A BetGoTo (SBR rating D-) player has written SBR with a payment complaint. The player tells SBR that he has received some small payouts over the course of three years from the slow-pay sportsbook and casino group, but is currently waiting on approximately $2,700 since October of 2011.

October 2011? That doesn't seem too much of a delay by any measure. It does always create a bad impression when a company's web site has poor spelling or grammar, so perhaps I shouldn't be surprised.

Quick Picks

A handful of games tonight, and the spreadsheet comes up with the following:

France: Bordeaux v Lille, XX Draw Selection at 3.35, or lay Bordeaux at 2.98, Over 2.5 at 2.25

Italy: Novara v Internazionale, Lay Internazionale at 1.69 (this one is risky given Novara being a newly promoted team with little reliable form to go on)

Spain: Osasuna v Sevilla, Back Osasuna at 2.82; Real Sociedad v Granada, Back Real Sociedad at 2.06, Over 2.5 at 2.13; Villareal v Mallorca, Lay Villareal at 1.7

Thanks to George for his comments on the last post, a record four, and Average Guy for his, well, average, one... I'll get to them when time permits, but with midweek games galore, I'd rather mess about with the spreadsheet than write blog posts. One (hopefully) pays the bills, the other doesn't.

Bumpy Roads

Next time I notice an anomaly, perhaps I shouldn’t question it. A tres bon weekend in France, as the 10 value over selections produced no less than 7 winners, a profit of 7.29 points. The Match Odds selections didn’t fare quite so well with 'only' 5 winners from the 10 selections, but a profit of 1.74 points. Football Elite had two Recommended Bets here, Auxerre drew, but Toulouse came from 0-2 down to win 3-2 and a 90’ goal went in our favour for once.

I hope a few of you followed me in on the Overs, but a quick word on what 'value' means'. Take a look at Peter Webb's excellent recent post What does value look like? on this subject. Peter writes:

I’ll often make suggestions around value. In my football ratings I point to matches that will have above or below value median results. What I am trying to say is this looks value, that is value, this isn’t. But what does value look like?

One thing it is not, is a tip. I’ll liberally scatter the words ‘on average’ into many posts as that is what value looks like. All sports and most events show a great deal of variability and that means that it’s nigh on impossible to get things right all the time. Therefore when you see something from me, I’m not saying back or lay this item. I am saying there is value in that. To understand how value manifests itself over time take a look at the following chart (see below).

This chart represents a lay value strategy. I think I have an edge, in fact I am pretty certain I do based on my research, but this graph shows you how variable the results are. After nearly 500 events using £10 stakes I am up £400. But, as you can see, the road is bumpy and this is because value plays out over the very long term. In that mix you can get very long runs where it’s very positive or very negative, but over the long term you should see your bank produce higher lows during each draw-down. That’s how you know you are achieving value. Once you are certain, you start looking at how scalable the strategy is.

So when I make recommendations or give ratings, be sure to interpret it correctly. It’s easy when recommending something to look foolish, but that will only occur if you interpret the information incorrectly. What I am saying when I post up information is that, based upon my analysis, it looks value or look for value here. I know from experience that I can generally find it, but often the biggest hurdle to making it pay is commission and associated costs, that’s critically important as well. So don’t forget to focus on that as well!

It's an excellent post, which reinforces that the selections here are not tips. Value does not always win. It simply means that over time, you will come out ahead, although as Peter cautions, commission and expenses can make the difference between a profitable strategy and a losing one.

My results in England weren’t bad either, and again, it was the Under / Over selections here that outperformed the Match Odds with a profit of 9.88 points. Nine selections, nine winners. The Everton v Wigan Athletic game was the one match where I found no value, and the only Under bet was Aston Villa v Newcastle United, so again I benefited from plenty of goals. The ten Match Odds selections produced a profit of 3.66, much a boost to the season running total which is still overall down in the EPL. The totals for this week are in the screenshot below.

The highlight selection in Germany was the lay of Bayer Leverkusen at 1.46 who then proceeded to lose at home to Koln 1-4. My spreadsheet recommended a lay of Borussia Dortmund, and Football Elite had Hannover ’96, and with two late goals, we both came out ahead.

In Italy's Serie A, Football Elite found their third winner of the weekend as Atalanta beat Palermo. I had Atalanta priced at 1.96, the market at 2.44 so this was a huge value bet for me.

And finally, in my least favourite of the top five leagues, La Liga, my value lay of Barcelona didn’t quite pan out, as the hosts beat Osasuna by 8-0, but only a week before, Barcelona failed to win at 1.2 so a Lay Barca strategy is still ahead on the season.

My spreadsheet doesn’t handle extremes too well. Barcelona went off at around 1.11 I believe, and to come up with this as a price, I would have needed to estimate Barcelona’s goal scoring probability 100% higher and Osasuna's 50% lower to have been close to that. As a result, the value in games involving big favourites (Barcelona, Real Madrid, Manchester City, Manchester United, Chelsea in particular) are often off the scale, and result in Lay bets for these teams. Whether this proves to be profitable or not remains to be seen.

The XX Draw selections went 0 for 3 on Saturday, and 1 for 3 on Sunday, (at last a winner, and as these things tend to work out, it was at 4.1, the longest price of any selection this season). Peter Nordsted’s Drawmaster system found Aston Villa v Newcastle United, raising his ROI to 27.14% and taking the lead as mine heads south to 26.11%. P had a few comments about the XX Draws

Before Fulham's unlikely comeback to equalise against Man City and end the diabolical XX losing streak, there were 16 consecutive losers.

I was wondering how this streak ranks as far back as your draw records go.

This is the worst run since I started tracking the sequence of bets. I had a losing run of 8 back in Jan / Feb but these runs will happen.

If we assume average odds of 3.5, then the probability that any single match will NOT be a draw is about 0.71 (not factoring in your edge, which means that the probability is actually a bit less). The probability of 16 consecutive independent events with a probability of 0.71 is 0.00416997, or about 1 in 240.

It would be nice to have our winners evenly spaced, but betting isn't like that. That's why it is so important to understand what value means. I started the season with 7 wins from 10 selections, which was nice, but the losing run looks even worse as a result! The overall picture is pretty good. 7 wins from 27 selections doesn't sound like a great strike rate, but a level stakes 7.05 points profit, and an ROI of 26.11% tell the true story. It's also worth noticing that of the 16 losing selections, 5 were winners at the 80' point or later, and could have been traded for a decent profit.

Secondly, would you consider offering a paid service that would get subscribers your XX ratings as well as the match odds and over/under value ratings for each of the five major European leagues by Thursday or Friday of each week?

You kindly drip feed your loyal readers a bit each week, but without all of the selections, it is very difficult to fullow a system for a particular league and market category over the course of the season.

Of course I would consider offering a paid service. Consider the Pros: It's not something I am actively looking to do, but I do it for myself anyway, it takes up a lot of time, and if I could recoup some of hidden cost of that time investment, then why not?The Cons add up though, mainly with the added responsibility. It's one thing me losing my peanuts on my system, but it's something else dragging others down with me. There would also be pressure to get the results in and the selections out in a timely manner.

Finally, if you are doing ratings for match odds and goals for the five major European leagues, does that mean that you are placing 50-100 value bets per week?

That's a lot to monitor, especially if you are always trying to get slightly better odds on an exchange...

In a typical 'Round' of the big leagues, there are 49 matches, so potentially there are 98 value bets. This weekend there were a lot, 80 in total, but last weekend there were 'only' 56. These are selections where I think the edge is 10% or more. It is a lot to monitor, but it's a lot easier to monitor when things are going well than when you have a poor weekend!

Finally, Mark Iverson hosted another NFL chat-room yesterday for the Minnesota Vikings v Tampa bay Buccaneers game. This turned out to be an excellent with a big comeback from the Bucs who trailed 0-17 at HT after making just two First Downs. Minnesota (1.08 at this point) couldn't do a thing wrong, and the Bucs couldn't do a thing right, but in the second half, it was a different game as the Bucs rallied to win 24-20. I was all set to call it a day at half-time, and find another game to trade, but Mark talked me into seeing how the second half started, and hanging in was a good call. I know better than to think a game is over at 17-0, but what was unusual in this game was that until the second half, Tampa Bay hadn't shown any sign that they would be able to make a game of it, but the beauty of the NFL is that you just never know.

Overs All Over

Something very strange is going on in France. Of the 10 Ligue 1 matches last weekend, I found value in just 4 matches (2 won, 2 lost) but the key point here is that my prices were close to the market's in 60% of the matches. 

In the Over / Under category, I had just 3 value bets (2 won, 1 lost) and I was close to the market on the other 7 matches. So why is it that this weekend, I am finding value in every match? Both Match Odds and Over / Under markets? 

Even stranger is that in every Over / Under market, my spreadsheet says the value is on the Overs in every match. Every one. This usually means one thing, and if it were anyone else I would definitely say it was, a mistake, but the other leagues have at least some games close to the market. 

It makes me a little hesitant about putting these bets on though.

It hardly makes me appear the sophisticated value seeking punter when I back Overs 10 times, but since nobody is looking, what the hell. I'll chalk it up as anomaly for now, but it'll be interesting how the results play out, and it'll be interesting how my prices compare with the markets in the midweek games. I don't like midweek games. It means little time to get the data from one round of matches entered before the next round is upon me.

The XX Draws are having a poor run, the worst of 2011 anyway, with another loser last night in the Freiburg v Stuttgart game. I've posted the rest of this weekend's selections over at Gold All Over for anyone who is interested. The ROI on this season is down to 33.1% which is still excellent, and an increase on the second half of 2010-11, but losing runs can be wearying.

For my value bets this week, the top value Match Odds bets in each league are:

Lay Arsenal 1.95 @ Blackburn Rovers (Edge 35.5%), Back Auxerre 2.1 v Caen (34.6%), Lay Werder Bremen 2.68 @ Nuremberg (31.6%), Back Atalanta 2.44 v Palermo (24.5%); Lay Valencia 2.28 @ Gijon (45%).

Best Value Over / Under: Bolton v Norwich City Over 1.9, Nice v Ajaccio Over 2.72, Schalke '04 v Bayern Munich Under 2.53, Parma v Chievo Over 2.5, Real Zaragoza v Espanol Over 2.31.

Paradox

Betfair Trading Challenge mentioned something that is worthy of further discussion. He writes, a little confusingly, but you can get the drift:

Take tonight's Europa league game, Stoke 1-0 up with 10 minutes to go. I fancied them to concede but when I looked at the price they were 1.3, to me that was not value and I would have ignored it.

The strange thing is that even though I thought 1.3 was too high a score I could not have backed them at that price. That's a bit paradoxical, is it not ? How can the lay be bad value and the back also be bad value ?

It may seem a paradox, because 1.3 should be either a value back or a value lay (unless the probability of the event is 0.7692 of course), but it's not. For a start, the in-play football markets are very accurate, making it nigh on impossible to find value after taking into account the commission. (In other words, if the Back / Lay prices are 1.3 / 1.31, the true probability is likely 0.7663 [1.305] so it's unlikely that you will find value on either side).

The only opportunities appear to be in the immediate aftermath of a game-changing event, e.g. a goal or a sending off, when there is some volatility, but in a sport like football, the prices will trend to 1.0 or 1000 depending on the time remaining, and many people have very accurate pricing models for this. I don't, and I suspect that most people don't, so while 1.3 may have been too long a price to lay, it may well have been too short a price to back as well.

Losing Faith

I'm a little disappointed in the BBC, although they will no doubt blame the Press Association who provide their data. Manchester City shots on target v Napoli last night? 11, according to the BBC, trusted around the world, yet two other sites (Guardian Match Stats and 90thminute.com) both agreed that City had just 4 shots on target. So maybe a shot on target from one angle may not be on target from another, and a small difference on a slightly subjective statistic is perhaps understandable, but corners are not subjective. One is either awarded or it isn't, so how come the BBC have 8 corners awarded to Napoli, yet other sites have 9? It's as if someone watching the match dozed off, woke up a few minutes later, and simply made some numbers up. Do these people not realize that these numbers are important. I had to revisit the Chelsea v Bayer Leverkusen (did Bayer Leverkusen have 5 shots on target or 2? - there's a big difference) and Borussia Dortmund v Arsenal (Arsenal 6 shots or 2?) results and re-update the spreadsheet. For the league matches, I use Football Data, but for the UEFA competitions I have to look elsewhere. If anyone has any better, i.e. more accurate, sites as a source for these statistics, please let me know. I can't watch EVERY game!

Centre Court Trading is rapidly becoming one of my favourite reads with two great posts in the last two days. The latest titled Right-Brain Trading is quoting from a book by disgraced ** former trader, and author of Way Of The Turtle, Curtis Faith,

called "Trading From Your Gut". Leaving aside Mr. Faith's fall from grace, what he has to say here, paraphrased by CCT, is interesting:

The trading world is divided into two fairly distinct camps. The largest camp consists of traders who consider trading an art, those who are called discretionary traders. A smaller group consists of traders who use a specific set of rules to make their trading decisions. These traders are known as system traders.

....trading styles generally fall on a continuum between the purely intuitive discretionary trader and the purely rule-oriented system trader.

The best discretionary traders tend to be right-brain dominant, using their intuition to decide when to make trades....... They might describe their approach as having a “knack” for the market or a “feel” for the direction of the market.

..... purist right-brained traders.....often don’t understand exactly why they make certain trades; they just know when a trade feels right. This willingness to relinquish decision making to intuition or gut, characterizes the hard-core right-brain trader.

System traders.... use a rational, systematic process to decide when to make trades......don’t trade on their gut or intuition; they trade using rules and strategies. These traders often think in terms of signals and triggers.....Systems traders will have identified these specific criteria earlier, when they performed their backtesting and historical analyses.

I've touched on this subject before, and it's an interesting topic. If you are purely a system trader, you listen to your spreadsheet and lay Manchester City at 1.36 last night. If you are discretionary, you pile in against the Raiders at half-time because the price feels too short. I'm in two minds about what to make of this...
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** "Randomness of markets is normal. Faith says to get out "if you can". He might as well be sitting at the craps table with that logic. It's the exact type of statement one would expect to hear from a person whose money management firm ended in a permanent CFTC ban. Caution should be taken when listening to this particular ex-Turtle."

Don't Panic

Centre Court Trading had a post yesterday that many of us can probably identify with. He wrote that

...back in March, when I was going through those terrible dark ages, I attempted to change my strategy and be a little more proactive. It back-fired because I didn't fully commit to the change. I ended up not letting trades run long enough, cutting out early due to fear and didn't know what my plan was from game to game.

Probably the single biggest reason why most traders fail is that they cut their winners short and let the losers run, exactly the opposite of what they should do. CCT also said:

There were times yesterday where I was spotting opportunities but, as I've become inclined to do, ignored them as they were not quite as 'sure' as I would have liked. As you can guess, almost all of those opportunities would have produced green positions.

The US Open final was a classic example. I managed to catch Djokovic at around 1.8 after a few games and was convinced by that point that he was going to win. I didn't think there was any point hanging around for a price above evens, as he was looking far better than Nadal. I only went in with half stakes, as Nadal was still level at the time and Djokovic's price was moving out. But my cautious mindset panicked at the first sign of Nadal picking his game up and I bailed out early for a small red. Nadal didn't trade above evens the entire match. I was gutted because if I'd just held on for a few more points (and I was on half stakes so should have allowed for a bit longer holding my position) I would've ended with my largest win for months.

The problem with being as 'sure' as you might like to be before having a bet in play, is that by the time you decide, the bet is likely to be gone. Trade enough, and you learn to harness the 'Blink'* instinct that I have written about before on here. And my advice on panicking at the first sign of trouble, is the same as that of Corporal Jones in Dad's Army - don't. Easier said than done, you might say, but it often pays to "be greedy when others are fearful, be fearful when others are greedy" - Warren Buffett. What is essential here though, is that you stake sensibly. Nervous money doesn't win. Over-staking leads to poor decisions, which lead to losses.

A poster on the Betfair forum had this interesting statistic about BETDAQ's change in fortune since the Super Premium Charge kicked in:

Quite an upturn for them, and some reports suggest that horse racing markets are also steadily improving. Betfair may well live to regret their latest move. While it may be true that only a small number of customers (750?) are directly affected, thousands more are indirectly affected. Either they are closing in on the finishing line, or if not any time soon, at least they aspire to at some time in the future, or they are impacted by thinner markets and less value as the big boys depart for greener, or purpler, pastures. Not to mention that it's very poor PR and people like myself who would have happily married Betfair a few years ago no longer feel the same way. If BETDAQ picks up in the markets less travelled, like many others, I'll be gone.

Boring stuff now, (ok, even MORE boring stuff), and two inter-league games tonight; Manchester City v Napoli and Villareal v Bayern Munich. My crazy spreadsheet thinks City should be at 1.7 v Napoli, and that 1.36 is a value lay. I'm not so sure, and whover said "numbers don't lie" obviously never tried making money from football betting. The Under 3.5 at 1.54 looks value.

Bayern Munich at 2.18 are value to win at Villareal, but no value on the Over / Under as my numbers fall almost exactly where the market currently sits - 2.11 U, 1.9 O.

The Europa League on Thursday has just one inter-league game, which is Udinese v Rennes. I have Udinese at 1.79, the market at 1.94. Unders for me is 1.85, the market around 1.91.

I checked my Premium Charge statement yesterday, and I know I have posted when I have been at 19.99% and had to pay, but last week luck was on my side:

* For any newcomers to this blog, Blink is a book by Malcolm Gladwell, about the first two seconds of looking--the decisive glance that knows in an instant. Add it to your Xmas list as I urged you back in 2008. It's very relevant to trading and the markets. Sometimes, you just KNOW when a price is wrong.

Editorial Integrity

An article in the Racing Post on the topic of Betfair's bonuses to management despite the company's poor performance since flotation has apparently been pulled. Anyone who might suggest that Betfair had some influence on this decision should be ashamed. Betfair's advertising money would have no influence on editorial decisions.

Fortunately for us, the Guardian is there in our time of need:

Betfair faces the risk of a showdown with its new shareholders after a leading UK investors' organisation raised concerns about potential bonuses on offer to executives at the troubled gambling group. The Association of British Insurers has published a so-called "amber-top" alert to shareholders of the FTSE 250 company, which is reeling from a 46% fall in its share price since its listing in October.

The report by the ABI – whose members account for almost 15% of investments in the London stock market – has highlighted the group's long term incentive plan (LTIP), because the targets that Betfair executives will need to hit to gain future awards are not defined in the company's annual report.

It has also raised the issue of one-off bonus payments made to executives last year, while acknowledging that the windfalls were disclosed in Betfair's flotation prospectus.

Despite the poor share performance since flotation, it emerged in July that the total pay of chief executive David Yu had risen by 125% last year to £824,676, while finance director Stephen Morana had taken a 445% hike to earn £1.6m.

A spokesman for Betfair said: "The company is still in discussions with the ABI. This is still a draft recommendation." Betfair also pointed out that the amber-top warning concerns the LTIP and not the one-off payments.

In July, Betfair's first annual report revealed that the total amounts paid to Yu and Morana last year were inflated by the so-called "senior executives' incentive plan" (SEIP), under which Yu received an extra £300,000 and Morana £1.2m. The report stated: "The 2010 SEIP granted certain senior employees and executive directors one-off conditional awards consisting of a cash amount and an award of nil-cost options on admission to the stock exchange."

Betfair's annual meeting is scheduled for 22 September, although it is unlikely that it will see a massive vote by investors against the company's remuneration policy: despite October's float, founders Ed Wray and Andrew Black still own around 21% of the shares, while long-term shareholders Softbank and Charlton Acquisition hold around 11% and 10% respectively.

On Tuesday, the company said its second quarter had started strongly, following an expected drop in its first-quarter revenue when it faced a tough comparative period that included last year's football World Cup. The group added it was comfortable with estimates for the full year of revenues of about £346m from the company's core business and £390m in total sales.

UEFA Champions League 13.9.11

There are relatively few inter-league games, so I don't have a huge amount of confidence in my ratings when it comes to the UEFA Champions League or Europa League games, but for interest, the Chelsea v Bayer Leverkusen market for today's match has Chelsea a tad short.

My spreadsheet has Chelsea at 1.7, but they are currently at 1.53. Not too much of an edge on the Overs, with 1.96 available versus my calculation of 1.83. 1-0 is a little short too, 7.2 available to lay while I have this score at 9.3.

The Borussia Dortmund v Arsenal prices are close to my own, with no significant edge on the Match Odds market, but the Under 2.5 goals is slight value at 1.96.

In the third of the inter-league games, Barcelona are too short at 1.28, but the AH -2.0 at 2.32 is looking good value. 2.74 on the Unders looks huge as well. I will probably see how this plays out with a view to trading out fairly early. The market clearly expects more goals in this match than the recent league records of the two teams suggest, but league form doesn't always carry over into other competitions, and recent league form is not exactly deep. Just for fun in other words. No laying £20k on any of these picks!

Speaking of which, who is backing that kind of money at 1.22 with half the game to go? It was all from one account, so it wasn't a number of individuals. Money is relative of course, but risking a sum that size in a sport as volatile as the NFL seems a little reckless.

Free Spin

Betfair co-founder Mark Davies filed a claim last month for close to £4.5million. The merits of the case are not for me to comment on, (although I will later), but one comment on the Betfair forum amused me. The author, viva el presidente!, likened Davies' situation with that of a Betfair client who experiences an unplanned outage having just taken a position and who is then unable to close out as it heads south.

While the value of money is relative, I would think that seeing £4 million evaporate has got to hurt.

Speechly Bircham is facing a claim worth more than £4m from Betfair founder Mark Davies and his wife Miranda for alleged negligence and/or breach of retainer for advice the firm gave them when they tried to sell their shares in the company.

In a claim lodged in the Queen's Bench division of the High Court last month (16 August), the couple, who are trustees of the Giselle Davies Family Trust and the Davies Family Trust, which both hold stakes in online gambling company Betfair, argue that that the losses caused by Speechly's advice stands at around £4.48m.

According to the writ, the couple instructed Speechly private client partner Charles Hutton that they wanted to sell their shares when Betfair went public in October last year, with the intention of selling when shares reached at least £13 each.

When the company listed on 22 October, shares were trading at £15.50, at which point Davies was told that selling was not possible because the shares had not been registered properly.

With share prices continuing to fall, the Trusts have not sold the shares, with the price per share standing at £6.08 at the time the claim was issued.

The form states: "Neither trust has sold the Betfair shares given the loss that each would thereby sustain. Insofar as may be necessary the claimants will say that the defendant is liable for the totality of the losses sustained because the defendant's breach of retainer/negligence placed the trusts in a position where they were unable to sell at the price that was available."

The pair are claiming damages and interest. Carter-Ruck litigation lawyer Rebecca Toman is advising the Davies on the claim. Mark Davies resigned from Betfair in July 2010.

Speechly declined to comment.

Why it would be Speechly Bircham's responsibility to check that the shares in question had been properly registered, I'm not sure, but there is likely more to this case than immediately apparent.

Something similar, although on a 'slightly' smaller scale happened to me several years ago, in 2000, when I deposited funds in a new share / options trading account.

When I was told everything was set, I bought shares in four companies, which almost immediately headed south. A couple of days later, I received a phone call telling me that they needed a new cheque, as they had (I forget the precise details) endorsed it incorrectly or something. Whatever it was, it was their error. Oh, and could I bring it over to them that afternoon or they would have to close my positions. "Well no, I am at work right now" I told them, but if they would like to send a courier to pick it up, that would be fine. No, they wouldn't do that, so they closed my position for a loss, and took the hit themselves, as I had done nothing wrong. I did receive a lawyerly letter asking for repayment, but when I produced my supporting evidence, (always keep records), they dropped the case. Only a cynic would suggest that, had the shares in question all increased in value, I would have taken a break from work and run it over to them without question.

Lows And Highers

Not the easiest of weekends for football, with all the big boys winning except for Liverpool who lost 0-1 at Stoke City, to a penalty after out-shooting the hosts by no less than 20 shots to 6. Stoke scored from their only shot on target, while Liverpool's 11 were to no avail. The Bolton Wanderers v Manchester United was another interesting one from a statistical viewpoint. Bolton had more shots on goal (20 to 13) and shots on target (13 to 9), yet lost 0-5. (Data courtesy of Football Data). A couple of years ago, the results would have been entered in the spreadsheet without further ado, but these days the ratings adjust based on other statistics. On the evidence of this past weekend, it's not helping, but it's early in the season and the better the quality of the statistics entered is, the better the output.

The XX Draws had their second consecutive poor weekend, with no winners from seven selections. The last two games were perhaps a little unlucky, going down to 82' and 86' goals, and then there was the previously mentioned Stoke City v Liverpool game. I'm recording the minutes in which bets become losers, and the average is 54' right now. Whether it would be profitable to lay these bets off at half-time or not is one avenue for further investigation.

The value bets in France were profitable, 1.13 points and 1.02 on the Match Odds and Over / Under 2.5 markets respectively, and in the Match Odds markets in Italy (2.35) and Spain (4.82) but other than that, it was a bleak weekend for football. Football Elite had no Recommended Bets this weekend, and his one Short List bet was Caen to beat Toulouse whereas my value bets suggested a back of Toulouse - who won 1-0. Peter Nordsted's Drawmaster picks also went 0 for 3 this weekend - Peter had Stoke City v Liverpool as did I, and also Sunderland v Chelsea (1-2) and Wolverhampton Wanderers v Tottenham Hotspur (0-2).

While we are talking about Pete Nordsted, he has stopped his baseball ratings given that we are now at that time the season where commitment isn't necessarily what it should be. Betting is hard enough to make profitable when your selections are trying, never mind when the focus is on resting players and / or bringing in second stringers.

Fortunately there are other sports going on, and I made a small profit on the back of Djokovic's win in the US Open last night. Also in the US, the NFL is back with the first week of action now at an end. Mark Iverson hosted an NFL Trading Room for the Baltimore Ravens v Pittsburgh Steelers game, with myself having a small walk on part. I believe that about 47 people attended, and most seemed to find the session helpful. Unfortunately, from a trading perspective, the game was about as bad as they get - pretty much a 1.10 express train. I took a loss on this game myself, but had more success on other games, and while I would like to blame the distraction of trying to sound knowledgeable as an excuse, in truth, the one-way nature of the game probably meant that it saved me from a bigger loss. The final game of the weekend was the best, when a lay of £20,000 @ 1.22 on the Oakland Raiders at half-time paid off, not with a win, but at least with a profit. It's not often I'm disappointed with a four figure profit, but this was one of those times. The screenshot shows the Gang of 47 what is possible with laying at short odds in the NFL when things go a little more according to plan. If it had REALLY gone to plan, the Denver Broncos would have won, but you can't win 'em all. Onward and upward.

Switching Horses

The last post addressed the issue of how to handle matches where winning for one or both teams isn't important. Peter has decided to end the season for his MLB Daily Picks, a system that has been hugely successful this season, but which over the past few weeks has struggled, in my opinion at least in part because of the inclusion of teams with little to play for. 

22.5 points profit is a good return on the season, although Peter is clearly disappointed after topping 46 points in early August. Only natural perhaps, but as a glass half full type of guy, I see 22.5 points won and a lesson learned to pull the plug on dis-incentivised teams sooner. P made a comment on a topic which I should have covered in my original reply. (It was in my mind at one point, but my mind wandered). He writes:

Further to this discussion, it seems that based on your experience you concur that laying the short-priced home favourite from August onward is conceptually problematic for the reasons you have explained, although again we only have one season's worth of data. In your opinion, does it then follow that a strategy of BACKING the short priced home favourite in the final two months of the season would/should be profitable?

There's no straight answer to this, since as always, the decision depends on the prices available, but if the home favourite has an incentive to win, while the road team doesn't, it wouldn't be unreasonable to factor this into the ratings calculation and compare the new price with what is available. I don't maintain ratings for baseball (the importance of the pitcher makes this too much work) but Peter generously includes the prices he considers value, so this could be a starting point. Teams with no apparent incentive to win will still win games. Athletes don't like losing, and in baseball players are always looking to boost their individual statistics because it means money to them, speaking of which, the much anticipated movie Moneyball is set for release in the UK on 25th November. If you enjoy baseball or statistics in sport, mark your calendars.

Equally anticipated is the NFL game later today between the Baltimore Ravens and the Pittsburgh Steelers. It's an AFC North Division game, and promises to be a close one. Since 2007, no game has seen a victory margin of more than 9 points, but the real reason the world awaits with such anticipation is because the game will be covered in Mark Iverson's NFL Trading Room. Game time is 6pm, but be warned that there could be a significant delay in kick-off while America remembers the 3,000 people who died ten years ago on 11/9/01 or 9/11/01 as the Americans put it. How ever bad your betting results are today, remember things could always be a whole lot worse.

Quitting Time

I mentioned Peter Nordsted's comment / question yesterday, and here it is:

Just a quick one - the ratings on my MLB selections are not performing as they did up to the middle of August as it peaked at around the mid 40 point mark only to come down to around the mid 20s.

My colleague states the following:

The last part of the season often provides crazy results. Large part of MLB teams is not 100% result oriented during this period. The teams that have no chance of reaching the playoffs put emphasis on testing new young players, giving inexperienced players more playing time. This significantly impacts the outcome of the game. Then there are teams with secured or almost secured place in playoffs. They are reducing pitch count to their pitching stars to keep them fresh for the playoffs and also they are more often resting hitters. The last part of the teams are those that are still fighting for the playoff spot and for them we should be "sure" they are giving 100%.

My question is in your opinion when should you stop betting on the MLB

It's a good question that applies to more team sports than just baseball, and is also relevant within single games rather than in the context of a full season, as I shall get to later.

To address Peter's question specifically with regard to baseball, the answer in my opinion is that there should be no hard-stop on MLB betting, rather you should stop betting on teams that no longer have an incentive to win.

Peter's colleague is correct in his assessment. When post-season play is no longer realistically attainable, the focus for teams moves to preparing for next season rather than the current season, and the opportunity is taken to bring players up from their minor league teams. It's also true that teams with a play-off spot guaranteed will rest star players, and reduce the number of pitches starters throw. So when you eliminate the teams with nothing to play for, you are left with those still in with a chance of post-season play, and indeed, these are the teams who should perform as expected. If you look at the standings right now, there are several teams with an E in the Elimination number (E#) column and a few more who are realistically all but eliminated. In the American League right now, I would only consider backing the New York Yankees, Boston Red Sox, Los Angeles Angels of Anaheim and Texas Rangers. In the National League all three Divisions and the Wild Card are all but sewn up. Slim pickings in other words. It's usually August when the E# starts coming down and it may be no coincidence that mid-August saw the high point in profits. (It was pure luck that I happened to start my holiday two days later!) Opposing chasing teams such as the Angels, Giants, Red Sox or Cardinals or teams still not quite there (e.g. Yankees, Rangers) could be risky.

Other sports can be even more of a minefield, and in the US, there is often actually an incentive to lose games. Finish with the worst record in the NFL, and there's no relegation. Instead, the team is rewarded with the fist pick in the upcoming draft, and an easier schedule next season! The NBA has attempted to address this issue with a Draft Lottery (meaning that the worst team is not assured the number one pick), and it's less of an issue in the NHL and MLB where the draft is of less importance.

In football, half of the EPL is playing the season out with a few games to go, and while clubs still have a small incentive to win (more prize money) many use the last few games to blood young players and teams just go through the motion with players trying to avoid injury and strange results abound - and not only in Italy's Serie B. Even winning teams put out weakened teams ahead of bigger games. It's not something new. The problem with pulling the plug on betting too soon is that, combined with the caution generally exercised early in the season, you can be left with a window of six matches in December / January from a 38 game season when form is reliable. I exaggerate of course, but my point is that it's very easy to find excuses for not putting your money where your mouth is. There's probably someone out there saying to avoid December and January because of the heavy pitches.

As for the in-game incentives I mentioned earlier, it is why I am not a big fan of handicap betting, or any 'by-product' markets for that matter. Games are played for wins and points, not to win by an arbitrary total or to take the most corners. When the Lakers are up by 17 late in a game, the team don't care if they win by 14 or more (covering an example spread of -13.5) or by 13. Teams typically care about winning, not so much about the margin. With a lead of 17, and the game won, starters are rested, and bench players are given a run out. Anything can happen, and there is often value late in games on the handicaps (if the liquidity is there - a big if).

Bottom line - never assume that teams want to win.

Buffett On The Premium Charge

Followers of super-investor Warren Buffett will no doubt be aware of his recent comments concerning his willingness to pay more in taxes. His statement that

I have never seen anyone shy away from a sensible investment because of the tax rate on the potential gain

is one that anyone impacted by Betfair’s Premium Charge can probably relate to.

A profitable method is still profitable whether you are paying 5% tax on the profits, 20% or 60%, a fact that I am sure Betfair took into account before implementing, and then tightening, their Premium Charge screw. Whether or not the reduced profits make it worth your while continuing with, will vary from person to person and depend on the time spent to generate the profits. If you have an automated process that takes little to no time and which generates profits, then you accept the change and continue on.

If your method requires you to sit in front of your computer screen for several hours a day, the decision is more complicated, ultimately boiling down to how much is your time worth. For a hobbyist like myself, it’s my leisure hours that are used, (mostly), and any profits are still a bonus even if the bonus is less than it was. For full-timers, or at least full-timers with employable skills, it’s more complicated, and my views on this subject have been aired on several occasions in the past.

Peter Webb wrote a good post on the value of time, triggered by Andy Murray’s Fourth Round match against Donald Young which finally ended on Thursday after being scheduled to start two days earlier.

Almost all of my betting is done on short-term events – a 90 minute football game, a 48 minute (or 40 minute) basketball game or an hour long NFL or NHL game for example. For the most part, the long-term markets don’t suit me. I get restless. I can focus on every play in a ‘short’ event, but asking me to watch all five days of a Test Match or all four or five days of a golf tournament, and I can’t do it. Even five sets of tennis is too much, not helped by the fact that I don’t enjoy tennis as a spectator sport.

The first of the weekend’s seven XX Draw selections was a loser tonight with Augsburg going down 1-4 to Bayer Leverkusen, dropping the 2011 strike rate to 7 from 15 and the ROI for the fledgling 2011-12 season to just 66.3%. Whether the decision to include Augsburg, or indeed any newly promoted teams, in this system so early in the season is a wise one remains to be seen (one winner in Swansea at 3.4, two losers in Dijon and Augsburg to date).

Finally, a great comment / question from Peter Nordsted which I will address tomorrow.

“The best way to appreciate your job is to imagine yourself without one”.

So Many Questions

P asks:

Any news on the trial NFL trading room that is planned with Mark Iverson?

Yes, the good news is that we are on for this Sunday's Steelers v Ravens game. Details are in Mark's post here.

Are you feeling generous enough to share your weekend XX selections in advance?

Send me an e-mail address, and I might consider it. As I mentioned earlier in the week, I am probably going to stop giving these away for free. 

Unfortunately, you likely won't have time to send me your e-mail before the first of the seven XX selections this weekend kick off in Germany tonight (hint)!

Finally, I wonder if you might consider publishing your own personal top 5 or top 10 best books about sports betting/trading/investing.

No problem here - I can just refer you to this post from March this year. I can't think of any new ones I have read since then, so it's still a complete list.

Coming Up This Weekend

The football results from mid-August are finally, after several hours of work, entered into the spreadsheets, and it’s fair to say that I didn’t miss too much by going away. The final weekend of August would have seen three selections for the XX System, with no winners, (although two came close going down in the 88' and to a 92' penalty), while the Value Bets across the four leagues currently in play also had disappointing results. It’s actually quite painful updating an entry as wrong as “Lay Manchester United v Arsenal” but without a crystal ball, decisions are made based on the numbers at the time (although in Arsenal’s case, a steadily declining team rating might well have triggered a red flag, at least until such time as their new rating stabilises). But in three leagues, we at least have some form beginning to tell, so fingers crossed for this weekend.

Early days still, but highlights from the ratings as they now stand include Manchester City’s climb into second place, while Arsenal hold on to sixth place but now are now closer to Swansea than they are to fourth placed Liverpool! At the bottom, Blackburn Rovers are above only Swansea City whose rating is still somewhat up in the air as a promoted team. Sunderland and West Bromwich Albion are the next worst rated non-promoted teams. Value bets this weekend:

In Germany, Bayern Munich and Borussia Dortmund are well clear of the chasing pack, and the early relegation candidates are Augsburg, Koln and Hamburg. Weekend value selections are:

In France, Lille lead Olympique Lyonnais and Olympique Marseille, with Sochaux and rapidly improving Paris St Germain not far behind. Value bets for this weekend are:

In Spain, Real Madrid and Barcelona not surprisingly dominate with just one game gone, and the value selections for this weekend (punter beware due to lack of form) are:

Sharp minds may be wondering where Real Madrid and Barcelona are, and the answer is that they are excluded because my prices are significantly out of line with the market as tends to happen when there is a big favourite. For what it is worth, my spreadsheet suggests the value is in laying the Big Two (well they ARE very short) and in backing Unders.

Italy's opening weekend, so the selections are raw and caution is again urged:

Finally, a little late, but I forgot to address a question from Griff who said...

Cassini, I'm after some advice, I've been working on my own ratings for probably 18 months on and off. I think I've found a edge. I've back tested my system over 3 years and it returned good profit each year so far. Over how many seasons would you say I should back test over?

In my opinion, I would say that three or four is probably enough. More than that, and you hit the law of diminishing returns, and the game changes over time so what might work today may well not have worked a few years ago, nor indeed may it continue to work. Good luck with the ratings!

Wrong Thinking

One of the keys to profitable betting is learning not to bet on what you THINK will happen, but betting on the outcome that offers value. I was reading a blog post at Sports Trading Life about last night's England v Wales match, and the author wrote:

Last night England started the match priced @ 1.16 and went as low as 1.07 when they took the lead. However, the 1-0 lead flattered England and I could see on Twitter that many people were now laying England at those short odds in case Wales actually managed to equalise. From a personal point of view, as soon as the match started I could see England were playing badly however I still expected they would sneak the win so having a Lay bet on England certainly didn’t make sense.

The point the author fails to grasp is that clearly, most of the world and his auntie THINK that England will win, but was their probability of winning 0.93 or more ? If not, then a Lay bet on England makes perfect sense. Simply basing your bets on what you THINK will happen rather than on the PROBABILITY of what will happen is not a winning strategy, and this applies to matches involving 'your' team even more, in that many people find it hard to bet against their heart.

Forum Classic

The Betfair Forum has a steady supply of posts showing ignorance of basic betting principles, but this one from yesterday was one of the best I've seen for a while. Titled "Hill's coupon with overround of 216%" thearchmeister writes, (with the poor grammar that typically accompanies dumb posts) of

muggy punters in hills shops getting 112% on coupons same selections round to 106% online but this is a whole new level of robbery

paired half time results coupon there are obviously 3 outcomes i)home or draw ii)home or away iii) draw or away

one selection on the coupon has all 3 outcomes at odds on lmao

people ignorant of overrounds really need to be warned

All very well, except that of the three outcomes, only one will lose, which means that the over-round will need to be in excess of 200% if Hill's intend on making a profit from this market, which seems a reasonable assumption. LMAO indeed. People ignorant of overrounds really need to be warned not to write about them on a public forum.

Re: Charging

There's a lot of nonsense written about the benefits of taking a break from sports investing. All it means to me is missed opportunities. As I haven't exactly missed my official job during my two weeks away, perhaps the "need to recharge my batteries" comments apply to those for whom betting is a full-time activity, but for someone like me, where it is a hobby which just so happens to make me some extra money, I must say I find it quite frustrating to not be involved with updating my spreadsheets with results, both sporting and financial, and looking ahead to what the ratings are predicting.

As you may have gathered, I have returned, a few pounds (lbs.) heavier and a few pounds (£s) lighter, and the first order of the day is to catch up the results from the last few weeks. Anyone who follows systems or tips will probably identify with my feelings as I update my spreadsheets. Any missed winners, despite validating the method by which they were selected, are on some level at least, annoying, while any missed losing bets are somehow met with a totally inappropriate smugness that you somehow dodged a bullet on that one. Having checked my e-mails, I can see that I dodged a few bullets after missing Football Elite's selections from the past two league weekends. I've not had time to read other blogs or forums yet, but it would not be a surprise if there were some rumblings of discontent out there. Have the ever maturing markets finally closed in on the inefficiency that Matt identified a few years ago, or is 2011 simply a blip in the run of continued success?

My own XX Draws have had a storming start to the season, at least up to August 21st, and I am seriously considering making these available on a subscription basis only. It's not something I'm really too comfortable with, but it was pointed out to me on my holiday that giving away profitable selections is, while generous, perhaps not too smart. The consensus was that Draw selections haven't been fashionable since the heyday of Littlewoods, Vernons and Zetters, one reason why the draw price tends to hold up excepting in late season Italian games, but perhaps there are enough investors out there who might be sophisticated enough to understand that draw betting can see some challenging losing sequences as well as the welcome hot streaks but that the Elo based ratings do, for the time being at least, consistently find value. I shall no doubt update the results for the weekend of August 20th, produce the selections for the weekend of August 27th, and go 0 for 7 and drop the idea completely.