Quiet, And Getting Quieter

The month is over from a trading point of view, and while the account is in profit, it's not by much. Prior to June, only 7 of 53 months saw a monthly swing of less than four figures, but June and July have both been less than that, and two of the quietest months ever. Also concerning is that every month this year, profits have been less than the corresponding month in 2009. 

The strategies I'm applying are pretty much the same as a year ago, but it does seem that it's getting harder and harder to make money on the exchanges. July is always a slow month, ranking 10th, and August and September aren't much better in 9th and 8th places respectively. With my taking half of August off, expectations for the immediate future are low, but if I am going to be away, it seems that this is as good a time of year to go as any. 

The silver lining in the cloud is that after paying the Premium Charge in all but one month since its inception, I have now avoided it for four consecutive months. I almost miss it. That awful April helped, with my Total Charges currently at 20.53%, still slightly above the level at which the Premium Charge is triggered.

This blog will most likely be dormant until mid-August. More important things than blogging and trading to focus on, and by the time I return, the new football season will be underway. In the US, baseball will be moving into its final few weeks, and the NFL will be in pre-season mode. Liquidity is always good in the televised NFL games, and perhaps some exciting baseball penant races will raise in-play liquidity.

Be lucky. I'll be back.

Europa Contenders

As some of my longer-term readers may remember, last season I divided the 20 Premier League teams up into two groups of 4 teams, and two of 6 teams. My theory was that intra-group games would be more likely to be closely contested, with a higher frequency of draws, and possibly under 2.5 goals.

Rather surprisingly, the top group (Arsenal, Chelsea, Liverpool and Manchester United) had not a single draw in the 12 matches between them, and only six matches finished under. A major reason why Chelsea won the league was that in their six games, they conceded just one goal while winning every game.

The second group of four (Aston Villa, Everton, Manchester City and Tottenham Hotspur) was much more profitable, with half of the games drawn and 7 under. Manchester City will not be in this group next season, (swapped with Liverpool), and if their results are excluded, 5 of 6 games finished as draws.

Overall, the draws in all intra-group games hit at 31%, so clearly no edge for the overall strategy, but is the problem with the strategy or in selecting teams at the start of the season and being stuck with them?

The lower twelve teams are clearly harder to predict final places for. Last season for example, Birmingham City and Stoke City did better than expected, while Wigan Athletic and West Ham United did worse.

This strategy worked well for the Europa League contenders last season, but only Aston Villa v Everton is on the schedule before October. Another angle I'll be keeping an eye on anyway.

One Team In London

I believe that Betfair's "Head to Head Leagues" markets are new, at any rate I haven't noticed them before, and in fact I first read about them at betfair.betfair.com although I can't see the original article any more. Perhaps they pulled it, because it was certainly very misleading. Bearing in mind the article is written for Betfair's own site, the article read:

The number of Premier League markets available to bet on is growing every day on Betfair, with further opportunities presented with three Head to Head Leagues, whereby you back a team to pick up the most points in matches with their regional rivals.

Confused? Well, take the market on top London club as an example. Your options are Chelsea, Arsenal, Tottenham, Fulham and West Ham, and all games between these teams count towards the standings, so that by the end of the campaign each side will have played eight times, and the one with the most points gained in derby clashes is the winner.

Chelsea are clear favourites at 1.3, with Arsenal next in line at 2.6, but it's Tottenham at 3.1 that look the most attractive option. Harry Redknapp's men were London's finest in 2008-09 - even though their overall league position didn't reflect this - and were impressive runners-up last year.

In their favour is the fact that West Ham gift them six points every season, with the Irons yet to win in ten meetings with former boss Redknapp. Roy Hodgson tripped them on several occasions as Fulham manager, so his departure could boost their total, while they beat Arsenal and Chelsea at home in 2009-10.

One other factor that makes Spurs a great punt is that their 16-point derby haul would ordinarily have been enough to top the table. They were unfortunate that Chelsea managed an incredible 19, a tally they'll almost certainly struggle to replicate.

If you fancy backing an outsider, Fulham are 14.0 and West Ham 16.0, however you should probably steer clear of the Cottagers until Hodgson's successor is named, while the east Londoners collected a pitiful three points with no wins last time out.

What the author doesn't make clear is that the market hasn't even formed yet (see the screenshot) - £40 traded (i.e. £20 on Chelsea at 1.5, is the only action at the time of writing). The 3.1 on Tottenham is not a 'great punt' - it actually looks shocking value, or rather looked shocking value since 3.8 is now available, with more to come I'm sure. Anyone who suggests that maybe the article's author was trying to lay that 3.1 himself should be ashamed of themselves.

Going Down

My Premier League Elo ratings have Chelsea out in front, followed by Manchester United in a two horse race, with Arsenal, Liverpool, Everton, Manchester City and Tottenham Hotspur making up the top seven. In the betting markets, the big difference is that Manchester City are rated third, for obvious reasons. The Elo ratings are objective; the betting markets are subjective, but after a few games, if City live up to their billing, the ratings will adjust. The markets also have Tottenham ahead of Everton, but otherwise the correlation is close. It usually is at the top.

The relegation markets are more of a challenge, not least because while teams at the top were all there last season, half of the teams expected to struggle were playing Championship football three months ago, and their ratings are a guesstimate at best.

For what it's worth, my bottom six teams, lowest rated first, are Wigan Athletic, Blackpool, West Bromwich Albion, Bolton Wanderers, West Ham United and Newcastle United.

The markets have a different perception, with Blackpool clear favourites at 1.3. Next are yo-yo team WBA at around evens, followed by Wigan at 3.2 and Wolves at 3.5. Then come Newcastle, West Ham and Bolton.

Based purely on the ratings, Wigan at 3.2 would appear to be good value, but their points total is negatively impacted by competing in the Premier League last season and a direct comparison with the promoted teams is not possible. The other thing that jumps out is that while I have Wolves ranked 13th, this is not close to the opinion of the markets.

The 25 player limit will no doubt mean a number of players will change teams before the season begins. Manchester City currently have 37 players on their books, while poor old Blackpool have just 17.

Newcastle at 4.5 are an interesting case. As has been commented on elsewhere, their problems from two years ago may have been overlooked as they returned to the Premier League, but the unpopular Mike Ashley is still there, reluctant to spend any money, well, former Port Vale defender Sulzeer Campbell excepted, and a weak start could well see the club have another poor season.

Will all three relegated clubs come from the seven mentioned? The market rules on Betfair have an interesting addition to previous seasons:

IF A LISTED TEAM IS DISQUALIFIED, THROWN OUT OR OTHERWISE REMOVED FROM THIS LEAGUE AFTER THE RELEVANT SEASON HAS STARTED, THEY WILL BE DEEMED TO BE RELEGATED AND SETTLED AS A WINNER IN THIS MARKET. HOWEVER, IF THE NUMBER OF TEAMS RELEGATED IS LESS THAN OR EXCEEDS THE NUMBER OF WINNERS SET OUT IN THIS MARKET, THE MARKET WILL BE VOID IN ENTIRETY.

Children May Die!

And in Canada, reality trumps the 'phony moral high ground':

British Columbia's new online casino may be the height of hypocrisy -- brought to you by a government that once condemned cyber-gambling as an evil, addictive vice -- but here's a couple of sure things you can bet on:

The Gordon Campbell government won't be the last to dive into the virtual pool of cash just waiting to be drained from the wallets of Canadian gamblers.

And, despite their moralistic huffing and puffing about the playnow.com website, there's no way the NDP Opposition will shut it down should they win the next election. There's simply too much loot to be made.

British Columbia became the first jurisdiction in North America to offer online casino gambling last week when the B.C. Lottery Corp. started dealing virtual blackjack hands and spinning a cyber-roulette wheel.

Despite the wonky start to the new venture -- the site crashed within hours under the weight of so many curious gamblers choking its capacity -- the government is still delighted. The fact that the playnow site crashed showed the demand for online gambling exceeded B.C. Lottery's most optimistic projections.

The site will be fixed and it will be a hit. The NDP and other critics will continue to whine. And the Liberals will take their lumps and rake in the profits.

Are the Libs a bunch of hypocrites? Sure they are.

Rich Coleman, the cabinet minister responsible, was once the government's fiercest critic of online gambling and vowed to wipe it out.

His cabinet colleague, Kevin Krueger, once said studies show pathological gamblers often abuse their children and famously predicted: "Children may die as a result of gambling expansion and their blood will be on the heads of the government."

My favourite Liberal quote on gambling expansion came from the premier himself, who said: "I want to build an economy based on winners, not losers, and gambling is always based on losers."

But that was then. Now the government has come to a simple realization: If you can't beat 'em, join 'em.

The Internet has drastically changed the ethical equation around gambling. The fact is no government can stop people from gambling online. There are too many offshore betting sites that are too easy to use.

So the government had a choice: Stand back and watch all that money drain out of British Columbia to offshore websites -- estimated at $100 million a year -- or try to get a piece of the action for themselves.

B.C. won't be the last jurisdiction to reach the same conclusion. Lotto Quebec and the Atlantic Lottery Corp. are already planning to team up with B.C. Lottery to launch an online poker platform that will compete with big offshore sites such as Party Poker and Full Tilt. Watch for other provinces to jump on board.

The New Democrats, despite their self-righteous preaching, also realize this genie can't be put back in the bottle. Gaming critic Shane Simpson said an NDP government would possibly lower the betting limit, but wouldn't necessarily shut down the playnow website. Translation: Gamble on, losers.

Speaking of hypocrites, don't forget it was the New Democrats who introduced slot machines to B.C., which now enslave addicted gamblers. And the party has accepted campaign donations from gambling companies such as Great Canadian Casino and Gateway Casino.

Online gambling is not going away, no matter how deep people want to bury their heads in the sand.

It's better that the government try to keep as much of that money inside our own borders to fund health and education, rather than cling to some phoney moral high ground while precious dollars bleed out of our province.

Boardwalk Monopoly

The upcoming debate on The Internet Gambling Regulation, Consumer Protection and Enforcement Act (H.R. 2267) is the latest step toward a more gradual acceptance of gambling in the United States. While it is hard to imagine that every town there will one day have a High Street betting shop, it does appear that consumers will soon be able to more easily bet on sports from their homes, and not have to take trips to Las Vegas or Atlantic City or jump through hoops to fund their accounts.

Las Vegas, Nevada, "The Entertainment Capital of the World" legalised gambling in 1931 and is the established number one gambling mecca in the US followed by Atlantic City, New Jersey "Gambling Capital of the East Coast" which legalised gambling in 1976.

New Jersey is famous for not very much really, but Atlantic City and Bruce Springsteen would probably be high on any list, and one of Bruce Springsteen's most memorable songs is in fact called "Atlantic City".

The opening lines are a reference to Mafia violence in nearby Philadelphia - "Well they blew up the chicken man [Mafia boss Philip Testa] in Philly last night, now they blew up his house too - and portray the uncertainty felt in Atlantic City at the time about the impact of the legalisation of gambling there - Gonna be a rumble out on the promenade and the gamblin' commission's hangin' on by the skin of its teeth

A young couple run away to Atlantic City, and the man takes a job in organised crime. Down here it's just winners and losers and don't get caught on the wrong side of that line Well I'm tired of comin' out on the losin' end So honey last night I met this guy and I'm gonna do a little favor for him.

The uncertainty over Atlantic City's future and the man's uncertainty about taking the "less-than-savoury" job are clear in the lyrics "Everything dies, baby, that's a fact, but maybe everything that dies, someday comes back."

"Atlantic City" was released in the UK as a single, but not in the US, and is the second track on Springsteen's sixth studio album, the rather dark "Nebraska".

Vocation Vacation

Money is a by-product of something I like to do very much – Warren Buffett

While trading on the exchanges is for most of us more of a part-time hobby than a job, for some people it is their main, or only, source of income.

Because a number of skills are required to be a successful trader, it’s reasonable to assume that just about every successful full-time trader is pursuing trading versus a career from choice, and that it is more of a vocation than a job.

I enjoy trading, for the most part, although at times it can be immensely frustrating, but as exciting as trading is, I can understand how it might get tedious. I think that were I to trade full-time, the added stress of having to make steady profits would be more of a problem than boredom. If you enjoy what you do though, you typically have the discipline to work hard at it every day. I enjoy my ‘proper’ job, and the flexible hours mean that there is plenty of opportunity to trade on the side. It might sound very glamorous to be a full-time trader, but a ‘proper’ job shouldn’t be dismissed too readily.

Where your job is more of a career, your earnings towards the end of your career are certainly going to be a lot higher than they are towards the beginning of your career. While an income from trading might match or exceed an income for someone in their twenties, there is no guarantee that a trading income would similarly increase over the years. It is arguable that as the exchanges mature, incomes are in fact more likely to decrease. Then there’s the possibility that the exchanges might start to ban consistent winners. The introduction of the Premium Charge no doubt hurt many full-time traders.

Although I guess full-time traders can boost their bottom line by claiming unemployment benefits, there are other benefits to a regular job too. Aside from the basic salary, many people get annual and spot bonuses. Getting paid for sitting on the beach is another benefit that is relevant to me right now as I will soon be taking a little more than a fortnight off work, and from trading (and blogging for that matter). Although this means a loss of income from trading, I can still enjoy my time off knowing that there is still some money flowing in to the Cassini coffers. Companies have other benefits too, mortgage applications are more likely to be accepted if you have a documented source of income, and many offer discounts on anything from cell phone service, flowers to company shares, not to mention the social side of working with other people. Saving for retirement is a lot easier when you have a steady income too.

Of course, working alone from home, not having to answer to anyone, would suit many people, and there are often significant savings in time and travel expenses, but it’s a brave man who chooses to trade full-time and there doesn’t seem to me to be a need to give up that day job. The evenings and weekends would seem to offer the lion’s share of sports although I accept that for some, their best opportunities may be during the ‘normal’ working day.

No two people’s circumstances are identical, and it would be impossible to cover every individual situation. The above post is therefore necessarily something of a generalization, with my own situation very much to the fore, but I suspect that at least some of my thoughts ring true to many out there.

Land Of The Free

Educated Anonymous has this to say:

American here, thus I recognize religion is a legitimate topic of conversation on this blog.

Cassini is correct, liquidity would be greatly improved if the religious right here in America would stop legislating their religious beliefs (not facts) onto others.

In fairness, religious zealots are only part of our problem, as governments trying to protect their own gambling monopolies and southerners trying to protect their horse industry are also holding us back here in the "land of the free".

One irony (of many) is in much of the USA, govt run lotteries, keno, scratch tickets, casinos, bingo, pickle cards, horses etc which have odds stacked against the consumer are legal, while games of skill such as on-line sports betting/trading, poker are not legitimized.

But Cassini is correct, religion is a legitimate topic in this forum as they have and continue to legislate their "values" onto us.

Ridicule needs to be used as it is hard to discuss logic with people who believe Noah built an ark, Jonah lived in a fish and Jack climbed a beanstalk to heaven.

A breath of fresh air. That's an excellent point that there are other factors at work in trying to suppress Internet gambling. Las Vegas has lobbied hard against it, although its stance has softened in the past few months - probably because they are accepting that Internet gambling is a reality and is here to stay, and with an "estimated $5.9 billion wagered by U.S. residents with offshore online gambling companies in 2008", that's a lot of action they are missing out on.

When you considering that in 2006, the Unlawful Internet Gambling Enforcement Act made it a crime for banks and other financial institutions to process transactions used in online gaming, it seems that many people have found a way around this pointless roadblock. It also means that a number of unregulated, and less than honest offshore sportsbooks have sprung up, something that could be avoided by regulating the industry with appropriate law-enforcement oversight and consumer protections for individuals gambling online.

Interesting times could be around the corner. Betfair floating. The USA allowed to join in trading. Competition from sportsbooks in the USA.

Won On Corners

In the 'you learn something new every day' category, I discovered this - that prior to penalty shootouts deciding matches, the number of corners awarded has already been used to decide the winner of a cup match. I'd always thought it was a relatively new idea, and not a very good one at that.

The Southern Football League in Scotland decided during the Second World War to organise a cup competition to replace the suspended Scottish FA Cup.

The third tournament, 1942-43 was won by Rangers who, after a 1-1 draw with Falkirk, were declared winners on corners 11-3.

The following year, Rangers beat Hibernian 6-5 on corners after a 0-0 draw.

One Born Every Minute

There are some prize clowns on the betting forums. Earlier today, we had someone trying to sell information on a 'fixed' game (lose, and your 10 Euros back - yeah, right) in Brazil, Ceara v Palmeiras. Ceara to win was the tip.

As time went by, the poster tried to make out that the tip was for HT Draw/FT Ceara;

"5/1 for HT/FT and 2.2 for Ceara which was smashed into down to 2.1. people like me who paid for the extra HT/FT knew that Ceara were gonna not score till 2nd half anyway. It's obvious they are going to have a late winner for Ceara and when it does **** will loook like a stalking fool".

Note the 2.2 smashed down to 2.1 - not exactly most peoples idea of a 'smash'.

It's always quite entertaining watching as these things unfold.

Listen you can still get 3.4 on what is a 1.01 chance. Stop talking rubbish and help yourself and feel the love

As 90 minutes approached, we got this:

Well they either score or a pen is guaranteed. Never bin so confident in my life after talking with Jens

Jens has assured me that it is fixed so expect a goal

As the inevitable was confirmed, the game finished 0-0, he came up with this little gem:

I am gobsmacked. Maybe Palmeiras weren't in the conspiracy. I will speak to Jens and let you know what happened after he speaks to his man at pitchside............

As someone else pointed out, in language a little cruder than mine, how the devil do you fix a game when the team that is supposed to lose, don't know they're supposed to lose! That's a strange fix.

And if all that wasn't bad enough, he finished off with

Jens says no bother put enuff on Manure versus Kansas. ManUre are certs. He says its fixed that Utd will win

You couldn't make this stuff up!

Pro Cycling

While never quite attaining the heights reached by Alberto Contador, for a short time in my life many years ago, I was a professional cyclist, with the somewhat rare accomplishment of placing in the money in every event in which I competed. I specialised in criterium races rather than the more traditional road races because a) they were shorter and b) if I needed to drop out, it wasn't so far to go back to the car!

These days, I don't even bother to watch most of the Tour de France, having become more and more disillusioned with cycling after the seemingly never-ending doping scandals that hit the sport. It's one thing to waste 10 seconds of your life watching an Olympic 100m race which turns out to be illegitimate, but it's quite another to watch for a period of three weeks only to find out months later that it was one big cheat (TdF 2006).

OK, time to come clean myself about my pro-cycling career. While technically accurate, the first paragraph of this post is now repeated with a few more details.

While never quite attaining the heights reached by Alberto Contador, for a short time in my life (about an hour) many years ago (in 1994), I was a professional cyclist, with the somewhat rare accomplishment of placing in the money in every event in which I competed (one). I specialised in criterium races rather than the more traditional road races because that was the one event I competed in.

The facts are that I used to race in amateur races, and one wet Sunday morning I cycled down to register for a Category 4 race later that day, and timed my registration so that I could watch the pros race. After I'd signed up for my event, I happened to notice the entry form for the pro race which was about to start. There were just four names on the sheet, and I knew the event paid prize money to fifth place, so after a quick look around to make sure there were no late-comers heading over, I asked if I could enter. No problem. So I added my name, paid the entry fee, and lined up alongside the pros. I hung with them for all of maybe 100 yards before deciding to conserve my energy for my real race later in the day, but continued to ride around finishing fifth (OK, last), soaking wet, and having more than doubled my money in the process. A value investment, and a mildly amusing story into the bargain.

Profits And Prophets

Competitive football returned to the Elo spreadsheet with the ALBA Challenge Cup north of the border. I am using these matches for rating purposes, albeit with a low weighting, but not risking any money. While some teams may not be too concerned about their results in this competition, 13 of 14 games over the weekend were decided either by penalties or by one goal, with just Peterhead's 5-0 thrashing of Montrose the exception. Given that Montrose are the bottom rated of all the teams I track, their defeat wasn't a surprise, although the ratings predicted a margin of just two.

I received something of a complaint from Anonymous (who else?) in Dublin, upset at my mention of religion in this blog. A handful of posts, perhaps five, out of 726 since March of 2008 have touched on the subject, with the most recent concerning the Christian right in the USA and their attempt to upset the passage of The Internet Gambling Regulation, Consumer Protection and Enforcement Act (H.R. 2267) - an issue that I would suggest is of interest to most traders on the exchanges, and thus justifiable for a post here. The United States is a huge gambling market, and liquidity in several sports should be much improved if restrictions there are lifted.

Anonymous suggests that I should stick to writing about betting/sports, but fails to understand that by the same logic, Christians should stick to writing about their fairy-tales, I mean religion. When they try to impose their ideas on the general public, that is when those ideas are fair game for comment. I'd love nothing more than for religious people to allow the more free-thinking among us the freedom to live our lives as we wish, without interference, but simply ignoring issues is not the answer, something that most people in Ireland should be well aware of. Looking the other way works as well as Prohibition.

One thing I've noticed is that the Anonymous (negative) commenters are among the ones who visit this blog the most often. For example, Dublin man has made no less than six discrete visits here in the past seven hours! If he is true to his word, and he decides to read elsewhere, my hit count is going to take a serious (pun intended) hit. Somehow though, his 'threats' ring hollow. There is no other blog out there that is as interesting as this one*, and part of its appeal is that you never know what you are going to read about. While it is primarily a blog about sports betting, my posts will continue to touch on other related subjects where it is appropriate.

* If there are, please send me the link so that I can update my blog roll. And please don't take me too seriously.

Christian Values

Some people really need to start enjoying this life, or perhaps more importantly, learn to keep their noses out of what other people do in the privacy of their own homes and allow them to enjoy their lives. This is the only one we get. Not content with telling us who we can sleep with, Christians are now using scare tactics to try and stop US residents from being able to enjoy an online bet.

Fresh from fixing Wall Street’s casinolike ways in high finance, Congress begins work Tuesday on a bill to overturn a 2006 law banning Internet gambling in the US. [Idiots - the law does NOT ban Internet gambling, but outlaws financial transactions involving online gambling service providers.] The measure is being rushed through the House Financial Services Committee on a promise that it would create 30,000 jobs and billions in tax revenue.

President Obama hinted at his support for online gambling last year by delaying regulations under the 2006 law in order to give Congress time to change it. The regulations force American credit firms to block payments to offshore gambling operators.

What’s exactly behind this drive to expand gambling in the US, especially a type done privately in the home rather than in a casino? Obviously there is the lure of money for both the government and the campaign coffers of politicians supporting this bill. (The same lure drives efforts to legalize marijuana.)

But as former federal prosecutor Michael Fagan told the House panel marking up the bill: “Any parent who’s puzzled or despaired over their child’s trancelike playing of video games during the past 20 years can readily see why Internet gambling operators are drooling over the chance to legally expand their market base into the United States.”

This foreign lobby and its domestic supporters want Congress to gloss over the negative effects of allowing gambling on every smart phone and laptop, where even a 10-year-old with a parent’s credit card might be able to wage bets at any time of day.

“It’s ‘click the mouse, lose your house,’ ” states business professor John Kindt of the University of Illinois.

Weeding out gambling addicts on the Internet can also be very difficult. As Mr. Fagan points out: “At least responsible brick-and-mortar casino operators can look a gambler in the eye and make the human assessment of whether he is too drunk, mentally unhinged, despondent and desperate, or otherwise at a point where it is simply unfair to take advantage of him any longer.”

The proposed law would also likely prove weak in preventing gambling on sports. The pressure on athletes from gaming interests to throw a game would only increase under national Internet gambling.

The estimates of up to $42 billion a year in tax revenue from Internet gambling have been seriously challenged by the bill’s opponents. But beyond the advantage to the US Treasury, Spencer Bachus, ranking member of the House Financial Services Committee, asks: “How does raking in cash from gambling addicts differ from taking a cut from the heroin sold to drug addicts?”

Other problems may hopefully keep this bill from passage:

It sets down a federal right to gamble and undercuts the ability of states and Indian tribes to regulate gambling. It doesn’t require operators of such sites to reside in the US where they can be properly regulated – and prevented from using computers to manipulate online players. And while states would be able to opt out of this law, the bill calls on only the governor to make that decision, and within 90 days of the bill’s passage.

If foreign online gambling interests can easily influence passage of this bill, imagine what it might do to eventually water down regulations over their industry.

The House Financial Services chairman, Rep. Barney Frank, needs to drop this bill and find other ways to raise revenue and create jobs than open the door to redistributing wealth from mainly poor Americans to mainly foreign gambling interests.

Rep. Barney Frank needs to make sure this bill passes, and tell Christians that they are not being forced to have a bet if they don't want to have one. Perhaps he can next work on passing a bill to remove the tax exempt status that religious groups enjoy in the USA.

In other news, does this punishment below make ANY sense to anyone?

In a bill to allow three brick-and-mortar casinos in the Bay State, Massachusetts governor Deval Patrick has proposed two-year jail terms and a $25,000 fine for folks caught gambling online. Congressman Barney Frank, who wants federal legislation to regulate online gambling, asks, "Why is gambling in a casino OK and gambling on the Internet is not?"

Gambling and porn are two of the most consistent moneymakers in the world. Porn is, for the most part, perfectly legal and can be purchased online with a credit card. Gambling, including sports betting and poker, is a little more tenuous. In the United States, most credit-card companies will not allow betting to be made on a credit card, forcing players to use overseas services such as Neteller instead. Because of the lack of regulation, if players are cheated, they have little or no recourse. Some online gambling sites are publicly traded on European stock exchanges — here in the U.S. though, the offline casino monopoly is enforced through fiat by the government.

Good Luck

I have a couple of ridiculous superstitions that I practice while I am trading. I never update my spreadsheet before the game is over (not to tempt fate, as my Mother would say). On the other hand, I do record potential losses ahead of time in the hope that the god of gambling will want to show me up. I never write any notes in red ink. I never bet £13 or £666, but that's about it. Totally ridiculous, but according to this article, to some extent, superstitions work...

From LiveScience.com:

The next time you cross your fingers or tell someone to break a leg, you may actually be bringing some luck.

Superstitious ways of bringing good luck are found in cultures around the world, and it turns out they may be ubiquitous for a very good reason: To some extent, superstitions work. New research shows that believing in, say, the power of a good luck charm can actually help improve performance in certain situations, even though the charm and event aren't logically linked.

This is what a team of psychologists at the University of Cologne in Germany report in the May issue of the journal Psychological Science. In a series of experiments employing tasks involving memory and motor skills, the scientists studied the effect of behavior and "object superstitions" – which rely on good luck charms – in college students.

The first experiment looked at the influence of the concept of good luck in a test of putting a golf ball. Experimenters handed participants a ball, and those who were told the ball was lucky tended to outperform those who weren’t.

In another experiment, participants were given a cube containing tiny balls and a slab with holes. The goal was to get as many balls in the holes as quickly as possible. Again, participants who were told, “I’ll cross my fingers for you,” by the experimenter performed better.

The final two experiments involved a lucky charm brought by each participant. In a memory test and an anagram test, the participants who were permitted to keep their lucky charms with them performed better.

Boosted confidence

To find out if superstitious beliefs were truly giving students an edge, the scientists surveyed them before the final two experiments to gauge their confidence levels. The participants who kept their good luck charms set higher goals for what they wanted to achieve on the tasks, and said they felt more confident in their abilities.

"Engaging in superstitious thoughts and behaviors may be one way to reach one's top level of performance," the researchers write in the journal article.

People often become superstitious when faced with unknown and stressful situations, possibly explaining why athletes and students are often superstitious, the researchers say. Engaging in a superstition could reduce tension related to a high-stakes competition or an exam.

As the study showed, superstitious beliefs may also increase a person's belief in his or her own abilities and talents. And what may seem like a “lucky break” when the underdog team wins may really be the result of team-wide, superstition-induced confidence.

H.R. 2267

Good news could be just around the corner for those of us who would like to see Betfair open its doors to residents of the world's top economy and allow them to decide for themselves if they would like to bet online or not.

Gambling is legal under US federal law, with each state free to regulate or prohibit it.*

Online gambling has, until now, been more tightly regulated. The Federal Wire Act of 1961 outlawed interstate wagering on sports but did not address other forms of gambling. It has been the subject of court cases. A late amendment sneaked in as part of the Unlawful Internet Gambling Enforcement Act of 2006 (part of the SAFE Port Act) did not specifically prohibit online gambling, but outlawed financial transactions involving online gambling service providers. Betfair was one on several offshore gambling providers that reacted by shutting down their services for US customers, even though gambling itself was not illegal.

It would be nice to see some common sense be applied. Baseball and NHL liquidity needs a boost.

The Internet Gambling Regulation, Consumer Protection and Enforcement Act (H.R. 2267) which was debated at a Congressional hearing this week is set to be amended or marked up by the House Financial Services Committee next Tuesday.

Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative tells WebProNews "Chairman [Barney] Frank is clearly intent on moving forward his legislation to regulate online gambling activity."

"This mark up demonstrates that Congress is serious about moving Chairman Frank's bill forward and establishing a strict regulatory framework for Internet gambling activity," said Waxman.

"The passage of this legislation would be a win-win as it will protect consumers, create an estimated 32,000 new jobs over five years and provide federal and state governments with as much as $72 billion in new revenues over ten years."

The legislation, introduced by Chairman Frank in May 2009, would establish a framework to permit licensed gambling operators to accept wagers from individuals in the U.S. In addition to mandating an array of consumer protections, the legislation reinforces the rights of each state to determine whether or not to allow Internet gambling activity for people accessing the Internet within the state and to apply other restrictions on the activity as determined necessary.

Since its introduction, a bi-partisan group of 69 co-sponsors has signed onto the legislation. A recent analysis by H2 Gambling capital predicts that Internet gambling regulation would create as many as 32,000 jobs over its first five years.

"During this difficult economy, the revenue and job creation potential that regulated Internet gambling provides will go a long way to help states and families alike balance their budgets," said Waxman.

* Gambling is totally illegal in just two states, Hawaii is one - you can guess the other, with one state (Tennessee) allowing lotteries but banning gambling for charitable causes. That's a bit mean! 'Wifey'-to-be is from one of the more liberal states although people there, and the US as a whole, are still somewhat surprised when you tell them that England has betting shops in just about every High Street in the country.

Kelly: On The Edge

A couple of comments on my recent Kelly post, with some good debating points.

First Escapee:

Kelly Staking is near useless in the real world. One of its major flaws (and it has a few) is its accuracy is dependant on the accuracy of the 'edge' calculation which is just a guesstimate most of the time.

As I wrote, "the trick is calculating your edge in the first place", and while this may at first sight not seem to be easy to do, that does not mean that there is a flaw in the Kelly criterion. For profitable bettors, calculating the edge shouldn't be as hard as it sounds. I would agree that most gamblers do not know the true probabilities of their selections, and as a result they lose in the long run, but mathematically minded bettors who keep records and study their markets do know fairly accurately when they have an edge, and roughly how big that edge is. If they don’t, then they shouldn’t be betting! Since the reality of sports betting is that we seldom know the precise probabilities, and since over-betting has more serious consequences than under-betting, this is why I suggest fractional Kelly because it makes sense to err on the side of caution.

The object of a staking plan is to manage the risk of ruin of a betting bank against seeking maximum returns for that bank.

No staking system beats Kelly for this.

In the real world, Most of the People seeking out staking plans are trying out a 'system' that they don't even know if it has an edge let alone what figure it might be.

I would hope that anyone trying out a system would evaluate it based on level stakes over a reasonable length of time. As we have already agreed, Kelly cannot be used when the edge is an unknown.

Kelly is over complicated tosh, if you’re brainy enough to realise the importance of a staking plan to try out a system then all you need to do is set aside a bank for it and work out how many consecutive losses you want to allow the system before you admit its failure. Divide the bank by this figure and you have your bet size. Re-assess and adjust if the bank drops to 50% or doubles, repeat until bust or rich.

The problem with simply dividing your bank by a fixed number is that you are almost certainly going to go bust whereas if you use Kelly, the probability of busting is theoretically zero.

One of the so called advantages of Kelly is that it adjusts the bet size according to the near fictional edge calculation. But in reality this is poppycock! If you're running a system with odds or an 'edge' that requires a stake that varies enough to make any difference then you are actually running 2 ( or more ) different systems under the same bank and using Kelly will cloud the view of how each system is performing.

Not sure I understand how you work out that one can be running two or more different systems - but I do take the point that the edge will often not vary hugely from one selection to another, but sometimes it may.

Anonymous had a comment also, and a couple of good points:

For me, the main problem with Kelly is "bankroll"

What is your "bankroll"?

People will instantly answer "it's the amount of money you have set aside for betting"

Yeah right. These people would give up if they lost what they had set aside? They wouldn't dip into savings?

They'd never bet again.

That's why Kelly isn't practical. Mathematically it is sound although Cassini is right in saying fractional Kelly is normally best.

He is quite correct about bankrolls. It’s just meaningless to read on the forum, or anywhere for that matter, that someone has “blown their bank”. As Anonymous says, do these people just quit gambling (as arguably would be the sensible thing for them to do) or do they just cobble another bankroll together? Most people would do the latter. Gamblers are optimists in general.

I am still playing with my initial Betfair deposit from 2004. I don’t like throwing money away, and if I had lost that, which I came very close to doing at one point with a drawdown of 78.27%, I would have given up. I played with trading options and futures contracts for a while as I believe I have mentioned before, but when it became clear (as it should have been before I even began) that I had no edge over the professionals, I closed the account. No amount of reading books on trading options or futures was going to give me an edge, and for many it's the same with sports betting.

Oh, not calculating your perceived edge in running shouldn't be too difficult. You shouldn't be having a bet without an edge and to know you have an edge you need to go at least some of the way towards calculating it.

Absolutely correct. If you are betting, then presumably you’ve calculated that you have an edge. From there it’s a small step to come up with an estimate of how sizeable that edge is.

And if Kelly is just too much effort, just use 2%. Chances are you won't be too far off with that number.

Bad Beat Baseball Rule 8.06

I lost some money the other night when the Los Angeles Dodgers lost to the San Francisco Giants 5-7 in the ninth inning after leading 5-1 in the third, but the numbers don't tell the whole story.

The Dodgers were favourites at 1.82, a price that caught my eye because Tim Lincecum, who you may recall cost me a four figure sum back in April, was the starting pitcher, and the Giants were underdogs for the first time this season with him starting. The smart money* was on the Dodgers in other words.

Leading 5-4 in the seventh, the Dodgers starter Kershaw hit Giants batter Aaron Rowand with a pitch, and was ejected, along with Dodger manager Joe Torre who came out to complain about the ejection. Torre's ejection turned out to be crucial.

In the ninth inning, hitting coach Don Mattingly, who had taken over from the experienced Joe Torre, went out to talk to the Dodgers 'ace' closer Broxton. After a short chat, Mattingly headed back to the dugout but as he took two steps off the mound, he turned around which is where the 8.06 rule came in.

According to Rule 8.06, "a visit to the mound is over after a manager or coach steps off the dirt", so when Mattingly turned back around, per the rules he was officially making a second visit which meant a mandatory pitching change once the Giants manager complained.

The Giants went on to score three runs in the inning against the replacement pitcher, and won the game 7-5. Fertiliser happens, as legendary Vin Scully would say.

Smart Money* -

When the line moves in the opposite direction of the public betting trends, a Smart Money pick is triggered. This is a sure sign that a pro betting syndicate has placed a large wager on that team.

Blog Roll News

I have a number of blogs on the blog roll, but another one has decided to call it quits yesterday. No more WTA Betting

Sat down to do the blog and thought ffs this is too much like hard work. Benefits to me are zero too, as discipline seems ok (famous last words!). It's a real chore to blog daily - don't know how some do it. So I'm jacking it in again. Might come on and gob off from time to time, but really can't be arsed with a daily pl etc.

Another good reason perhaps not to post P&L all the time - it's boring to write as well as read! As Rob The Builder said in his comment:

Most of the guys who pack the blogging in quickly are posting daily, generally in a formatted way ( P&L, same recurring info ). You do the same, but have plenty of interesting things to say as well. Cut out the daily '3 out of 4 favourites won' and just post when you've got something worth saying. There's plenty in your blog worth reading, it would be a shame if it stopped.

I had a request to add Cubone - The Gambling Historian at the weekend, which I did. If only the guy had someone to edit his posts, I think there might be some great stories in there, but sadly most of the posts are almost incomprehensible. Names are spelt wrong, and some dates are clearly wrong - he claims to have opened a betting shop in 1959, yet they weren't legalised until 1 May 1961 - but there's a lot of potential there.

Peter Nordsted returned after an absence in April to write: "Well its been a couple of very busy weeks since my last posting and hopefully now I can return to some kind of normality" but has since vanished from the blogosphere. Abducted by aliens perhaps.

Similarly vanished are John the Loser, who spun such a web of porkies that no one believed anything he had to say any more anyway, and lost at the water fountain, presumed drowned, is Adam "H2O" Heathcote.

kokoooooooo 'trading mostly football on Betfair' may soon be gone since he has upset Betfair and found himself banned, and after winning £2,280.11 in June, the "month my life changed" BH at Total Available £0.00 has stopped blogging, perhaps to avoid the begging letters.

This blog itself will most likely be dormant for several days later this month into mid-August, but I'll be back. Do not forsake me.

Lay The Leader

I mentioned backing Louis Oosthuizen after the third round of the Open Championship, a move which I justified by the record of final day leaders at St Andrews and backed up by Oosthuizen holding up well on the Saturday when leading.

Until about two years ago, backing the last day leader was a solid bet, with at one time 18 of 20 last day leaders going on to win, but in the last two years this trend has reversed, and the value now is more often with a lay of the leader. Two plus years ago, and Tiger Woods in his prime was one factor boosting the number of leaders holding on, but golf has changed of late with new Major winners in five of the last six events, something that hasn't happened since 1968, and prior to that, 1936!

A similar strategy that I use in a few two-team sports is to lay an underdog that gets off to a strong start. Bettors have a tendency to panic (i.e. overreact, or on the flip-side get greedy - fear and greed drive the market) but in the long run, good teams, certainly in sports where timeouts or built in breaks are a feature, tend to come back.

I have read that in the fist half of 2009, some 30% of tennis matches saw the first set winner go on to lose, but unfortunately don't know if this is true, or whether this is just in best-of-three or includes best-of-five matches, or even whether this strategy would have been profitable.

Fractional Kelly

Joep said...

I can't stop wondering about the practical implementations of using Kelly while trading and I was wondering if you could give your insight as to why you think it's useful.

While I can see the value for using a system where you place larger bets on picks that have more value and are more likely to come in (as opposed to high odds picks), it seems to me that having to correctly price the true odds in play, calculate the Kelly while keeping in mind the available liquidity (that fluctuates a lot in play, specially on lower liquidity sports) are too much practical problems to really use Kelly as opposed to using it as a guideline. Then there is issue that you're not punting and letting all your punts run, but rather you trade out of your positions often, thereby reducing the risk and making Kelly an estimate that is much too low.

The book “Sports Investing: Profiting from Point Spreads“ wasn’t written for traders, but for punters, and although all my bigger bets are made trading in-play, I do play the handicaps and totals for smaller amounts as well. I enjoy reading books on betting and trading because there's often something of interest that you come across.

I totally agree with Joe that it is impractical to use Kelly for trading, at least not for trading in-play sports markets. It could be used when trading stocks, options or futures prices, since they move slower and there is plenty of liquidity in those markets.

As Joep says above, in sports markets, the amounts available fluctuate, often hugely, and the speed at which some markets move also rules out Kelly as a viable option. Kelly works best when you have a very good approximation for the size of your edge, and you intend to let the bet, or rather ‘investment’, run. In a fast and furious NBA or NFL game, there is often not enough time to accurately calculate the edge.

In practical terms, fractional Kelly is probably a better way to go for most of us. The trick of course, is calculating your edge in the first place.

Counter Productive

I have recently finished reading the recently published (July 2010) “Sports Investing: Profiting From Point Spreads – Finding Value in the Sports Marketplace”, by Daniel Fabrizio and Joseph Hunter, and while there was nothing in its 115 pages to set the pulse racing, like most books of this type, it does generate a few ideas that may or may not prove useful.

Much of the contents could have been pulled straight from this blog. The dedication is to “anyone seeking value in the sports marketplace” and Chapter One is titled “Sports Betting, or Sports Investing?” along with a quote from Warren Buffett “Risk comes from not knowing what you are doing”.

Chapter Two is titled “Getting An Edge: Approaches and Tips”, and lists several comparisons to the financial markets.

There’s an interesting chapter on statistical analysis but rather surprisingly the chapter on Money management contains absolutely no reference to Kelly.

Overall, the book seems one big excuse to continually promote SportsInsights.com, a website founded by Daniel Fabrizio. Whereas one or two mentions might have made me curious, the site was mentioned so many times that I am now reluctant to visit the site!

Ban Sine Die?

I gave up tracking the regional Conference leagues last season as the markets just weren't liquid enough to make the effort worthwhile, but apparently Jonathan Goulding, formerly of Leigh RMI, now of Marine, found enough value in the Conference North two seasons ago to invest the a sum "not exceeding £13 in total on two fixtures".

The games in question did not involve his team, so what exactly are the FA's rules that he has 'contravened'? Are players not allowed to bet paltry sums on football matches involving teams other than their own?

On the face of it, this seems a ridiculous waste of everyone's time. You would think the FA had more pressing matters to attend to than this.

Summer Rules

It's been a quiet week on the betting front following the conclusion of the World Cup. Nothing doing on football, with friendlies of no interest to me, and the competitive games in leagues or competitions that I have no interest in.

This week also saw very little baseball action with the All-Star break meaning just one game in three days, but liquidity is still poor on most games. Perhaps liquidity will improve as the season reaches its conclusion, but I'm sure it's down on previous seasons.

There was a welcome alternative to baseball with the NBA Summer League from Orlando and Las Vegas that concludes today. The liquidity has been surprisingly good with all games available online very cheaply. The lower quality of play, and a rather lackadaisical approach to the enforcement of rules from the officials, has meant some frustrating moments, but the basic principles that produce profits in the regular NBA season, for the most part work well in these games too.

A couple of the frustrating moments have been one game last Tuesday - Milwaukee v Memphis, when I had a lay of Memphis at 1.07 looking great with the game tied and just 0.7 of a second left. Memphis in-bounded and 'hit' a three-pointer which in an NBA game would have not counted because the clock was down to 0:00 before it left the shooter's hand. But being Summer League, the referees didn't bother to review the play, and the game was over. A little frustrating to say the least, especially with the commentators laughing about the fact. Don't they realise that people have money on these things?

The second was a couple of days ago when a team I had backed had three bites of the cherry in the last two seconds to score a basket, but missed all three times and lost the game by 1. They had also missed two free-throws a few seconds earlier. The players are all young and trying to impress the coaches, so these are risks we take when we invest on these games, but overall the Summer League has so far been profitable. Definitely something to watch out for on the calendar next year.

I also made a small profit on the golf today backing Louis Oosthuizen to hold on to his lead in the British Open. Going into the final day, the leader at St. Andrews has a good record, (winning 7 of 11 since 1945), and my logic was that he had handled the pressure well on Saturday and 1.97 was a value bet that he could do the same on Sunday. I missed the 990 that he traded at on Thursday!

It'll all be relatively quiet for the next month or so too. A quiet sporting calendar for my interests followed by a little more than two weeks of holiday from work, before life gets back to normal on August 16th and the football season will be in full swing.

Stating The Obvious

It's not so much as whether you use ratings - elO or others - as to what you do with them. The elO numbers themselves are, in many ways, meaningless - Anon. (London)

Nevermind that the quote is on a post about Betfair's flotation plans, or that "Elo" proves once again too difficult a word for the anonymous mind to get right...

To be profitable from betting on sports, you need to be able to find an edge, which means that you need to be able to compare your rating of a selection (i.e the probability in your opinion) against the odds (implied probability) available on that selection.

How individuals reach their decisions is an individual choice. Elo ratings, form, historical performance, trends, weather, manager, trainer, jockey, "gut feeling", whatever - these are all inputs to the decision making process, and even if you your decision making appears not to be mathematical, part of the process of comparing probabilities means that it is. It has to be - probability is mathematical.

Unless you're an idiot, any time you place a bet, you have calculated the probability relative to the implied probability, and decided that the price is value.

To directly address the comment above, what you do with Elo, (or any other) ratings, is use them to assist in this search for value.

Of course an Elo number by itself is meaningless. I have Chelsea starting the new season with a rating of 2309. Obviously that information is totally meaningless.

I don't think anyone could think otherwise.

Ratings ARE meaningful for comparison purposes though. In horse-racing, Timeform ratings have been around for more than 60 years, and in the US, Beyer Speed Figures since the 1970s, and to be told that Dobbin has a rating of 120 in either method means nothing unless you know the ratings of its competitors, or the number is given some perspective.

For those who are anti-ratings, bear in mind that many experts and sports use rating systems. In the US, sports ratings systems are used to decide the teams in College Football who will play in the BCS championship game, or to determine the field for the NCAA Men's and Women's Basketball tournaments, men's professional golf tournaments, Pro Tennis, and NASCAR. FIFA ranks football teams, curiously based on Elo for women, but not using Elo for men.

I also keep Elo ratings for other sports including the NFL, NBA and NRL, sports where binary bets are available, calculating a handicap is relatively easy, and no pesky draws to confuse matters!

Not sure who will be able to use the Capello ratings though...

Britain's Secret Google

Betfair, the online betting exchange,

is targeting an autumn stock market listing valuing the company at about £1.5bn, I [Mark Kleinman] have learned.

I understand that Betfair held detailed talks earlier this week with its advisers at Goldman Sachs and Morgan Stanley about a plan that would see the company catapulted straight into the FTSE 250 as early as September.

It would be a landmark moment for a company dubbed ‘Britain’s secret Google’ and which was founded just 11 years ago. And it would provide a platform for Betfair to lead the consolidation of the online gaming market.

As I understand it, Betfair’s shareholders will not formally decide to press ahead with the flotation until after the summer break. It will undoubtedly take into account the performance of other IPO candidates, one of which – Fairfield Energy – cancelled its listing this week, before taking a final decision.

One person close to the betting exchange told me today that Betfair was “95 per cent certain” to announce an IPO in September. A flotation would give the company access to capital to accelerate its expansion, both internationally and by moving into other areas that use similar exchange technology. 

In one sense, as a tech company with no obvious listed peers, Betfair could be compared to another business experiencing a rather torrid ride as it prepares to go public: the online grocer Ocado.

The similarities between Betfair and Ocado are merely superficial, however. For one thing, Betfair recorded earnings (before interest, tax, depreciation and amortisation) in the year to April 30 2009 of just over £70m. That was on sales of about £300m – a very healthy margin indeed. Ocado, by contrast, has yet to make any money.

I’m told that Betfair, which abandoned an attempt to float in 2005, would be unlikely to use its listing to raise new money by issuing new shares but that some of the existing investors would seek to reduce their shareholdings.

Four blocs of shareholders each own about a quarter of the company, comprising: Ed Wray and Andrew Black, Betfair’s founders; Softbank, the Japanese bank; a group of venture capital investors including Balderton Capital; and company employees.

Betfair declined to comment.