Exchange Wars

I am watching the Internazionale v Celtic match (winning a little on the Under 2.5 after a nervous second half) and found it amusing that the advertising boards around the pitch featured Betfair followed by BETDAQ on several occasions. If I was an advertising consultant for BETDAQ, I would be making it quite clear what the maximum commission rate is.

Prospect: "Hello Betfair - I am thinking of opening an account with you. I see that BETDAQ have a maximum commission rate of 5%. What is the maximum I might pay with you?"

Betfair: "You will be paying the same maximum Sir, unless you start winning, in which case it may be a little more. You're not a winner in life, are you?"

Prospect: "Well, yes. I like to think so. I make financial decisions, including betting ones, after considering all my options. How much is 'a little more'?"

Betfair: "It's only a little more - really, we prefer losers, but while we won't stop you from opening an account, we will take up to 60% from you if you are indeed a winner.

Prospect: "Sorry - the line broke up. It sounded for a moment like you said 60%"

Betfair: "Er, I did. But that's only for winners as I say."

Prospect: "Thank you. I shall take my business elsewhere."

Betfair: "How does 20% sound? Would that be OK for a while?"

Click.

Pukka Up

Newly promoted Real Betis may have thought they had a nice easy warm-up game arranged for today against relegation candidates Portsmouth, but a collision between Portsmouth's aircraft and a catering truck has delayed the Championship side's return to England by a couple of days, resulting in their replacement in the friendly by rivals Havant and Waterlooville.

You probably won't believe this, but apparently when the Real Betis official asked if a replacement opponent of similar standard had been found, and was told "Havant", he was about to order his team home before, amidst much hilarity, an interpreter was found to explain it all.

It didn't end there though, with Real Betis being initially very concerned about the risk of injury involved in playing two matches in one day.

Another amusing side-note is that several Pompey fans were reported to be planning trips to the city of Betis in the event of a reciprocal friendly being arranged for next summer...

When it comes to friendlies, a real bet is (get it?) not always easy to find, as seen in last night's Oxford United v Everton fixture. Betfair listed it as just that, despite Everton playing today at Birmingham City, so clearly the team at Oxford was always going to be a weak one. Relatively speaking of course. For anyone doing their homework, Oxford at 5.0+ were good value, but losers were bailed out as Betfair voided the game only after it had finished and Oxford had won, presumably because there was no XI after Everton's name in the listing.

Running On

A couple of comments on my Purposeful Practice post, with Graeme Dand being extremely modest about his efforts to identify value in the football markets. Certainly Soccermetrics takes football analysis to a whole new level, but it seems to me that whereas Graeme, and most of us reading this, are looking at data from the point of view of identifying value and making money, Soccermetrics isn’t so vulgar, and betting doesn’t seem to be a driving factor behind his analysis. My point really was that anyone serious about finding a long-term winning method needs to be prepared to put in some effort. Googling “Winning Football Betting Systems” is unlikely to be the path to riches.

Graeme continues with:

“You're definitely correct when you say it takes time to find something that works. I've been at this footie game now for 18 months and although I'm closer to finding an edge than I was 18 months ago, I'm a long way short of believing that I have something bullet proof that I can follow with 'serious money'. Saying that, I still staked well into six figures last season on my bets and made a nice little profit. I'm hoping to stake the same again this season but hopefully manage to achieve a double figure ROI instead of what I achieved last season. Easier said than done I suspect but we'll see.

I'm also keen to do a bit more work this season understanding when we agree and when we disagree on certain games in the Premiership. My results in the Premiership haven't been good but it's driven by the poor performance of Aways on my systems as I've pointed out before on my blog. I won't have this issue next season (they just won't be appearing so frequently as bets as I've dropped them from some systems) but I'm still keen to see how we compare in certain games.

Good luck for next season.”

500-5000 said:

“Hi Cassini, Nice to see you mentioning my blog again.

You make some interesting points in your post. I agree it takes many hours to become proficient at any type of job that you do. It certainly takes time to work out what works and what doesn't when it come to trading on Betfair.

Yes, I m being honest with my trading journey, and yes, I have made mistakes, as you so painstakingly point out. I'm sure we all have. However, I am learning from those mistakes.

Do you have any advice for a newbie trader? Obviously, not laying 0-0s willynilly and analysing form is key, but do you have any other info you could share?

I'd be grateful for any assistance.”

Unlike the delusional O'Dwyer, 500 to 5000 actually seems to have taken on board the advice given and accepts that his previous 'strategies' were leading nowhere. As for further advice?

Well, you're reading this blog, which is the best advice anyone could give you, and if you have read Green All Over from day one, you’ll know that for me, the key is to only bet when you have identified value. (Incidentally not a rule that I always follow myself, or I wouldn’t be lumping on Copa America matches where I clearly have no edge, and thus have no business getting involved - do as I say, not do as I do). There is nothing wrong with laying 0-0s per se, if the price is right. There is also nothing wrong with backing 0-0s, but again, only if the price is right. What makes you think that 0-0 is more or less likely than the market thinks?

The trick, of course, is in identifying when the price is right, and staking sensibly when you do.

Find a sport, or sports, you have an interest in, and specialize. It doesn’t have to be a popular sport - it’s a paradox that the more popular sports are perhaps the hardest to find value in, although If you like football, there are dozens of leagues and markets you could focus on. I follow the big five leagues in Europe (England, France, Germany, Italy and Spain) which are all very popular – a double-edged sword. They have the advantage of being liquid, but the disadvantage of being studied by lots of people, making finding an edge all the more challenging.

Test your ideas. If you suspect, for example, that odds-on favourites in the Bundesliga are too short, and do not reflect the unpredictable nature of that league, make small bets and record the results. Research the results from previous seasons. I spent much of my first year on Betfair playing with 2 bets. The thrill was not in the money, but in the challenge of making a profit. (If you NEED the money, then you shouldn’t be doing this).

Keep records. Understand exactly where you are winning and where you are losing. Accurate record keeping not only helps with maintaining discipline, but it also helps you to keep wins and losses in perspective. A losing run looks a lot less disturbing when you can see the big picture. And don't beat yourself up if your discipline does slip. Step away, regroup, and get back on track.

Always look to improve. Review your results and eliminate losers. Record your results in a spreadsheet, and filter to identify what may not be working. Keep looking for new opportunities. Edges can literally disappear overnight.

Be realistic in your goals, or at least the time-frame for achieving them. While 500 to 5000 is certainly achievable, it is a goal unlikely to be achieved in a few months.

And last, but by no means least, be patient. Keep your discipline and your focus. You don’t need to bet every day, nor do you need to limit how many bets you have in a day. Some days there may be no value bets. Other days there may be a dozen. It’s a marathon, not a sprint.

Purposeful Practice

A post on the topic of the effort required to make a success of trading over at Interactive Sports Investor. I am still reading Matthew Syed's "Bounce" which comes up with the number of hours required to achieve excellence in any pursuit as 10,000, something I mentioned earlier this month. Malcolm Gladwell's "Outliers" came up with this same number in his earlier book, and in December 2008 I wrote about the apprenticeship that we all need to go through. Here's the latest on the subject:

We talk to people all the time that want to make money trading/gambling on Betfair as they love Sport and they see it as an opportunity to give them an enviable lifestyle and release them from the shackles of their boring 9 - 5 life.

What never ceases to amaze us though is that the vast majority of these people are not willing to put the time and effort into becoming successful. More often than not, they will deposit a couple of hundred pounds in their account and after a few weeks, they have lost it and they become disillusioned and then think that its just not possible to make a living trading on Betfair.

Now, consider this, how long does it take to train to become an accountant, a doctor or a vet or in fact, how long does it take to become proficient at any well paid job - the answer is typically measured in years and definitely not months.

Consider also, in any other profession would you not have some sort of formal education to become proficient? Well why do people undertaking a career (even if its part time) not take advantage of the education and help that is available? I can only guess that it comes down to the fact that they are not willing to pay for this education - but what about the saying 'speculate to accumulate'. You will lose far more money than it costs for the education by trying it on your own and you will probably give up - denying yourself the opportunity and lifestyle that sports trading undoubtedly gives to those willing to master it.

The 'we' and 'us' is somewhat pretentious, but our gentle ribbing of 500 to 50s blog name appears to have been a little closer to the truth than we thought, with his confession today that his initial £500 deposit is now down to £100 and that when that goes, the dream will be over. Credit for honesty, and credit if he really does close his account and move on if that £100 evaporates, but the thing that strikes me is the complete lack of any focus with his betting. We all laughed at his betting on German football based on alphabetical order, but it's really rather sad that anyone would put real money on an event without doing even the most basic research. Making money on the exchanges is not easy at the best of times, but laying 0-0s and betting on teams with no form makes that goal highly unlikely if not impossible. "Bounce" refers to the importance of the 10,000 hours being "purposeful practice" - in other words, practice has to mean something rather than be simply for the sake of it ('junk hours'). Picking on seemingly random football markets during the poorest quality time of year is just junk. Watching how a market moves when football of a higher quality resumes would be far more purposeful and beneficial. Compare the approach of 500 to 50 with the effort invested by The Football Analyst or this one from Soccermetrics. Which approaches are more likely to reap long-term profits?

Learning how to trade is not as simple as depositing some money, randomly selecting markets in which you have no knowledge, and blindly betting away. It takes purposeful practice, and usually lots of it combined with a disciplined approach.

To end on a positive note, I know from personal experience that £100 is more than enough to experiment with and find a method that works. There's no big rush to make profits. It's far better in fact to spend a couple of years making peanuts but developing a method than it is to get lucky and win big early on. Look at O'Dwyer and his delusional belief that he has an edge when he clearly doesn't. Teach a man to fish and all that.

Vote Early, Vote Often

In a further sign that perhaps the United States is finally, albeit slowly, starting to catch up to the rest of the civilised world in regard to betting, if not the death penalty, the Wall Street Journal had an interesting piece this weekend written by Alexandra Berzon:

Want to put $200 on Johnny Depp for Best Actor?

Las Vegas gamblers may soon be able to bet on the Oscars, beauty pageants or make a host of other offbeat wagers, long the domain of London's famously inventive bookies, who offer odds on everything from a White Christmas to which European country will be next in line for a bailout.

America's gambling mecca is starting out close to home, with the World Series of Poker. On Wednesday, the Wynn Las Vegas became the city's first casino to place odds on the tournament's nine finalists.

A change in Nevada gambling regulations this year allows the state's casinos to take bets on events and contests other than horse racing and other sports. "This will open the door," said Johnny Avello, the director of the race and sports operations for the Wynn and Encore casinos.

The new market is dawning at a time of rapid change in the sports-betting field, which has long been viewed as a backwater in the gambling industry. Casinos traditionally have considered their sports-betting rooms, or "sports books," a way to lure customers through their doors, rather than a profit center.

Lately, however, the growth in sports betting has outpaced other forms of gambling. Nevada casinos reaped $158 million in sports-betting revenues in the 12 months through May. Though that represented just 1.5% of their total gambling revenue for the period, it was a nearly 8% increase from a year earlier, far exceeding the 1.3% growth in their overall gambling revenues.

Now, new entrants including Cantor Gaming, a subsidiary of New York investment bank Cantor Fitzgerald & Co., and William Hill PLC, a big London-based bookmaker, are vying to take over sports books in Las Vegas casinos and provide betting options that are new to Nevada but common in Britain, where legal betting is widespread, such as betting on individual plays while a sports game is running.

William Hill has agreed to buy several companies that run sports books in Nevada and expects to receive its license to do so by next year. The company already takes bets in Britain on commodity prices, indices and currencies. Partly for publicity and partly as a revenue driver, it also churns out odds for dozens of novelty bets, such as the singer of the next James Bond theme song (Adele is running 3-to-1 odds).

Bookmakers generally try to limit their risk by changing the betting lines as bets are placed so that they have equal bets on both sides. They earn money by charging a commission, also known as a vigorish.

William Hill said wagers related to the royal wedding attracted around $1 million in stakes, the largest among recent types of novelty bets. But Lyndsay Wright, director of investor relations, said the company's plans for the U.S. are focused on more traditional sports betting.

Cantor Gaming Chief Executive Lee Amaitis, who was involved in pushing for the Nevada law that led to this year's regulatory change, said Cantor is hoping to offer year round betting on poker tournaments.

"It could be like horses, where you get to pick favorites and long shots," Mr. Amaitis said. "I think you can build up momentum around that."

Under the new Nevada rules, taking bets on a new event requires the company involved to prepare a report that addresses, among other things, whether the outcome could be manipulated, and then submit it for approval by Nevada Gaming Control Board Chairman Mark Lipparelli. Mr. Lipparelli said it isn't certain what type of events will be approved, though the regulations explicitly ban political elections and youth activities.

He cited two key criteria: "Can the event be effectively regulated, and does someone have an advantage in knowing the outcome to give them an edge?"

Mr. Lipparelli said he already has rejected two proposals, including a "talent competition," a category that includes TV shows such as "American Idol" and "Dancing with the Stars." Mr. Lipparelli said betting on such competitions isn't likely to be approved. That's because he believes fans can vote as often as they want for their favorites, and there isn't a secure enough system for keeping the outcome secret.

He said other events, such as awards shows, some beauty pageants and financial-market moves are better candidates for wagering. Accounting firms oversee voting for major award shows and pageants and keep the results confidential, he said. Similarly, financial markets are overseen by regulators.

Several Nevada bookmakers said they still are evaluating whether the logistical challenges of many new types of betting might outweigh the demand.

In a two-day experiment by the Wynn earlier this month, 25 bets were placed on such questions as whether a group of "new school" or "old school" poker stars would go farther in the World Series of Poker. The "old school" won, said the casino's Mr. Avello, though no one from either group made it to the final table, where play will resume in November.

"When I look at how much money we won, it was surprising for just two days of action," said Mr. Avello, who declined to disclose the amount.

Mr. Amaitis of Cantor Gaming said he is taking a cautious approach to financial-market betting due to concerns of running afoul financial-market regulators. "I'm going to take baby steps to a product I think can be extremely explosive to a marketplace, and I want to make sure I do it correctly," he said.

While the "talent competition" category, and Next Manager markets for that matter, are ones I leave alone for the reasons outlined in the article, I'm not sure I understand banning betting on political elections.

In Zimbabwe the results might be known well in advance of election day, or perhaps the election for Mayor of New Amsterdam, Indiana could be a little dodgy, but it's hard to see why betting on an election for a seat in the House or Senate or for President should be banned.

Japanese Football

Liquidity on BETDAQ appears to be significantly improved for the more major of matches - certainly the Rangers v Hearts match yesterday was promising as reported in this thread on the Betfair Forum. Good news all round you might think, but one poster, presumably a Betfair employee or an individual who needs to get out more, posted in reference to BETDAQ that

"2 Japanese footy matches aren't even actively managed in play for a start!"

Really Well, there's a great reason to stay with Betfair then. Of course, the commenter Rs1 has only been a member since 2008, and unless he has some in depth specialist knowledge of in-play Japanese football, is unlikely to be troubled by the Premium Charge, either new or old. But Betfair and BETDAQ, are not mutually exclusive. If the market you need isn't available on one site, use the other, but if there is sufficient liquidity for you on a site where you are paying 2% commission, why would anyone choose to play where their commission would exceed 40% or put you one step closer to that level?

Zeroing In On Value

There are a few comments to catch up on, the first being from Geoff at Full-Time Betting who wrote:

Talking of German football- Cassini, a question if I may? I've trawled through your posts but can't seem to find your posts on laying Bundesliga games (specifically favourites).I'm sure it was on here somewhere but may be confusing it with something else. Can you point me in the right direction. Thanks in advance.

There are actually a few references to this phenomena, but it appears I first revealed it in this post from last September. If you search for Bundesliga, you'll find several posts on the subject.

I did feel slightly bad that 500 to 50s week was off to a disappointing start due to my being mean and unfriendly. He writes:

I'm starting today off with a bit of a disappointment. It seems that not all of our fellow bloggers are as friendly to us newbies as first seems.

I was disappointed to read that the blog 'Green All Over' slated me for making the mistake I made the other day. I posted it on here. I confess, that I was unaware that it was day 1 of the season of that particular league. Had I known that information I wouldn't have placed the trade. It was an elementary mistake, and one that I won't be repeating. If I want this to work on a longer term basis.

As the poster mentioned: 'I really don't think basing decisions on the alphabet is a viable strategy'. I'm inclined to agree. Thanks for pointing it out. It's a mistake I won't be making again. I m just a bit disappointed that he decided to post a sarcastic comment or two about it on his blog.

I guess 'Green All Over' is clearly having better success than me, at least, with comments like the above you would certainly hope so.

I do try to be nice to everybody, usually, but I have been known to be just a teeny-weeny bit sarcastic at times. It was just that the whole idea of researching a league table full of zeroes and basing a betting decision on alphabetical order, was just too wonderful a story to pass up. Yes, we all make mistakes, even me on occasion, but I doubt that many of us have found perceived value in team names before.

Anyway, enough on that subject. With the new season fast approaching, I have been studying the Premier League opening day fixtures along with the current league table (pictured), and find value in Blackburn Rovers (currently 3rd place on goal difference, and unbeaten) v Wolverhampton Wanderers (20th and without a point). Blackburn haven't conceded a goal at home all season, while Wolves have yet to hit the target away from home. At around 2.04, Blackburn look excellent value.

A Betfair Story

A very well written post on the Betfair Forum (posted by Total Brosman) that is well worth reading:

Firstly, apologies if this is all a bit self-indulgent, this just felt like the right day to jot this down. I’m not looking for sympathy, or to be big-headed, but I’m fed up of being lumped in with courtsiders and cheats, so here’s my story.

Before 2004 I’d been a sport fan but never a gambler. I was working in a boring computer-based job, and a few colleagues liked a punt during the day, so I followed suit to pass the time. I looked at a few bookies sites and, even though I didn’t really understand the exchange concept, was drawn to Betfair. I’d have a couple of quid on a horse race or two to pass the time, but couldn’t watch them, so I liked the fact you could follow the odds to imagine what was happening.

I became fascinated by how the odds moved, particularly in-running, and began watching the markets move in other sports too. Since I was at work I couldn’t watch anything, so I started to almost follow events in reverse, by watching the odds and working out what was happening from that.

One day I had a look at the Sony Open golf before it started, and some form from previous years. I noticed Azinger had played well there in the past, and had a fiver on at triple-digit odds. Two days later he was bang in contention, and trading about 10s. I’d never looked at the dynamics of laying but realised I could lock in a decent guaranteed profit. He faded away, but I was quite excited to be in a position where I won regardless.

So I started following the golf markets every week, and was fascinated by the movement of the odds in a 100+ runner market, where every shot made some sort of difference to the odds of that player and every other player. I didn’t have Sky so again I was looking at the odds and working out what was happening. I’d place a few fiver bets and trade out of them, and make a miniscule profit if I got them right. One day I took the bold step of depositing £300 so I could lay a player I thought was too short. It was the last deposit I made.

I found myself making tiny but consistent profits each week, and built my bank that way throughout 2005. In October 2005 I got pretty lucky with some trades, and made £4000 for the month which established me with a good-sized bank to trade with. Things went well at the start of 2006 as well, but even so I can’t believe I was so rash to quit my job so soon. I did so in June 2006. I certainly didn’t expect to last five years, but I thought I’d have a go. To someone who liked sport and hated his job, it was, and still is, a dream job.

The way I traded then is still the way I trade now. I use the leaderboards from PGAtour.com, and watch it on Sky (I eventually treated myself). Everything I follow during a tournament is available to everyone. I use the standard Betfair interface, not a bot or any trading software. When the North Americans have fast pics on a Sunday night, I’m as far behind as anyone. The skill is in being able to constantly and quickly react to everything that’s going on and re-price a multi-runner market which changes with every shot. And in having the balls to take a big position when you feel there’s value. No two weeks are ever remotely the same.

I make a consistent, comfortable, but not spectacular living. I’m cautious by nature so like to lock in a profit. Although I have bad trades, some very bad ones, I’ve become a good ‘scrambler’, and some of my better performances have been good recovery jobs. One week I lost thousands laying a runaway winner (Brian Gay) but recovered things somehow on the final day for an overall profit of £9. It was one of the most satisfying wins I’ve had.

So, because I play one or two markets a week, and they last long enough to recover mistakes, I generally emerge with a profit. I don’t think this strike-rate is unnatural over such a small number of markets, I’m just consistent.

From today Betfair want to take more of my profit than I get myself.

I don’t know yet what the future is, but it seems certain the five-year run of trading on Betfair for a living is over. It’s possible that if things go well I could make a living on 40% of my profits, but that would leave no buffer for a bad run, and it’s always necessary to have that sort of buffer in such a risky business. I’ve always known that this would come to an end, and that’s always been the scary part- that at any time, by being overtaken by someone better or by losing my focus, interest or discipline, I could stop winning altogether. But the gut-punch is I feel I’m trading better than ever, but am now being priced out by Betfair themselves.

But they don’t owe me a living. Although I was obviously upset when it was introduced, I understand the justification for the 20% PC. It covers Betfair’s costs of attracting new players, and redresses an imbalance between those trading a few number of outright markets and those punting on multiple markets. I’ve never sought to avoid paying PC, and I don’t even really know what churning is, other than what my stomach does at the thought of paying 60%.

Betfair’s justification for charging 60% is that at 20% they merely break even on my account. By that logic, at, say, 30% I’d be an extremely profitable customer. At 60% I can’t be a customer at all. It all seems rather short-sighted.

I do believe 60% can be justified for the courtsiders, bot users or cheats, who cream consistent risk-free profits across hundreds of markets a week. That’s not a ‘natural’ strike-rate. But I hate being lumped in with these guys. I might emerge with a fairly consistent profit, but I’m no cheat. I take on a hell of a lot of risk every time I press submit. Once their 20% is covered, Betfair have no risk, and that’s why I think their share of my reward is unjustified.

Perhaps some extra criteria could mitigate this a touch – a minimum weekly threshold above which 40-60% is charged would help. It seems ridiculous that even in my Brian Gay week, I’d be charged 60% of my £9 profit. Or some sort of distinction based on the number of markets played, since maintaining a high strike-rate over hundreds of markets a week is far more indicative of risk-free ‘cheating’ than winning a consistent profit over only one or two longer-term markets a week. There doesn’t seem to be any possibility of a compromise.

But they can charge what they like, and if I have to go, I have to go. It’s a shame because I’ve always been a Betfair evangelist. When I tell people about what I do they are fascinated, and I daresay a few have come here themselves as a result. When I hear people talking about having a punt on something, I tell them they should come here, not just for better odds, but I also explain the idea of trading out for a profit no matter what happens.

For me, that’s what Betfair’s always been about – they used to run seminars in doing just that – and I feel that I’ve only ever used Betfair in the manner for which it was intended. Although I’m far from the most profitable customer on here, I at least show to some extent what can – or could – be achieved playing honestly and well on Betfair.

Would I recommend Betfair to others now? No, probably not. Not just because of the current price hike, although I do believe it is unfair. But they have shown they don’t want anyone to profit but themselves, and if so, what’s the point? When that is the case, betting here is no more shrewd than betting with any bookie. And they have shown they are constantly willing to move the charging goalposts at the drop of a hat. The premium charge, and especially the new premium premium charge, is not just a charge on profits I might make in the future it’s a charge based on all the profits I’ve made in the past. How could I or anyone know what odds we are really betting when charges invented in the future might apply based on whether or not we win? I do not believe Betfair now has a fair or transparent charging structure.

Like I said, I’m not looking for sympathy or anything, just to get this off my chest. I’ve been lucky to do this for five years, and I’ve got Betfair in part to thank for that, as well as a hell of a lot of hard work a hell of a lot of risk, and a reasonable smattering of stress and recreational swearing. It’s a shame if it has to end like this.

Then after a few comments, Total Brosman added

Thanks for the comments folks.

Regarding any hope of avoidance etc. I'm not getting involved in any account shenanigans. I'm not a fraudster and I don't intend to become one. I make what I consider to be an honest living from gambling and if I can no longer do so then so be it.

And I've got no intention of getting involved in arbing / churning etc. I enjoy the thrills and spills of what I do - I know some people may think of trading as safe or risk-averse, but every trade for me starts with a punt I think is value and then I consider what to do with it further down the line, just like that first ever Azinger punt. It's exciting and it's fun and I don't want to turn into an accountant or a mathematician grinding away at markets day and night to make things pay. I'd rather just get a job.

Assuming Betfair don't suddenly have an epiphany about all this by best hope is that a genuine rival emerges. It could be a slow process but among PC payers or non-PC payers I don't sense much loyalty or goodwill towards BF any more, so there has to be a tipping point. Breaking the monopoly would be a good thing for everyone, maybe even Betfair themselves- the share price suggests they need to buck up their ideas and some competition might actually force them to do that.

One comment by DStyle made clear the inequity of the Premium Charge:

The problem is that it's based on how much you've made in the past not about how much you'll make in the future. Imagine you'd been in your job for four years doing the same thing earning 60k a year. The government taxed you 20% of your earnings, then announces that anyone who's been doing that job for four years or more will now be taxed at between 40% to 60% depending on how good you are at your job (the better you are the more you get taxed). In the meantime, someone else joins the company, does exactly the same job as you, but only gets taxed at 20%.

BetFAIR? Really?

"Fairly Even"

It is my opinion that, at least for betting purposes, league tables are pretty much useless, and never more so than early in the season, but not everyone shares my opinion. Read the following excerpt from the 500 to 5000 blog, where the author apparently based his betting decision on the pre-match league standings.

The second mistake, although a smaller one, happened in the Cottbus v Dynamo Dresden game. I actually thought Dresden were 6th in the league and Cottbus were 8th, and so it was fairly even. Cottbus ended up winning after I had laid them at 1-0 to Dresden. It wasn't a biggy, but was a stupid one nonetheless.

Dresden stood in 6th place, and Energie Cottbus in 8th place "and so it was fairly even"? Well, not really. The match yesterday was the opening game of the season, and the league 'standings' were based on nothing more than alphabetical order.

I've known people back horses based on nothing more than their name, but for anyone even remotely serious about being profitable from betting, I really don't think basing decisions on the alphabet is a viable strategy. While the Premium Charge is unlikely to be an issue for our friend, with the new Premium Charge structure less than six hours away, I needed a laugh.

Competition

In a discussion on the merits, or otherwise, of Smarkets, a poster by the name of Get On Massive had this to say:

Betfair are killing off p2p. They want to suffocate the winners and bet into their own markets with bookie like margins. The exchange concept has been born and Betfair won't kill it off, if they abuse their position then someone will take their place sooner or later. It might not be next week or next year but Betfair in the future will have lost all ties to it's original concept and some other company will have taken its place.

Betfair in the future will still probably exist and will be the market leader in virtual racing and 'Deal Or No Deal' but it will lose it's exchange business at some point. Their model for p2p exchange betting is unsustainable. Do you really think in 20 years time people will be paying up to 60%?

Rather well said. and as I have said myself before, the exchange betting genie is out of the bottle, and while customers may continue to do business with Betfair for the moment, they have lost a lot of goodwill and there will be no loyalty to them when a viable alternative comes along.

It is interesting how liquid the Smarkets markets (sorry, had to do it) are relative to BETDAQ, (who incidentally have all of £9 currently matched on the Women's World Cup Final!) at least for some events, and while the former's turnover is still relatively small, once that ball is rolling, (pun intended), market conditions can change fast.

Smarkets may be little known for now, but they are fast gaining attention and a reputation for responding to the customer. As the poster above said, "Do you really think in 20 years time people will be paying up to 60%?" No, they won't, not when Betfair ceases to be a monopoly, a day that is one day nearer than it was yesterday, and nowhere near 20 years away.

Losing Focus

It's always a quiet time of year, but with less than five days to go to 18/7, a date which will live in infamy, - at least on my spreadsheet - an increasing possibility that the NBA season 2011-12 will be lost, a lockout continuing in the NFL, the All-Star game in baseball meaning no games there for a few days, and unfortunate losses in the Copa America, it's probably fair to say my enthusiasm for trading is at its lowest ebb since my balance hit £21.40 back in 2005 and I was a bet or two away from packing the whole exchange betting thing on the head. But I bounced back then, and I will do so again, and speaking of 'Bounce', on the recommendation of Peter Webb, I went out and bought a copy, and so far, it's a good read. 

My son ploughed through it in a day, but his Dad has work to do so it'll take him a little longer, but the essential message so far appears to be that talent is not 'God given' or encoded in DNA, but the result of putting in hours and hours of practice - with 10,000 hours being the necessary total for excellence. Let's see - an average of 4 hours a day on Betfair for 7 years... 10,220. 

Allowing for holidays, that's pretty close. My enthusiasm is restored. I am an expert. Well, perhaps if I regain my discipline and stop lumping four figure bets on Copa America matches that I have no edge in. Unlike the Women's World Cup where I have the advantage of being married to an American and I am reliably informed that 2.08 is value. Or maybe Mrs. Cassini's heart is speaking since I'm not sure she knows what 2.08 really means.

Paranoia, Passion And Paulo

When it comes to tipping services, the first reason in the comment below may have some merit, but I'm not buying into the second. I somehow doubt that bookies are trawling the blog world to see who is using what tipping services, and limiting accounts based on their findings.

I’m not a big one for talking about which tipster services I use for a couple of reasons. The first one is that if does look like you have a personal interest in the promotion of the service (more of that another time) and secondly the bookmakers are a bit sneaky sometimes and could limit your account if you talk openly about using services which are on their hit list for having the temerity to actually provide winners!

Call me old fashioned, but I suspect the bookies know from your betting profile what services you might be using, and for the most part, love it. Your account will get restricted or closed if you find winners consistently, wherever they come from, and you can bet that the selections of any consistently winning tipping services are soon known to them, and the prices available trimmed anyway. If you use an exchange and win consistently, then you simply hand over up to 60% of your winnings.

I seem to have acquired a new name - Paul. Over at Interactive Sports Investor, I read this today:

Earlier we touched on the point that the decision to exit should be based firstly on the trading plan you have set yourself and secondly the way in which you trade. For example Paul Cassini could not have said it better in his post over on his great blog Green All Over. In a nutshell Paul is a value trader and therefore his exit point is when the price you are trading no longer offers value. Paul has been trading on Betfair for a number of years and has created his own edge by working out whether he thinks a price on offer is value. He does this with a combination of his own odds compiling and a great understanding of the games he is involved in and the phases they go through both on and off the pitch (the Betfair traders). His edge seems to be very successful and he is passionate about his hobby that also makes him money.

Well it hasn't been making me much lately. With quality football in short supply, I've been dabbling on the Copa America, and not too successfully. Colombia's 1-0 win over 10 man Costa Rica cost me, and in their second game, Colombia managed to hold Argentina to a draw for another big loss. My own stupid fault though. When there is a short priced favourite, you get several minutes at the start of a game where the price tends not to move much - in other words an essentially low-risk bet, but at the point where I usually switch to lay the favourite, I held off because, in my 'expert' opinion, Argentina looked value for the win. Of course, the goal never came. Should be a nice rebate from the Premium Charge next week though. Oh wait, there is no rebate policy. How is that fair?!

New World Order

My Golf Schocker post has, in record time, become the fourth most read GAO post of all-time, in just a few days. It was linked to from a number of places, the Betfair Forum, Bet Angel’s forum, Facebook and several blogs, so thanks to anyone who drew attention to it. Sadly, after recently passing the 250,000 hits mark, Stat Counter now only counts a hit as 0.4 of a hit, so my numbers are no longer an accurate reflection of the blog’s popularity (enormous).

It’s been a week now since the latest move of the goal-posts by Betfair, with implementation just a few days away, and from what I read, rather than from first-hand experience, (this is a quiet time of year for me), liquidity on BETDAQ appears to be improving. Mark Iverson and Peter Webb have made the point that there is money there, and even if the markets may not be quite as liquid as Betfair’s, it is worth making the effort to work with what is available.

There seems to be some confusion over how exactly the charges are to be applied. The wording from Betfair suggests that once the barrier is crossed, the rate is applied ‘thereafter’ while forum posters are reporting that they are being told the rate being charged can change. It’s hard to imagine that Betfair would let you cross the line at 40%, and then fail to hit you for 50% or 60% should your account profile change. It’s not hard to imagine that if you cross the line at 50% or 60%, you will never pay less than that amount. 

The ‘finishing line’ of £250,000 may sound like a lot of money, but as Mr. Mark Iverson discusses in this post, when you think of it as total income generated over a number of years, it certainly isn’t.

The latest figures available show that the median gross income for men in the UK is £538.20 a week (£28,000 a year rounded). Regional differences mean that the top median is in London at £36,000 while the lowest is in Northern Ireland at £24,000.

After deductions, this works out at £21,402, and to reach £250k would take 11.68 years. Betfair was launched a little over 11 years ago – in early June 2000. Coincidence? Well, yes, probably, but the point is that a Betfair customer making an average income on Betfair would be hitting the £250k mark in the next few months.

As a part-timer, the changes are annoying, but given that anything I make is a bonus, it’s not life changing. I am unlikely to match my current averages, but life is about adjusting to changes, and in the whole scheme of things, it doesn't, or shouldn't, rate too highly on ones list of priorities.

It’s the full-timers on median income or thereabouts who will feel the most pain. After netting 95% of gross winnings before the Premium Charge, and 80% of gross winnings since, some now face the prospect of netting just 40% very soon. Assuming that full-timers are pretty much already maxing out their potential, to face a halving of income may well be the death knell for some.

For anyone who hasn’t yet reached £250k, and doesn’t need to generate income for a few months, there may be some wiggle room to adjust what band you are in when you cross the line. The ideal is to win on BETDAQ and lose on Betfair, but as others have pointed out, if we knew how to do this, we wouldn’t need the lay on Betfair!

Treading water for a while, and churning some commission, may well pay dividends in the long-term, but this is by no means guaranteed. It will be no surprise if Betfair move that amount down to £100k in the not too distant future, and even the 40%, 50% and 60% band rates could be raised.

As any successful punter knows, start winning with a bookmaker and your account soon gets shut down or severely restricted. As an exchange, Betfair should be matching individuals and care not who wins or loses, but they are not an exchange – just a highly efficient bookmaker. Betfair no longer welcome winners. They may not be closing accounts (yet) but the severe restrictions are here. If the trickle to BETDAQ becomes a flood, this might just prove to be a Ratner moment for them. The genie is out of the bottle so far as exchange betting is concerned, and if Betfair won’t provide a fair exchange for all, someone else will.

Golf Shocker

The world of golf was rocked today by the decision of the US based PGA TOUR to implement several changes to their tournament rules.

Any players who have career earnings of $10 million or more will, effective July 18th, be subject to a “Premium Score Adjustment”.

The full announcement released earlier today to a ‘small number’ of players reads:

From 18th July 2011 PGA TOUR will be making some changes to the scoring system which may affect you directly.

Full details of the changes can now be found on the PGA TOUR page under the About Us section of the website but the changes can be summarised as follows:

Players will be subject to Premium Scoring Charges if they satisfy all of the following conditions:

Career Gross Earnings exceed $10,000,000

Lifetime Major Tournament Earnings generated less than 99% of Career Earnings

Played in more than 2 tournaments lifetime

As of 30th June 2011 your golfing activity satisfies the criteria set out above. In order to view the Premium Scoring Charge rate that will apply to your future scores as well as the calculation that determines your rate and the date from which the rate becomes effective, we have developed a secure online portal. The portal can be accessed at unfairterms.pgatour.com by logging in with your PGA TOUR username and password.

For the purposes of introducing a change to the scoring that applies to your golf, we will assume that you were under the misguided apprehension that you would always be treated on a ‘par’ with other golfers. For example, if the Premium Scoring Charge rate applicable to your golf is now set at 40%, we will assume that you have always scored at the Premium Scoring Charge rate at 40%. This will ensure that you are considered to have always played under unfair rules at the point that the new scoring rate becomes effective.

For more information, please visit an FAQ section on our forum. We hope the information provided will outline why we are making these changes and how they will be implemented in practice.

Alternatively, if you have any additional questions about the changes we are making that are not covered in the FAQs then please contact your account manager or email premiumscore@pgatour.com.

Players who meet the criteria detailed above will now have their score adjusted as follows.

A round at over par – no adjustment.

A round at par – player’s score will be subject to a 20% adjustment.

Under par rounds will be subject to adjustments according to the following scale:

1 or 2 under – score subject to a 40% adjustment

3 to 5 under – score subject to a 50% adjustment

6 or more under – score subject to a 60% adjustment

Q and A:

Q: The scoring in golf has been unchanged since God invented the game while on vacation at St. Andrews in 1457. Why has the PGA decided to break with tradition now?

A: These steps are necessary for the PGA TOUR to continue to be able to attract new professionals. We have found that new players are reluctant to enter tournaments because leading players are too good. The new scoring rules should help new players break through.

Q: The new rules make it almost impossible for a player meeting the criteria to ever win again. Does the PGA TOUR realize that for many players, they have dedicated their lives to golf, and played many years in good faith supporting the TOUR, and now find themselves left high-and-dry? Would it be fair to say that you are no longer "putting" up with winners and attempting to "drive" them away?

A: The PGA TOUR welcomes winners - just not quite as much as we used to. The same players winning all the time is bad for our business. We do not want children looking at the success of Tiger Woods for example, and wanting to emulate him. We would rather pretend that no one makes any money out of professional golf, and have our tournaments full of semi-pros / amateurs that no one has ever heard of. Our aim is tournaments where mediocrity reigns supreme, and excellence is seriously restricted.

Q: But won’t some of these ‘semi-pros / amateurs’ eventually win the $10,000,000 and thus effectively have their careers cut short themselves?

A: $10,000,000? I think you’ll find the number is closer to $1,000,000 actually. $10,000,000 is just a test. Oh wait, that’s not supposed to be public knowledge yet, forget I ever said that. Next question please.

Q: Why aren’t you increasing the Premium Scoring Charge rate that everyone is asked to pay?

A: The introduction of the Premium Scoring Charge is designed to ensure that all consistently successful players generate in green fees at least what has been spent by the PGA TOUR to provide the service. However, there is still a very small group of our most consistently successful players who are not contributing enough towards the maintenance and long-term growth of the grass and rough.

Q: Are you not concerned that the top players will form a breakaway organization, called the Real PGA or something similar, and play elsewhere? A number of players who have yet to reach the ‘limit’ are already suggesting that their incentive is somewhat diminished.

A: No, not at all. We believe players would be unwilling to join what sounds a bit like a 1970’s terrorist group or a Spanish football team, but also we have the biggest tournaments in the world. We have heard that there is another Tour called the European Tour or something with a purple logo, but nobody plays there.

Q: It has been reported that several big-hitters have in fact started to play over there now. Is it not a concern that as newer players see the prize money over there build up, that they will be attracted to it and the PGA TOUR will become a mere shadow of its former self – that everything the PGA TOUR was founded on – fair play for all, a medium where smart minds may compete fairly, top class competition etc. will be lost? Are the founders happy to see this latest turn of events?

A: We’re a Stock Exchange traded company now. Principles don’t mean anything.

Q: So Tiger Woods is still welcome then?

A: You’re changing the subject – I like that.

Q: Well yes, sometimes I get distracted and can’t resist a little dig. My final question is what will you do if you find the top players defecting and taking the majority of other players with them – the players who still have the dream of winning along with those who like to play among the hustle and bustle of competition?

A: It will never happen - unless the European Tour gets its act together I suppose.