Monday 30 April 2012

Risky Business?

From the Daily Mail comes this surprisingly interesting article about on-line and in-play betting. Thanks to Mets' Trading Diary for finding this - I won't normally be found anywhere near to a Daily Mail piece:

Risky business: With the advent of online gambling, are we creating an epidemic of addiction?

The trader leans forward at his desk. There are four screens in front of him. The bottom-right one warns him of his worst-case scenario right now: a £207,000 loss.

This figure has been climbing steadily for the past 90 minutes. His target is a six per cent profit.  

His eyes dart to a small television on his left and then back to the screens in front of him, on which numbers flicker and change, listing the money coming in.  

He cannot afford to become distracted. 

This trader is working for a company that generates £1.1 billion in revenue every year. But it’s not an investment bank, and the TV isn’t showing an announcement from the Chancellor or news of a potential euro default. It’s showing the Chelsea v Napoli Champions League game. 

His job is to manage a market operating 120 different live ‘in-play’ bets. 

It used to be that you’d walk into a bookies, put your cash on the counter and that was it. Now people place bets from their PC or smartphone while the game is in progress. 

On an average Saturday in the football season this control room will manage 70 football matches with 120 markets in each game (by ‘market’ they mean a bet, such as ‘odds for first scorer’).

Over the course of the game our trader will set prices, change bets, look for cheats and send his prices around the world trying to up his share of a global sports betting market worth an estimated £245 billion a year.

This is the in-play betting control room of William Hill, based in an office building in Leeds city centre. 

Sports betting is a global business and the control room is manned 24 hours a day, with up to 20 traders dealing with live events around the world. 

This new type of gambling is helping to grow the bookies’ bottom line. 

Ladbrokes and William Hill made around £1 billion each in net revenue last year, while the kings of in-play betting, Bet365, made £501 million and they don’t own a single bricks-and-mortar betting shop.
This trader is working for a company that generates £1.1 billion in revenue every year
This trader is working for a company that generates £1.1 billion in revenue every year. His job is to manage a market operating 120 different live 'in-play' bets

Bookies have come a long way from sheepskin coats and deerstalker hats. In-play betting is now the single biggest growth area in gambling. 

In this year’s Cardiff v Liverpool Carling Cup final, William Hill took 24,417 in-play bets, and the epic Australian Open tennis final alone netted Betfair £50 million. 

Brash adverts on TV, like Ray Winstone’s disembodied head spouting odds for, promote a business that is constantly evolving. 

Andy Excell, William Hill’s in-play football manager, is currently helping to develop ‘five-minute markets’, meaning punters will be able to wager what will happen in the next five minutes of the game: how many corners; will there be a goal; number of yellow cards, and so on. 

The thinking is that bookmakers will attract younger customers, who are more interested in football and are tech-savvy enough to enjoy in-play betting while also  watching the game.

While for most people this is not a destructive force, rates of problem gambling have increased, with the latest figures from the Gambling Commission suggesting that nearly one in 100 people meet the criteria for problem gambling – or 0.9 per cent, compared with 0.6 per cent in both 2007 and 1999. 

Even though the Chelsea v Napoli match is playing on the big screen at the end of the room, each trader has to focus on his own game. 

The tennis from Indian Wells Masters in California is generating extremely heavy betting and is controlled by a trader who appears moulded to his desk, keying in each point by hand and adjusting the odds accordingly. 

Next to him someone is working on German basketball (with no live pictures, he stares at a data feed), while behind him are desks that deal with golf, ice hockey and one of the biggest earners, cricket.

Around the room traders throw numbers and odds back and forth from desk to desk, handling 310 bets per minute between them. Prices are constantly challenged, checked, dissected and recalculated. 
Traders at William Hill's Leeds control centre
Traders at William Hill's Leeds control centre. Sports betting is a global business and the control room is manned 24 hours a day, with up to 20 traders dealing with live events around the world

Much of the mind-blowing maths is handled by an algorithm created by William Hill’s R&D department. 

The computer program takes prices generated by the huge Asian betting market and blends them with estimates of goal expectancies, then throws out a list of prices for 120 different markets in each game. 

As the matches progress, the onus is on traders to keep the prices up to date and either feed the algorithm the latest data from the game or check prices are set correctly.

Most of the traders here are graduates, many with maths degrees who have paid their way through college working in bookies. 

More experienced bookmakers oversee the operation: Andy Excell, 45-year-old in-play football manager; and 42-year-old Lancastrian Chris Uren, who monitors all of William Hill’s in-play gambling. 

Dropping by too is Graham Sharpe, a bookmaker with William Hill for 40 years. He is the man who first offered the chance to bet on who shot JR. 

On the far wall of the control room a multitude of screens display all the data that Uren and Excell need to survive the night. 

One screen gives each game under way its own ‘tile’, which contains the prices at the start of the game, the current prices and the profit or loss for William Hill based on win, lose or draw. 

Two other screens contain prices from other bookmakers, while a fourth runs a feed from Running-Ball, a Swiss company supplying live football commentaries and in-game match data.

‘Goal in the Chelsea game!’ shouts Excell. Football trader Dan quickly opens a new ‘second scorer’ market. 

‘The best result for us is usually a low-scoring draw, a nil-nil,’ says Dan.

‘People usually back over goals, they want something to happen. Nobody wants a nil-nil.’ 

Right now his screen tells me the worst result is a Napoli win; the cost of this is £41,000 and climbing. 

The final screen on the control room wall, which traders have a smaller version of at their desks, hosts a real-time ticker of every bet being made on William Hill in-play. 

You see the user name, amount wagered, and details of the bet and the stake factor. 

At least half the bets are colour coded – meaning that William Hill have enough data to make a judgement on the likely skill of the gambler and have decreed how much each will be allowed to wager unsupervised (this is called the MSF or maximum stake factor).

When you open an account with William Hill, the initial colour code is white, meaning it will accept bets up to £50,000.

Small-time gamblers who win very little, will have their MSF raised up to £2 million (colour code green). Canny gamblers who win a lot can have their MSF lowered to as little as £25,000 (orange) or even as low as £100 (some red gamblers).
An in-play match 'tile' from a trader's screen after 105 minutes of the Chelsea-Napoli game
An in-play match 'tile' from a trader's screen after 105 minutes of the Chelsea-Napoli game. Yellow numbers are the current odds for a Chelsea win, a draw or a Napoli win (with start time odds in brackets). The green and red figures show how much William Hill would win or lose depending on each outcome

Right now the bet ticker is an even mix of green and white, with smatterings of orange and red gamblers. Should they begin to clump together making the same bets then Uren and Excell will know they have a problem; it could mean either a wrongly set price or that they have missed a vital piece of information.

One bet I can pick out is £5,000 backing the draw in a Ryman League game between Tooting & Mitcham and the Metropolitan Police (he’ll go on to lose this later). 

‘If a player wants more than their MSF they get referred to a risk manager in Gibraltar,’ says Excell. 

‘That’s where we have what’s known as the over-ask desk. They will then say yes or no.’

He clicks on the Tooting & Mitcham/Met game  gambler. It brings up his name and address but the section on the page that holds comments from the company’s senior traders at the Gibraltar online-betting HQ is blank. 

‘They haven’t made a decision on him yet. He comes from a street in north London and he is currently losing £2,000 on another bet. He was also recently reduced from green to white. So he appears to be learning as he goes along – and he’s getting better.’

While a game is under way, the team will often create special, one-off bets triggered by events, or even talking points raised by the commentators.

If Rooney is on a yellow card, they might put the odds up for him to be sent off. Graham Sharpe personally handles some of the stranger requests that come into William Hill. 

‘When a cat ran on to the pitch at Anfield we opened  a new market on what would be the next animal to run on and sure enough, a few Saturdays later at QPR a squirrel came on, so we paid out. 

'When we reopened the book the other day somebody bet on a unicorn, which we offered at 1,000 to 1.

‘I wouldn’t be at all surprised if we see a bloke in a unicorn outfit turning up on the pitch tonight.’

The potential danger of frenetic in-play gambling to punters who can place bets from anywhere is clear. 

‘What the in-play markets have done is take what was traditionally a discontinuous form of gambling – where you make one bet every Saturday on the result of the game – to one where you can gamble again and again and again,’ says Dr Mark Griffiths, professor of Gambling Studies at Nottingham Trent University.

‘You cannot become addicted to something unless you are constantly bring rewarded. If the reward only happens once or twice a week, it’s impossible to become addicted. In-play has changed that.’ 

In-play gambling has also come under fire for providing a new outlet for sporting corruption, particularly in the light of the no-ball scandal that recently rocked international cricket. 
Playing the odds

‘By law we have to inform the Gambling Commission if we suspend the market because we see betting that we think is suspicious,’ says Sharpe.

‘The commission would then inform the governing body of that sport that there might be something around this game.’

Although suspicions don’t necessarily mean anything untoward has happened. 

‘There was an instance with Kettering when quite a few people started backing them to lose up to 9-0,’ says Sharpe. 

‘It was a huge swerve in the market – an overwhelming amount of money coming in for no logical reason. 

'We investigated and found the entire first team was in dispute and they’d decided to play their youth team instead. 

'Unless you were a big Kettering supporter you wouldn’t know this. 

'The betting on this wasn’t crooked: somebody simply knew more than we did and we changed the odds to factor in the new information. I think they ended up losing 7-0.’ 

As the second half of the Chelsea v Napoli continues, the control room is fielding 300 bets per minute. 

A John Terry goal puts Chelsea two up. Napoli answer a few minutes later before a Lampard penalty takes the score to  4-4 on aggregate. 

Extra time beckons and, to the delight of the traders, the money backing Napoli increases. An in-play bookmaker can take as much in extra time as they do in the preceding 90 minutes. 

Excell is busy posting prices for Chelsea to win the Champions League outright. He opens up a web page listing the remaining teams and their pre-match odds. He keys in his new adjusted price (8-1), double checks it and publishes it live on the website.

When the extra-time algorithm finally kicks out the odds for Chelsea to qualify, the number turns out to be the same as he arrived at by totting it up in his head. 

He points out that his guys have retained the skills to come up with the right numbers. It’s the sheer volume of calculations that take this beyond human reach:

‘When I first started doing in-play football, to do two Champions League matches with four markets in each game, you’d need eight people,’ he says. 

‘Some were just sitting there entering data. With this system, one trader can handle 70 games with over 100 markets per game.’

Although they spend all day around gambling, it’s clear that the traders themselves bet. During dead points in games they discuss wagers on horses, American football and even the odds of various candidates seeking the Republican party nomination for the U.S. presidency. 

But it’s hard for them to place a bet. 

‘I got my account with Stan James shut within six days of betting on ice hockey,’ says Excell. 

‘Just because they started doing  a new market and didn’t realise that they were doing  it wrong.’

But the bookies usually react swiftly. 

‘During the Super Bowl I opened up a new account with Ladbrokes,’ says Excel. 

‘The senior U.S. sports guy there used to be a trader here. At the end of the game I could only get on ten per cent of the amount I could at the beginning.’

He points up at the wall of red and green colour-coded gamblers and shakes his head ruefully. 

‘I think he might have worked out it was me. I reckon I’d come up as red on their version of that!’

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Sunday 29 April 2012

Cassman - Off The Radar

The draw price on today's Atalanta v Fiorentina match traded at 2.32 before kick-off (actually, it traded for pennies at 1.03 and 1.04!). Both teams are realistically safe from relegation, and neither has a recent history of being involved in such games. Fiorentina were in one game almost exactly a year ago, but won 2-1 at Cagliari. If the agreement here was to play out a draw, someone forgot to tell the players as Atalanta won 2-0.

My Serie A XX Draw (Classic) Selection lost on both counts today, with Siena losing 1-4 to AC Milan. Two 90th minute goals, but 1-4 is only worse than 1-2 on the spreadsheet - the loss in the account is the same. Overall a small loss of 0.22 points on the weekend.

A couple of comments on my self-nomination for the Nobel Economics Prize. Rob the Builder suggested the Cassini-Balotelli formula would be catchier if I were to work alongside the manager rather than the player, and I have to admit I wish I had thought of Cassini-Mancini earlier this morning!

Webbo added that:
1 year 8 months is pretty good I'd say. I know it's taken me longer than that! As someone who does well on both betting and trading, I wondered how your usual stakes (or max stakes as I know you use Kelly) differ on bets to trades? My losing streaks are less with trading so it makes me think that my stakes should be higher but if they are too much higher than the bets then that makes the bets pretty insignificant. Would be great to hear your thoughts on this.
It seems to me that a lot of people find the exchanges, think how easy it all looks, and expect the profits to roll in. Rather unrealistic, if you ask me, and while it might have been easier 10 years ago when the markets were still developing, I would say it is even harder now. Those 20 months were a very useful apprenticeship, and while it's a cliche to say you learn more from your mistakes than from your successes, I think there is a lot to that. 

When trading, my bets are often far higher than with straight punting, simply because it is very unusual to find big value before an event (if the value is too big, it probably means I am missing something), whereas trading in-play in my favoured trading sports does throw up huge value bets more frequently. It's also important to note that when trading, I don't think of my bets as 'stakes' because I have no intention of losing that amount. 

While the ideal is to use Kelly, or a fractional version of it, when trading, this is very hard to do, especially in the fast-changing in-play markets. Typically I see a price that my 'blink' instinct tells me is wrong, and jump in big and fast. There's no time to calculate the size of the edge, the important thing is to act fast and worry about the details later. If you dither about, the opportunity is lost. I should also make it clear that my exposure can never exceed Betfair's default of £5,000 - I have never asked for this to be increased, so my maximum loss is limited.

Webbo comments that higher profits from trading makes the bets (punts) pretty insignificant. This is certainly the case for me, and in the early years on here, my punting was pretty much non-existent, with just about all my profits generated from in-play trading, and if I saw what I thought was value pre-game, I would usually trade out during the game. Unfortunately, this approach meant that I seldom lost, and as unfair as it is to change the rules of the game without a reset, the Premium Charge was introduced to burst the bubble on that style of winning. Maybe the initial introduction of the PC didn't burst the bubble so much as let some of the air out of it, but the 40% to 60% might! I'm actually almost certain to enter in the 50% band.

Anyway, the in-play profits were not from football, which for reasons I have stated before, does not lend itself well to trading, essentially because the price movements are so predictable, and there are a million other experts with whom I am in competition, and I don't like those odds. So there were a couple of reasons why I turned my football attention to identifying value pre-game, but as I mentioned earlier, value is hard to find, and the reduced edge means lower stakes. And there's nothing wrong with that approach.

Unless you are full-time, there really just isn't enough time to look at every aspect of more than a handful of games each week, and it seems better to me to play with smaller stakes with which you are comfortable than with larger stakes with which you are not. If you are lumping on big amounts, then clearly the numbers are a starting point, and you would want to apply a subjective element also (injuries and context for example), but for most part-time players, a disciplined approach with small stakes works fine. Small being a relative term which will vary from punter to punter depending on their individual situations.

Punting profits might be 'pretty insignificant' relative to trading profits, but they are still additional profits, and always worth having. They help with the Premium Charge, and they do not require you to watch the event, so when you factor in your hourly rate, the value to you of punts increases. Your annual bonus might be 'relatively insignificant' but it's still worth having!

On a slightly different topic, I was reading Space Chronicles by Neil deGrasse Tyson, the relatively well-known astrophysicist, (with a family name of Cassini, I have to have some interest in astronomy), and he was waxing lyrical about the benefits of space exploration. The comment that resonated with me was one about how discoveries are often made by accident. His example of the microwave oven resulting from investments in communications, specifically radar, might not immediately bring to reader's minds the XX Draws, but they too were discovered by accident. Trying to identify draws was not the original intent of the spreadsheet, but it turned out to be a fortunate spin-off. Perhaps not as useful to mankind as the microwave, but it has its benefits for me. In short, without inside information, you're not going to find an edge without making an effort. Keep records, play with the numbers, make adjustments, and you never know - you may find an edge where you never expected to find one.

Options Made Simple

Anyone who has traded, or read about trading, options will no doubt have heard of the Black-Scholes formula, and the BBC had an interesting article on the subject today.  One passage caught my eye, since it is refers to some similarities regarding how the betting exchanges have evolved. 

"There were many young traders who either had taken courses at MIT or Chicago in using the option pricing technology. On the other hand, there was a group of traders who had only intuition and previous experience. And in a very short period of time, the intuitive players were essentially eliminated by the more systematic players who had this pricing technology."
The betting exchanges levelled the betting playing field. Anyone who thought that betting back in the 1970s and 80s could be a steady source of additional income should have realised fairly quickly that with the 10% plus over-rounds, betting tax, and bookmakers who closed your account after making some profits, the average Joe was never going to be able to make a profit, and in my case, I dropped it for many years, and would have dropped it forever were it not for the advent of betting exchanges. 
After Cassini, it was the spreadsheet that said 'back', 'lay' or 'stay away'
When I stumbled upon Betfair, it was immediately obvious that with a close to zero % over-round, no tax, no restriction (currently) on betting, the ability to trade and just a (at the time) small commission to pay, this was something that, with a disciplined approach, could be a fun challenge, as well as generating a little extra cash. I suspect that I was / am not alone. While I hadn't taken a course at MIT or Chicago, I had taken a course in 'A' Level Pure Mathematics With Statistics, and passed it, and knew how to use a computer, and no longer was betting an unwinnable battle against bookmakers, but a very winnable probability estimating competition against other individuals. 
"It might have taken us a year, a year and a half to be able to solve and get the simple Black-Scholes formula," says Scholes. "But we had the actual underlying dynamics way before."
There's that word 'simple' again. Just yesterday, it was used to describe my draw selection process, and there it is again being used for the Black-Scholes formula. I suppose it's quite flattering really. It actually took me about a year and eight months to establish a profitable method - I'd say that it's because I'm a little slow, but then unlike Mr. Black, I didn't have Paul Scholes to collaborate with, and share the workload. Shame really. The Cassini formula doesn't sound so catchy as the Cassini-Balotelli formula, but if Mario had been involved, it would probably still be a (fire)work in progress. 

Meanwhile, I patiently await my Nobel Prize for Economics. The cash will come in handy, and at least I won't have to share it with anyone. Oh wait, Mrs. Cassini is saying shouting something about a new carpet. Always something.  

Saturday 28 April 2012

Simple Genius

I wrote about the Golden State Warriors 'needing' to lose their last game of the season a few days ago, and their 'surprise' late collapse on Thursday night put them into a tie with Toronto. I am pleased to report that their (lack of) efforts were not in vain, as they won the draw earlier today guaranteeing them at least a seventh draft pick in the first round, assuming they do not win a top three pick via the lottery, for which the odds are against them. Probability of first pick = .036, a second pick = .042 and third pick .049. The Warriors also have a second first round draft pick, so expect them to make a playoff run next season. I jest. The Charlotte Bobcats (.25) and Washington Wizards (.199) have the best odds to win the lottery, but the 'top' two have only won seven times in 22 lotteries.

Hard to turn such trivia into money, but the playoffs started today with no surprises so far. The Chicago Bulls took care of the Philadelphia 76ers, (although Derrick Rose's injury has seen the Bulls drift from 5.0 to 6.0+ for the title), and the Miami Heat (backed -8.5 at 1.98 for a small bet) are all over the New York Knicks at the time of writing.

I have Miami to win it all this season, with the Thunder runner-ups - and I have the latter -7.5 at 1.99 later.

A couple of Extended XX Draws came in tonight in Serie A at 3.25 and 3.4, although the 2-2 draw at Roma v Napoli was not one I take too much pleasure in identifying. Not quite a fluke of Geoff proportions, but close.

Finally, perhaps it's human nature to gain pleasure from trying to belittle the efforts of others, while offering nothing constructive yourself, but as thick-skinned as I am, it's something which is beginning to get a little tiresome. The latest troll is BigAl, uncannily reminiscent of the infamous Anonymous, whose IP address I finally had to block. He seems to enjoy visiting this blog - he's a very frequent visitor - and he's back again, with his latest negativity. He dismisses the profitable draw selections (and they have been profitable for three years now, so hardly a flash in the pan) with:
Now, as I understand it, your somewhat simple system of backing draws essentially identifies matches where the supremacy is low. Genius.
Yes, it's really that easy, except it rather misses the point that the 'genius' part is in identifying the matches where the supremacy is low. One would think that if it were really that 'somewhat simple', everyone would be doing it, but of course, it's not that simple. It takes a few hours each week to enter in the numbers from each round of matches, and then enter the upcoming matches to identify the qualifiers, and while those tasks are time consuming, if not particularly difficult, determining the formulae behind the scenes is the real key, and making adjustments if necessary.

A suggestion for BigAl - add something of value to your comments, and they will be taken seriously, continue with talking in riddles about Blackjack or entire defences being injured shortly before kick-off and you will be ignored. I enjoy comments that give me something to write about, but your theme is getting old. The other day, someone asked if you have a blog. If you do, please share the link. You are clearly far more successful and knowledgeable than I could ever hope to be, but as a natural cynic, a little supporting evidence of your talents would be great. Plus, I'm sure I'm not the only one who would be interested in reading your thoughts and ideas, and if there is a god (or gods).  

Injury Crisis

The XX Draw Selections had one winner from one selection today as Stoke City and Arsenal drew 1-1 at 3.8, and win for the Unders also at a generous 1.98. Peter Nordsted also picked this as one of his Drawmaster selections, and he also found West Bromwich Albion v Aston Villa (0-0) for a profitable day.

Pete's third draw pick was the Wigan Athletic v Newcastle United game, and as I wrote earlier today, this for me was a value Wigan back, and the game finished a comfortable 4-0 to Wigan.

Football Elite went for Norwich City v Liverpool (Draw No Bet) but, again as I wrote earlier, for me this was a big value back of Liverpool.

Geoff came up with his usual Saturday selection of eight draws, and found two for a small loss on the day. This week saw Geoff finding selections in the footballing hotbeds of Lillestrom, Stabeek, Sogndal and Annan.

BigAl suggests that my post stating that "There has been an increase in goals this season, which clearly affects the probability of a game resulting in a draw." is somehow meant to imply that it applies to the probability of games yet to take place. My words could well have been better chosen, but I think that 99.9% of readers understood what I meant, especially given the context of the post, i.e. the 2009-10 season, and the unusual results up to that time. BigAl seems to be stuck on his idea from the world of Blackjack that probabilities in football are dependent.

What BigAl finds so hard to understand about more goals meaning less probable the draw, I'm not sure. A look at the low scoring Ligue 1 in France and the high scoring Bundesliga might make it clearer.

In the Bundesliga since 1998-99 there have been six seasons where the average goals per game has been 2.9 or higher and in those seasons the percentage of draws was 23%, 22%, 24%, 21%, 24% and 21%.

Contrast this with Ligue 1 where six seasons in this period saw an average goals per game of 2.28 or lower. In those six seasons, the draw percentages were 28%, 35%, 31%, 31%, 31% and 29%.

There is a reason why the draw percentages are so consistently different.

BigAl also came up with his much anticipated explanation of how an increase in goal expectancy makes a draw more likely. He writes:
Imagine a team with a strong supremacy (x) in a match with goal expectancy (y)
That team then loses its entire defence to injury just before the match.
(x) and (y) obviously change.
Is it possible for this change to result in higher goal expectancy but a more probable draw?
Yes it is. Not probable, but possible.
One significant detail missing is that the opposition's goal expectancy (z?) increases in this scenario, and the goal expectancy (y) for our unfortunate team would be only slightly reduced - if at all.

Anyway, there you have it - look for matches where the stronger team loses "its entire defence to injury just before the match", (it happens all the time), back the overs, and back the draw.

Not probable, but possible. Indeed - and for those of us living in the real world, and dealing with probabilities rather than possibilities, I respectfully suggest we continue looking at the numbers, and understanding that the probability of a draw is the sum of the Correct Score probabilities of 0-0, 1-1, 2-2 etc. and that most draws are either 0-0 or 1-1 (unless of course your name is Geoff, in which case you find 3-3s all the time!)

Backing Ian Erskine's Lay the Draw selections lost a couple of points today with Schalke '04 winning 4-0 and Gijon winning 3-0.

The XX Extended (Bundesliga) Draw selections had one winner from two today with Hamburg and Mainz '05 playing out a perfect draw, although the less said about the second qualifier, the better. When a game has five goals in it, I hope we can all agree, the probability of the result being a draw is slim. Cue for BigAl to comment "Imagine a world where penalties count as 0.5 goal, and both teams score a penalty.... not probable, but possible".

Sogndal are still in-play, and more matches tomorrow before I'll publish the latest Friendly Tipster League standings.

Norwich City v Liverpool

Some big movements pre-game in the Norwich City v Liverpool game this afternoon. My own numbers have Liverpool at 1.77, a price that most people consider very short. My spreadsheet of course doesn't know that this is a meaningless game for both teams, or that Liverpool have a big game coming up next week. The price of 1.77 is based on Liverpool's rating, and on their recent form - not just results, but taking into consideration other factors. In essence, Liverpool have deserved better results than they have achieved. With a little over 90 minutes to kick-off, Liverpool are trading at around 1.82 after being matched as high as 2.26 and as low as 1.8. I also have the Overs as value here.

The game that I was most interested in this afternoon was the Wigan Athletic v Newcastle United game, with both teams taking the match seriously. I mentioned a few posts ago that along with Liverpool, Wigan were a team that I rate higher than their league position might suggest, and priced by my spreadie at 1.95 and available at 3.0 a couple of days ago, this was a huge value bet. The game is not yet over, but at 3-0 it's looking good. Make that 4-0. Off to walk the dogs!

Friday 27 April 2012

Away We Go

A quiet day at home today recovering from the last night of regular season NBA action. I actually tried my hand at trading a couple of tennis matches. It's really not my game. As I discovered at a very early age, I'm only good at things I enjoy, and I do not usually enjoy watching tennis. I picked a good one though, with David Ferrer beating Feliciano Lopez in Barcelona in three sets, a match with two tie-breaks, and which paid for dinner.

Later I watched my first XX Draw Selection of the weekend go down as Lorient beat Olympique Marseille 2-1 - not a good start to the weekend's selections. My bonus selection of Toulouse v Montpellier also lost 0-1, although at least here was a consolation win on the Under at a whopping 1.66.

I was searching some of my old posts for a comment on the Betfair Forum, and came across a post I wrote at the time on the subject of the lack of draws in the EPL in early 2009-10, a subject which came up again recently. I also mentioned, and I quote:

There has been an increase in goals this season, which clearly affects the probability of a game resulting in a draw.
While I may not have stated it specifically, you can be sure I wasn't trying to say that an increase in goals makes the draw MORE likely. BigAl's assertion that this can be the case awaits supporting evidence, but I fear the wait could be long. I think what BigAl is missing is that if the goal expectancy for a team rises from say 1.2 to 1.4, the probability of that team scoring one goal increases, but so does the probability of it scoring two, three, four and so on, and the higher these probabilities go, the less likely the scores of 0-0, 1-1, 2-2 etc.

Incidentally, while I may be slightly biased, there are a lot of interesting posts in the archives of this blog, which is now closing in on the 400,000 mark.

One final observation is that in the EPL this season, 31.2% matches have been away wins. I believe this will break the record for the Premier League set in 01-02 at exactly 30% if it holds up.

I wrote that final piece before I read Rob the Builders post . Inthejungle, the odds-on favourite, almost fell before the jockey pulled off quite a recovery, and went on to win the race by 18 lengths.
£330 was matched on Betfair at 1000. It seems extremely likely that the same lucky punter then laid off £165k at 1.29. The unlucky punter may be having a bad evening.
I would say so. That'll take a while to claw back. With a relatively small upside, one wonders what the point of laying at 1000 is, although perhaps that is how he built his bank up to £165k in the first place. Like option sellers:
1000-1 layers "eat like chickens, and go to the bathroom like elephants" - Nassim Taleb.

When Losing Is Good

The New York Knicks duly won their game last night, as expected. Once the Sixers were down big early in Detroit (the games were simultaneous) there was no point in them tanking this game. Far more fun to rub Charlotte's noses, or more specifically Michael Jordan's nose, in it. Background: The Chicago Bulls and Knicks had a strong rivalry back in the early 90s, meeting in the playoffs four times in five seasons, with the Bulls winning four of those series.

The last game of the regular season was unique as the Golden State Warriors started with five rookies - the first time that has ever happened. (The word 'unique' is oft abused, so I thought I would make it very clear). 

Playing against a San Antonio Spurs team resting their stars made this a tough game to call, until you looked below the surface. As with football betting, the context of the game can be crucial - does Team A need a win, or is a draw enough? kind of thing. Trading at around 1.43 at tip-off, the Spurs hit 1.21 early on with just a 6 point lead, before the Warriors came back and led by one at half-time. 

What you could glean if you looked hard enough, was that a Warriors win would have meant them losing a first round draft pick (they needed to finish in the bottom seven of all teams to keep it) so while the players may have been looking to win this game, the word from upstairs at half-time might well have been different. In fact, it's almost certain that the issue was discussed. Draft picks, especially first round draft picks, are significant in American sports - the NFL draft started yesterday, and no surprise that the Indianapolis Colts used their first pick to select Andrew Luck, who lived in London for several years in case you didn't know. A name that copywriters must be salivating over, with its endless possibilities.

Here was the draft issue from hoopsworld explained much better than I could hope for: 

Having recorded an improbable victory Sunday at Minnesota in their third game in three nights, the Warriors took the Oracle Arena court on Tuesday knowing a win over the lowly Hornets would almost assuredly cost Golden State its first-round draft pick in June.
The Warriors must land among the bottom seven teams after the draft lottery in order to keep their first pick. Otherwise, it goes to Utah as part of a trade the Warriors made with New Jersey.
A 24th win Tuesday would have assured the Warriors would enter the lottery with either the eighth- or ninth-worst record. Their chances of finishing in the bottom seven under those circumstances would have been less than 10 percent.
Instead, a 42nd loss put the Warriors in the likely position of tying either New Jersey or Toronto for seventh-worst record, setting up unquestionably the most important coin flip in franchise history. The winner of that coin flip will have a better than 50-50 chance of retaining the seventh pick (or better) following the lottery.
With just one game remaining, the Warriors will tie the winner of Thursday’s Nets-Raptors game in the final standings if Golden State should lose that night at home to San Antonio.
It helps that, while calling myself a fan is a bit of a stretch, I did enjoy a game there last season with my son, and tend to follow their fortunes closer than those of any other NBA team, with the possible exception of Utah.

The NBA turns a blind eye to teams 'resting' players and obviously not trying to win meaningless games, quite different to the approach taken by football authorities (except in Italy of course, where big teams have a history of trying to determine which teams stay up). 

So the playoffs are set, which is always exciting, but excepting last season, seldom hugely lucrative for me. 

Eastern Conference

No. 1 Chicago Bulls vs. No. 8 Philadelphia 76ers
No. 2 Miami Heat vs. No. 7 New York Knicks
No. 3 Indiana Pacers vs. No. 6 Orlando Magic
No. 5 Atlanta Hawks vs. No. 4 Boston Celtics

Western Conference

No. 1 San Antonio Spurs vs. No. 8 Utah Jazz
No. 2 Oklahoma City Thunder vs. No. 7 Dallas Mavericks
No. 3 Los Angeles Lakers vs. No. 6 Denver Nuggets
No. 4 Memphis Grizzlies vs. No. 5 Los Angeles Clippers

Note that the Hawks have home court advantage, despite having a lower seeding than Boston, who got the 4 seed by winning their division.

And on the question of significance or luck - not Andrew, but the random fluctuations of probability kind - BigAl said:

I've not done significance tests for years but I'm pretty sure you should be doing a "two tailed" test which, if i remember correctly, doubles the chance results are by chance in this type of analysis (not that I agree with the methodology as I believe the implied probability assumptions you have made to be incorrect)
From my recollection and understanding of statistics, when one has a specific theory such as "these matches will be draws, more often than the implied probability suggests" you use a one tailed test. Two tailed tests are used for more vague tests such as "is football more fun to trade than basketball?" where you do not have a specific guess.

Thursday 26 April 2012

Euro Club Index

The Euro Club Index website came to my attention recently via Twitter, and I was looking at their assessment for next Monday's big game. Their probability estimates work out to Home 2.5, Away 3.125 and Draw 3.57.

The Betfair prices at the time of writing are Home 2.21, Away 3.625 and Draw 3.675, giving implied probabilities of 45%, 28% and 27% respectively. (For anyone unsure as to what 'implied probability' means, the Betting Expert wrote a post on this topic recently).

My prices for this match are 2.04, 3.93 and 3.93 - implied probabilities of 49%, 25%, and 25%. The market expects more goals from Manchester United than my spreadsheet does - 1.36 versus my 1.18.

The Euro Club Index (ECI) calculates the Home / Away / Draw probabilities from their ratings for each club. My approach is to use the ratings as one parameter, but also to factor in the recent form of each team, come up with a goal expectancy for each team, and calculate the prices for each score, and from that the odds for a Home, Away or a Draw.

The ECI updates the ratings based solely on the result, but I think this is too simplistic an approach.

Finally, Michael Jordan's Charlotte Bobcats play their last game of the season tonight, and a loss at the New York Knicks will see them finish with the worst ever record (percentage-wise) in the NBA. Seven wins from 58 to date, and a current losing streak of 22 games - Knicks are 1.56, Why so long? Possibly because the market considers the Knicks may want to tank this game and face the Chicago Bulls in the first round of the play-offs. Unfortunately for the Knicks, that plan most likely won't work. They hold the tie-breaker with the 76ers, who would also be happier to face Chicago. The 76ers play at the Detroit Pistons (already eliminated) and opened at 2.1 to win this game. Since then, they have drifted out to 5.1. A loss guarantees the Bulls play Philadelphia next week.

Ah, the risks / opportunities of end of season games.

Less Significant (On Average)

Many thanks to George for confirming that my numbers regarding significance are at least close to being accurate. In fact, his numbers came in slightly better than mine.

BigAl stopped by suggesting that my significance test was too simple, and that the average (across all matches) probability of a draw is irrelevant, but yes, I had realized it was of limited value, included it in the post as a starting point before rapidly moving on.

BigAl also notes that “Might be wrong. I seem to remember your 3.54 number was just a guess as you didn’t have all the prices”. Partly right – I don’t have all the draw prices of selections prior to 2011, but since January 1st of that year, over 207 matches, the average price has been 3.54 (actually 3.55 now) and I have made the assumption that this price is at least close for the matches prior to this date. I see no reason why this assumption should be invalid.

Having said that, the (Mean) average draw price is just that, average, and as BigAl says, each match is different, which makes using the (Mean) average a less than perfect strategy. My selection draw prices have ranged from 3.05 to 4.3, so comparing matches where the implied probability of the draw is .3279 with matches where it is .2325 is less than perfect. It only takes a couple of 4.2+ prices to pull that Mean average falsely high. (The average person has less than two legs).

I decided it would be better to use the Median (3.5) and the Mode (3.4) to give the implied probability and when I use 3.45 (iP = .2899) as the average, the probability that these results were achieved by chance goes up to .0834 - no longer at the .05 level of significance, but not bad.

Calculating the Implied Probability from the price available is also problematic - if I can back at 3.5, it's because someone else rates the probability of a draw even lower.

I don't have enough data to look at individual prices yet, but it'll come. The Modal price of 3.4 has 24 selections with 8 winners, with the probability that this occurred by chance a whopping .4101.

Anyway, it was an interesting exercise, and I'll probably look at this some more in the close season.

No joy for two XX Draw Selections yesterday in Serie A, with just one Under winning (Lecce v Napoli). The Extended selections also came up empty this week with two losers at Cagliari on Tuesday and Parma last night. The draw on Parma's game v Palermo was trading at below 3.0 after opening at 3.35, so what that was all about, one can only imagine.Oh I know - it's end of the season Serie A! Unfortunately, the game ended 1-2.