Woodwork Problems

The margin between victory and defeat, can be small - here is a screenshot at the end of the game between Utah and BYU which ended earlier this morning.

With Utah leading by 3 points, BYU had a chance to tie the game with a field goal, and take the game into overtime. They hit the post and missed - but a value lay, and one that I am happy to make any day of the week. Actually any day of the month too! American Football is a great sport to lay at 1.01 - games often appear to be over, but like this one, a 15 yard penalty changes the whole picture. Unfortunately not quite enough on this occasion :(

A Game of Inches

Sam left a comment on the earlier debate, saying: 

I see the exchange format as a blunter version of the real world.

If you start winning money on an exchange this is probably because you are working harder than the opposition. However, you may be winning this money from those who can't afford to lose it or those whose actions don't correlate to their deeper desires (e.g. addiction).

If you get a job this is probably because you worked harder than those who missed out (e.g. you had a better CV) but also some of those who lost out maybe had anxiety/depression/past illness that would obviously hurt them in the application process.

In both cases, the 'losers' are left with little money and I don't hear getting a job being deemed unethical. In fact trading the markets is maybe a fairer playing field than that of employment - for e.g. anyone can set up a betting account but the less privileged can't afford the best education.

In many ways, the exchanges are a microcosm of the 'real'world. There are winners and there are losers. Some people think all it takes to be successful is to open an account and start trading, but for most of us, there is an apprenticeship lasting, at least several months, (it was for me, but I can be a little slow), and the markets are constantly changing. Most of the first strategies I tried back in 2004 no longer work. Betfair was a very different world back then, as any long-term trader will tell you. Markets evolve, Betfair make changes, e.g. Premium Charges / cross-matching. Evolve or go extinct.

US Presidential Election

70.67%

About a month ago, The Telegraph had an article by Mike Smithson on the US Presidential election in which he noted the arbitrage opportunities offered by price differential between the US focused Intrade, and the non-US focused Betfair.

In the world of political prediction betting a huge gap has opened up between the London-based Betfair market and the US-focused Intrade on who is going to win November's White House race.

The big movement was triggered on Saturday when Mitt Romney announced that the House Budget chairman, Paul Ryan, would be his pick for Vice-President.

Just before that, Romney was trading at about 38.3 per cent on the Dublin-based Intrade while on Betfair he was at 35.2. Since the Ryan announcement, players on Intrade have been buying Romney pushing his chances up to a 42.5 per cent shot. On Betfair the movement is in the other direction, to trades overnight at the 33.7 level.

If this was the world of high finance, traders would be pushing huge sums of money onto both markets to take advantage of the discrepancy. Within a very short time the prices on both markets would move towards each other.

The big operational difference between Betfair and Intrade is that the former goes to great lengths to prevent Americans or customers who happen to be in the US from accessing its site. Intrade does not seem to have the same problem and a lot of money that is bet is from the US.

A more recent article notes that the gap is now much reduced. The suggestion that there is 'something of a panic amongst those backing Romney' is very pleasing. 

One of the betting oddities on the 2012 White House race has been why the Irish exchange, Intrade, has been so out of line with Betfair, other bookies and in the US the Iowa Electronic Markets – something that I looked at nearly a month ago in a piece for the Telegraph.

The gaps have been so large that it’s been hard to explain why punters there have been ready to risk money at much poorer odds for Romney when so much better value was available elsewhere.Now the Intrade differential is being eroded and the prices above show the latest this morning. It is still stronger for Romney than Betfair’s current 32% but the gap is nowhere near what it was.

At one stage last week the Intrade Romney price was showing a 44% level which was eight points better.

Such a drop on a market as large as Intrade suggests that there’s been something of a panic amongst those betting that Romney will do it.

One poll that seems to influence Intrade punters more than others is the regular survey from Fox News. The latest, which came out overnight, has more gloomy news for the Republican challenger.

The details of the poll were quite dramatic showing how this is become a battle of the demographic group. Obama leads Romney among all women by 14% and unmarried women by 38%. The president also has big leads amongst those with annual incomes below $50,000 (+18%), young voters under age 30 (+25%) and black voters (+89%).

Romney bests Obama among men (+6%), white voters (+12%), Southerners (+18%) and working-class white voters (+22%).