Investing And Morality

Here we go again. Something in my Staying Pure post seems to have touched a raw nerve:

Please correct me if I'm wrong, but haven't you written a number of blog articles for Bettingexpert?

Isn't their approach based on the Bookmaker affiliation model?

http://www.bettingexpert.com/about/business

Not having a go, just curious why you're not keen to support Bookies through your site but seem happy to do so on another - what's the difference?

Mark

P.S. I think Bettingexpert is a very informative site with lots of thought provoking articles.

Goodness. If that's not having a go, I would hate to get on the wrong side of Mark, who knows me well enough by now to know that a response will be coming.

Does he not know that it's almost the end of the month and that he should be easing up by now? (For new readers, despite being pro, Mark operates in a "lower gear" toward the end of the month for reasons still not fully understood by anyone but himself). Even better, it's actually the end of the second quarter, so Mark should at most be in first gear if not neutral. Not having a go.

Anyway, to address the points in Mark's comments.

Please correct me if I'm wrong, but haven't you written a number of blog articles for Bettingexpert?

As I have mentioned in this blog many times, and tweeted ( @CalcioCassini ), I certainly have. And darn good articles they were too! I'm a little surprised Mark didn't know this.

Isn't their approach based on the Bookmaker affiliation model?

I'm beginning to suspect at this point, that Mark's questions might be rhetorical, because the business model behind Betting Expert is indeed based on affiliate relationships as explained in the link clearly displayed on their home page. Betting Expert say that there is no impact on their editorial discretion, (as they might be expected to do), but I've not seen any evidence to the contrary. In fact, they were happy to get the story of Bet365's welshing on this punter's bet out there last year although as it turned out, there was a little more to it than was revealed initially.

Not having a go, [I think he was...] just curious why you're not keen to support Bookies through your site but seem happy to do so on another - what's the difference?

The main difference is the degree to which I might reasonably be accused of being happy to "support the bookies". To me, there's a big difference between:

1) taking bookmaker money, placing a lurid and tacky advert for them on my blog, and hiding affiliate links in my posts, and

2) writing some educational articles that will definitely draw visitors to a site that openly declares its business model, but which may or may not result in any of the embedded links on that site being clicked on.

Most people make such 'moral' distinctions in their lives all the time. We may abhor smoking, but do all the index funds we invest in have no tobacco company holdings? We may think climate change is a huge threat, but do we give money to oil companies? Obesity is becoming an epidemic - do we own any fast-food shares?

We're all in betting to make a profit. Do we worry about the likes of Paddy or Claus Elgaard when we are making our value bets?

While seeking a consistency between your investments and your morals is laudable, it is almost certainly an unachievable goal. You just have to draw your own line.

My feelings on Betting Expert are that the site is pleasingly classy, with some excellent articles and resources that really do help the average punter. If people want to buy cigarettes or lottery tickets in a store where I have a stand selling fresh fruit, well that's fine. My responsibility for that choice is minimal, even if the customer was drawn to the store for my apples in the first place.

It's a little different when you yourself are selling tobacco out of your own house. 

For me, writing a post such as the following, complete with undisclosed affiliate links, crosses a line:

Once a sponsor has given you money and and encourages you to write "natural posts" casually throwing in their company or product, to my mind the quality of the product goes down. Fortunately most readers see right through this, and turn away rather than say "Oh goody, let me open up accounts with Bet365, Sky Bet and Stan James via these links".   

I see a difference in where we each have our lines, but others may not. This is an interesting topic that I hope some of you choose to comment on it. Mark will be back with a reply, and we should bear in mind that he is a pro making his living from this, so any extra income may be a justification for him to lower his standards, but we will see. 

What would also be interesting to know is how he can keep his Stan "Winners Unwelcome" James account open. 

Staying Pure

I get this nonsense all the time. I mentioned a couple of posts ago that Mark Iverson's displays of bookmaker adverts at best gives the impression that there is a conflict of interest.

Mark did respond though to say that no bookie money had been received - "to date" anyway, which rather begs the question why have bookie ads soiling the site in the first place:

Nice of you to pick up on my post Cassini. I am becoming more interested in the football betting markets and probably have you to thank for that.

Just for the record though, I'd like to make it clear that I've not received one penny to date from the Bookmakers on my site. Not through any affiliation deal or advertising etc. so it's not an income I'm reliant on. I just don't get the traffic and my readers tend to be quite experienced so the banners are just there to make the site look pretty and fill some space.

On top of that I do have those accounts and did use them frequently last season.

My view on this is that the only people who would want to advertise on this site are bookies or casinos - I don't get a lot of readers interested in cookery or gardening, at least they are not here pursuing that interest.

And the purpose of this blog is to impart my ideas about gambling wisdom, share and discuss ideas that will help others make money - and of course be a little provocative at times. I can only be a saint for so many hours a day.

The last think I want to do is help bookmakers or online casinos. They are not our friends, and I have as little to do with them as I can.

If I took money for adverts, it would feel a bit like the away dressing room at Brighton and Hove Albion FC before their devastating loss in the play-offs - rather shitty. And that little prank didn't work out too well for them.

Drifters

Included in Peter Webb's interesting post on 1.01 tennis beatings, are these words:

If you look at players trading 1.09 or less then they come in a bit, but there are few ticks left to profit in these cases. However, there is plenty of room above them. Therefore, on average, they drift around 14 ticks away from their start price. If your player is starts at 1.20 then it’s an evens chance they will drift to 1.50 at some point during the game.

While tennis isn't my thing, I've mentioned many times that the down-side of laying low in any sport is very small, while the up-side is huge. As the numbers in several studies show, backing short priced favourites to win is a slower way of losing your money than most alternatives, but that's not much use to anyone except Betfair's shareholders. The opportunities for bigger wins are found on the lay side in many sports.

Not many NBA favourites start at 1.09 or less and never edge up above their starting price. Many years ago Peter Nordsted sent me a number of charts from this sport, and the bumpy road to victory for favourites was quite a revelation at the time. What is that saying about forests and trees?

I think one problem with learning to trade successfully is overcoming your prejudices. It's easy to watch a team come back from 10 points or more down in the fourth quarter and go on to win, and think that you have seen a once-in-a-season moment, but on a busy day in the NBA, 1.01s are turned over (go on to lose) every night.

If you go by the numbers and leave emotions and feelings out of it, if you know that 50% will hit 1.5 or whatever, then you can be far more objective in your betting.

The downside is that you need to actually watch these games whereas a punter just backs at 1.09 and goes out for a pint or to bed for some sleep, but the extra effort is worth it.

Incidentally, it's amusing to see the comments on the forums when this happens - people start threads titled "1.01 Gubbing!!!!" as if the events unfolding are as rare as Halley's Comet. 1.01 means there is 1 in 101 chance it will lose. How many markets are there on a busy day? 101 is not that big a number.

Perhaps it's my age, but it seems to me the word 'gubbing' has become far too overused. Every loss is not a 'gubbing'. Favoured horses, teams and individuals lose all the time. It's called probability. It seems like half the tweets I read from some people contain the word these days. And while I have my venting vest on, why do some Tweeters assume you are watching what they are watching? Tweets along the lines of "Wow - what a shot!" are a waste of everyone's time.

Premature Extrapolation

The big-hitters in the sports investing blogging world have been 'drawn' together this week with their thoughts on this often ignored outcome of a football match, but with Thursday long-awaited for the latest results from Betfair, it was a little surprising to find no mention of their comments regarding commission.

The Financial Times, quite reasonably, don't like the copy and paste, as 'quality journal journalism requires investment', but the link to their report is here.

Basically in an effort to make up for revenue lost from withdrawing from unregulated markets, Betfair have been experimenting with a (higher) commission rate up to 7.5% in four countries. Apparently the results were good enough for Betfair to decide to extend the number of countries to 18.

Sixteen of the countries on the higher rate are know, but either someone can't count (never good when producing a financial report) or two countries remain unknown, at least to me.

While there is mock outrage on the Betfair Forum at the idea of the UK being added at some point, e.g.

Bahaha there is no way I'd be playing at 7.5%.

(yeah right), but implementing this one day is presumably somewhere in Betfair's grand scheme. The official line is:

"We are trying to build this business in a sustainable way . . . The initial experiment went well, but we are very wary of extrapolating too rapidly.”

Perhaps the lack of genuine outrage in the blogging world is because none of this will come as a surprise or that we are all paying at least 20% already and would leap at the opportunity to pay anything close to a single figure percentage.

One line from Betfair's CEO Breon Corcoran was refreshingly honest:

"we have a lot to learn about sports betting"

Heel Nipping

Hot on the heels of my last post highlighting, among other interesting facts, the importance of achieving maximum rather than average prices, comes an article going into much more detail on the subject from Premier Betting's Danny Jaques.

The reality is that most of us can never get the best price all the time. For one thing, accounts are closed or seriously limited by many bookmakers as soon as we show signs of actually wanting our accounts to be profitable and having half-a-brain, and so our options are limited.

Danny suggests that it is worth spending a couple of hours opening accounts with as many bookmakers as possible, but from personal experience, I would question this. What is the point of opening an account with a bookmaker known to close or seriously limit accounts, often after just a few bets?

Bookmakers might try to act like they are your best friend, but of course they are not. They will open up their arms trying to get you to play the game with them, supply the half-time interval orange segments, refund your bus fare to the game etc., (bonus offers in other words) but as soon as you start to win, they will pick up the ball and go to find someone else to play with. And they likely tell their friends not to play with you too.

There’s a lot of whining about these practices being unfair, but they’re in business to make money. They are not providing an essential service, and as annoying as it might be, there’s not a lot we can do about it other than find alternatives.

With the Exchanges, at least for now, choosing the punitive tax option over banning winners, everyone can at least be assured of getting on at those prices, which are usually better than average. If they aren’t, then arbitrageurs would be piling in at the sportsbooks and laying off on the exchanges. Other sportsbooks also promise not to ban winners, (notably Pinnacle who pleasingly to me at least, don’t feel the need to seduce you with bonuses, but let their product do the selling), and these may be viable, but opening accounts with “as many books as possible” is at best a very short-term proposition, and at worst a waste of time and quite possibly money.

Only open accounts that are sustainable and with a good reputation. 

A quick look at a recent thread with this topic highlights the problem.

Around 20-25 I'd say, maybe a few more. I can only bet currently with 4 of them, and only 2 are fully unrestricted. My fav site to use is probably WillHill. Worst website of them all goes to Coral for me, it's just buggy as hell.

I opened loads of phone accounts in the days when bookies started offering bonuses to do so so did my missus, and mam and dad, and sisters, my hamster even had a tote account ! I rarely use any of them from choice as I think they are good at collecting data on you, and some stopped accepting bets after a few winners, and some stopped after I placed bets tipped up by shroodies on Betfair.

I did have about 10, I now only have 3 that I can actually use. and 2 of those wont let me have more than 50/100 bets on.

It's amazing! Before I started reading these forums I thought that bookie closures etc. were rare! I didn't realise they were so common! Is there anybody that hasn't had any restrictions!
I didn't last very long with Stan James!

Finally, I’m not sure Danny meant to say this in his article:

“…let us assume you are a reasonably good punter who has around a 50% strike rate on all your selections.”

Say what? Strike rate on its own is absolutely meaningless. What matters is strike rate relative to price. A punter having a strike rate of 10% at 12.0 is much better than a punter with a 90% strike rate at 1.01. If Danny’s imaginary punter is getting better than evens, then we can probably say he is ‘reasonably good’, but we can’t bestow this designation on him based on strike rate alone.

And similarly hot on the heels of my last post, comes this post from my old friend, and occasional sparring partner, Mark Iverson providing his valued his input on draws, which are fast becoming very trendy this summer. As Mark points out, there's little old me and my XX Draws, Peter Nordsted and his Drawmaster and now Graeme Dand crashing the party with his TFA Draw Systems D1, D2, D3, D6, D7.

You can read Mark's post in full here, but hold on for a second while I cherry pick a few lines first:

My expectations were that I could expect an average selection price of 3.60, so to at least break even I’d need a strike rate of 28%. 

This is a very reasonable expectation - by way of comparison, for the EPL my prices averaged very close to this, actually at 3.64. 

In total, I placed 168 bets and successfully won 52 (30.95%) at an average price of 3.91, with my ROI finishing on 16.71%.

How does this compare to the XX Draws in the EPL I hear you ask?  Well as it happens, I now have the final numbers for last season broken down by League, and I can tell you. With 35 winners from a nice round 100 selections in the EPL, the strike rate was obviously 35%, and the ROI was 27.25%. 

2012-13 XX Draw Results By League

Back to Mark:

A straight-up punting mindset is one I left behind quite a while ago, so despite being expected the losing runs were nevertheless uncomfortable (my longest run was 16 losers on the trot). To my mind this makes it all the more important to understand the system inside and out before getting involved and to make sure your bank is big enough to absorb the losing runs from the outset. If you have a good handle on how many bets you’re likely to place and can make a decent estimation of what your likely strike rate will be then this is a pretty forward calculation to do. I’d done this, and so arranged for my betting bank to be 20 times larger than my stake size.

Couldn't agree more. Backing the draw is not for the emotional, and those lengthy losing runs can be tough to ride out.

At the same time I now fully realise how important it is to get the best price possible for every selection, as over a high number of bets it really makes a difference to your overall profit and loss. It’s not even that hard to do with sites like Oddschecker allowing you to compare selections at the click of a mouse. However, don’t forget that not all bookmakers are listed and throughout the course of the season the majority of my punts were placed at Pinnacle, who are keen to stress that winners are welcome due to their high turnover model. Others on my regular hit list were Bet365, Sky Bet and Stan James but when possible I tried to spread my business around.

I think a full-time professional like Mark always 'fully realised' the importance of getting the best price possible, and I'm glad it's not just me banging on about it these days. I would take Mark's recommendation of Bet365 and Stan James with a pinch of salt though. With adverts for these companies present on Mark's blog, a jury would likely agree that there's a serious conflict of interest here.  

Xpertcentages

I spent much of yesterday afternoon in conference with the Green All Over lawyers discussing options for handling the latest challenge to the prestigious XX Draws Service. As some of you may have noticed, Graeme Dand aka The Football Analyst, has started to publicise a new set of selections targeting the draw.

A cease and desist notice is now on its way to Graeme, not because the new selections are any threat to the long established XX Draws service, but because finding draws is an extremely specialised and potentially treacherous area of football betting that is best left to the Xperts.

On a more serious note, Graeme did have a couple of things in his post that are worth discussing here.

On the topic of his new draw system, he writes:

Am I as confident in the draw systems as I was in the Home/Away systems? Well, no. Simply, I don’t know how easy it is to find an edge on draws and given the fact there aren’t lots of people running algorithms in the UK leagues on draws, my concern is similar to the Euro systems in a way. If it was easy as it appears to back draws in these leagues and make a profit, surely everyone would be doing it?

Everyone isn't doing it for two main reasons - 1) backing the draw is not popular, and 2) it takes a very disciplined kind of investor to handle the inevitable long losing sequences that are inevitable when the average price is around 3.5 implying that you will lose over 70% of your bets. But it's for those reasons that the draw, in my humble opinion, offers value.

I mentioned the favourite-longshot bias yesterday, and in football, when backing at average odds in the typical draw price range, the return is ~87.5%. (By comparison, when backing at less than 1.5 the return is 97.74%).

Average Betting Price

Highlighting the importance of getting the best price available rather than settling for average is the return when achieving that maximum price. Admittedly you are unlikely to get the best price all the time, but it is astonishing to me how many serious imvestors happily settle for say 3.45 rather than ask for 3.5 or 3.55. The differences add up.

Maximum Betting Price

Graeme’s numbers are interesting too. While it may appear hypocritical to suggest that Graeme has too many systems, and that his methods get a little confusing, it’s worth taking a look at his bottom line. While Graeme operates in different leagues to myself, his numbers over five years are very impressive:

A strike rate of almost 36% is quite amazing, although Graeme does make it clear that some results are back-fitted. If he can continue that strike rate and get an average price of 3.42, this time next year we'll be millionaires Rodney.

Looking at the Big Five leagues in Europe over the last five seasons, draws make up 26% of the results.

The key to profitability is not the percentage of winning selections per se, but that the percentage of winning selections exceeds that implied by the odds, which makes it essential to obtain the best price.

If we look at Spain, the league as a whole has a strike rate of just 22.9%, but the XX Draws hit at 31.3%:

I did think that my XX Draws (all three systems combined) strike rate last season of 30.6% was good (158 winners from 517) but perhaps I should focus on the top five leagues in England and the Scottish Premier League?

Due to overlapping, Graeme's number of selections is also significantly higher than mine. After three full seasons, the XX Draws (combined) are hitting at 31.1% with a grand total of just 1,705 selections - full numbers for all leagues:

The 3.21 is of course the required price to break even, excluding costs, commission, taxes and fees, and while that price is, in my opinion, almost always beatable, it does still matter in the long run if you beat it with a 3.45 or a 3.55.

I'm planning to have a breakdown by league and month of last seasons results in the next few days, if time permits, certainly by month end when the early-bird price of £99 for next season's XX Draws service will expire.

Favourite-Longshot Bias In Tennis

From the Football Data Co's web site, by way of commenter Jimbo, comes this article on Evidence for the Favourite–Longshot Bias in Tennis Betting Odds by Joseph Buchdahl which is worth a read.

Tennis match betting, with only two possible results in a game, offers potentially better value than football fixed odds, which also has the draw. With the exception, perhaps, of the most popular football leagues like the English Premiership and Spanish La Liga, over-rounds for tennis match betting will generally be lower. Indeed from a sample of 7,957 matches played between the 19th April 2010 and the 15th May 2012 and analysed for evidence of a favourite–longshot bias, the mean over-round from average betting prices collected by the odds comparison website oddsportal.com was just 106.4%, whilst for best prices it was 100.0%, the equivalent of fair odds. The results of the analysis are tabulated below.

As for fixed odds European league football, ATP and WTA tennis exhibits a pronounced favourite–longshot bias. Betting any average price at evens or shorter loses the punter less than 4 pence in the pound. By contrast betting anything longer loses him nearly one fifth of his investment, That rises to nearly a half for bets over 5.00; a staggering outcome. Inefficiency in the betting market persists even at best available prices, although like for football it is weak and exists only really for the longer prices beyond 3.00.

Incredibly, had a punter backed every favourite at the best available price over this 2-year period, his return on investment would have been nearly 102% from almost 8,000 matches. At £100 per bet that translates into almost £13,000 profit in a little over 2 years, simply from using an odds comparison, considerably better than many who claim to be "sports tipsters". One could not, of course, rely on such profit being replicated time and time again. Perhaps more importantly, however, many of the bookmakers who offer such arithmetic value prices in this betting market have reputations for expressing a dislike to punters found to be taking advantage of them. I'll take a more in-depth look at bookmakers' attitude to risk next time.

The overriding conclusion to be drawn from all of this is that if you don’t know your tennis (and football for that matter), don’t ever back the underdog; you’re certain to lose a higher proportion of your turnover.

I'll be returning to this last point in my next post.  

A Bad Taste

Some of you may be aware that there was something of an upset in the first round of the Gentlemen's Singles tournament yesterday, with Rafael Nadal going down in straight sets to Steve Darcis. When I saw the below tweet, I couldn't help but think that 30-1 was not that great a price. I seldom trade tennis, but I did see that on the Exchanges 1.01 had been matched for six figures, as well as all prices north. 

The excellent Betting Expert web site has an excellent Wimbledon preview which shows that just 7 men's singles favourites priced at sub 1.11 have lost in the past five years which, all things being equal, means that 30-1 backer was lucky this time, but not the sharpest of minds.

Yesterday was also my first day back at work after a few days off, and I noticed that I was being treated with a lot more respect than I remembered.

I'd hardly walked through the door when I heard "May I get you a coffee Signor Cassini?" As I was about to sit down at my former desk, the Chairman appeared, slapped me on the back with much exuberance and asked me to follow him to the executive floor where he showed me my spacious new office with a corner window view. Still in a state of some shock, he went on to explain that sometimes misunderstanding arise in business, and he hoped that I wasn't one to bear grudges, because "we're all one big family, and we want everyone to be happy".

It was all very strange. At lunch time, I wandered down to the canteen to grab a bite to eat, and noticed several surreptitious glances in my direction, and colleagues appeared to pull their plates a little closer. As I sat down to join them. I noticed a new face at the table. When I introduced myself and asked his name and position, I thought at first he said he was a "tester".

Turns out he was the new "taster".

To cut an already long story short, before leaving on holiday I had been chosen for the Employee Spotlight feature for the June Newsletter, and had answered a few questions about my life including interests outside the office. With sports and investing taking up much of my free time, I felt it necessary to mention the subject and that I enjoyed writing about various related topics.

It seems that in the process of formatting the Newsletter, the ditsy secretary had felt the need to make a rather crucial edit, resulting in the sentence nonchalantly mentioning that I had been published in newspapers, magazines and on web sites reading:

...with articles on subjects as diverse as the weather, football, running, cycling, basketball and poison distribution.

Based on a true story. At least she left my rather humorous pet hate of "improper use of apostrophe's" as intended.

Best Promoted Team

According to the bookmakers, the 2013-14 English Premier League season is comprised of three teams with a chance of actually winning the title, (the Manchester duo plus Chelsea), Arsenal, two teams who will be playing for the Europa Cup spot (Liverpool and Tottenham Hotspur) and Everton. The other thirteen teams are all available at 1000 to win the league, and any season long betting interest is confined to the relegation market, the "Rock Bottom" market or, in the case of three clubs, the "Best Promoted Team" market.

One of the challenges of updating ratings in the close season is how to incorporate the promoted teams in each league. One component in these calculations is how promoted teams have historically performed in the following season.

No doubt many people would simplistically assume that the second level Champions fare best, followed by the runners-up with the Play-Off winners bringing up the rear, but this is not true.

If we look at the last ten seasons, in the EPL, only three of the clubs promoted as champions have followed up by finishing as the best promoted team. Four times the runner-up achieved this distinction, and three times the playoff winners did it. 

The last two season, the champions actually ended as the worst of the promoted teams. The average final placings are:

In the other leagues I follow, similar results are seen. Again looking at the last ten seasons, in France and Germany four of the Champions went on to finish best, including the last three in Ligue 1, and in Spain it is just two. In Italy meaningful numbers are best extracted from the past five seasons, as the data is skewed by over-performing teams only competing at the second level due to non-playing reasons. Here, two of the five champions finished best.

Unfortunately the only League I see a market for this bet is the EPL, which isn't the most liquid I have seen, but should Cardiff City really be odds-on to be the best promoted team? I suggest not.

Crystal Palace, Hull City and Cardiff City also happen to be the first three favourites to finish "Rock Bottom", a fate that has befallen five teams promoted in the last ten seasons, but none in the last four seasons. Of those five, two were previously Champions and three were playoff winners.

Going back for a moment to the starting ratings for promoted teams, an exception has to be made this year for Monaco. The Ligue 2 champions would normally be rated around thirteenth for the new season, but clearly this would be nonsense this time around.

The Wanderer Returns

My travels for this summer are sadly at an end, and work begins on completing the numbers from last season's XX Draws, and looking forward to next season. I have had a few requests for the numbers to be sliced and diced in various ways, and will endeavour to have these completed in the next few days.

Some of you may recall that my XX Draw Selections earned me a bonus hamper last Christmas,

courtesy of Steve from Australia - currently living La Dolce Vita in Italy, although if he is searching for the happiness and love that Marcelo was seeking in Fellini's classic film by the same name, I hope for a better ending for Steve. It was a very generous gesture, all too rare in the world of betting in my experience.

However, come the end of the season, and another much appreciated gesture, this time from my old friend and frequent supplier of content for this blog, Scott, who very generously sent me a bottle of my favourite tipple (pictured below) last month as an extra thank you for the XX Draws this season.

Clearly I am setting my prices far too low, but as a giver by nature, I should remind prospective subscribers that last seasons prices are being continued for another season, and that the early-bird special price of £99 expires at the end of June, which is not too many days away. After that, the price is a still very reasonable £149: PayPal to CalcioCassini@aol.com

Per selection, with an estimated 500+ selections, that's quite a deal.

In other news, the 2012-13 NBA season has finally concluded with pre-season favourites Miami Heat winning, but not as easily as might have been expected coming within a whisker of losing Game 6 and the series. The Super Premium Charge means that my in-play involvement in this sport was a lot less this season, and profits were consequently down too, but the sport continues to be one of the best for trading. It's a shame the same can't be said for the NHL whose final series is currently in progress, with the Chicago Blackhawks leading the Boston Bruins and very poor liquidity. 

And finally, if you are looking for an inspiring film, you might want to take a look at this story with which I have a personal connection.

Miami Composed

With just one or two more games to go in the 2012-13 NBA season, there is one final play on the strategy of backing Miami Heat to cover the spread in the game following a straight up loss. Many of you will already be up on this strategy revealed a few days ago here, and in Game 6 tonight, the handicap is 6.5 (the largest spread of the series).

With Miami's average margin of victory in 12 such games since January 19.5, the 1.98 currently available on them looks to be great value. Miami have shown a lot of composure after losses, and returning home for a must-win game v San Antonio Spurs.

The Heat straight up are 1.36 tonight, but the better value is to back Miami to win the Championship at 1.87.         (Miami are still series favourites thanks to the 2-3-2 format in the NBA Finals).

If (when) Miami win tonight, they will be shorter than the implied 1.375 to win Game 7.

Advantage Heat

The Miami Heat Rebound strategy continues to pay dividends and thanks to Dags for letting me know that at least two people have made money from following this. 

The line for the latest game was remarkably low, with the San Antonio Spurs favoured by 1.5 points so Miami could have covered the spread but lost the game. As it happens, there was another double digit win for them in line with their record in these games. The Heat were 1.85 to cover, which in hindsight looks a steal with the market overreacting to the blow-out win of 36 points in game three. Once the game is lost though, there's no point in expending effort in reducing the loss, and the large margin should have been largely discounted.

With only two or three games left in the 2012-13 season, we can only have one more of these at the most this season. Home court advantage is back with the Heat, and the series will be won in Miami who are now 1.42 (70%) to do just that.

A Whale Of A Time

Regarding my recent Lazy Tiddlers and the Pareto Principle, The Investor commented:

I'm not sure the big fish need small fish. The winners need fun bettors.

So if you have 100 fun bettors betting 10 quid a week and they are replaced by 10 fun bettors betting 1k a week, the winners will be better off.

The problem I have with this is that while most people, I'll exclude my Mum, would have no problem dropping £10 a week on fun bets, there are not many people who would find it fun to drop £1,000 a week.

I appreciate that, in theory, £10 to someone on £25,000 a year is the same as £1,000 is £2,500,000 a year, but in my experience people on decent salaries have other ways of having fun and don't find losing £1,000 to be fun anyway. They might have fun dropping those sums on the craps tables in a Las Vegas Casino, (losing at gambling can be fun), but betting on-line is a different kettle of 'fish' and losing is never fun.

Heat Rebound

For those who like these kinds of statistics, it may be of interest that Miami Heat's last ten losses dating back to January 10, have all been followed by a win, not only straight up but also against the spread, and all by double digit margins.

This streak includes four matches so far in the play-offs, and as most of you will know, the Heat lost game one of the finals at home to the San Antonio Spurs on Thursday night.

Evidence suggests that this Miami Heat team bounces back strongly after a defeat.

After a close loss, four points or less, the average margin of victory in the next game is 21.5 points.

Miami Heat are -5.5 on Betfair (~1.94) and -6 on BETDAQ (market unformed). I'm just saying.

Game two is Monday morning at 1am BST.

Amygdala Hijack

An excellent post by yours truly on amygdala hijacks and other (grey) matters over at http://www.bettingexpert.com/blog/emotional-betting

Lazy Tiddlers

From the Finance pages of The Daily Telegraph comes this interesting article by Alistair Osborne on the failure of CVC’s takeover bid for Betfair. It’s a well written article on what could be a dry topic, but there are a couple of subjects that are especially interesting.

One is the mention of the Pareto Principle, something discussed on this blog back in January 2011 and well worth reminding ourselves of. Most of us are probably guilty of spending a lot of unproductive time on the exchanges, but if we are making £100 or so net for a day’s ‘work’, it’s easy to overlook the fact that perhaps at least 80% of that time generated very little in terms of profit. 

To a large extent, you never know when a value opportunity will come up, but if you keep records, it's not too difficult to see where your time is likely to be most valuable, and where you are spending hours making very little. With the Premium Charge now in effect, it’s more important than ever to be aware of this, as the same ‘working’ day now brings in just £50. 

Slightly off-topic, but several years ago, I had an agent who negotiated a contract renewal for me, and was delighted to inform me that the deal was for my weekly pay to increase by £50 a week. I was all set to sign on the dotted line, when she added that there had been a small change in the hours I was expected to work, which on further inspection turned out to be the not so insignificant increase in my working hours from 35 to 37.5, or 7%. A quick calculation showed that my hourly rate would now actually be less than that of my current contract, but it took some time for her to understand how I could consider an ‘extra’ £50 a week to be decrease in pay. “But you’re getting £50 more!” she kept repeating.

Speaking of wasting your time, I checked in on Odwyer’s blog the other day, and saw that he had made £679.28 in three months since his last post. As the single comment pointed out though:

675 pounds for three months work?? Is it really worth the effort. I could understand the pnl if it was pocket money part time betting but you assume you'll make a living at this.

As pocket money, anything extra is good, but one would hope John is not full-time - at least full-time with the option of a 'proper' job. If you're trading to occupy yourself while collecting unemployment, then I suppose it falls into the pocket money category. 

The other paragraph that stood out was this one:

So he [Richard Koch] advocated cutting customer numbers to focus on the big fish, not the minnows. That would have allowed a drastic cut to the annual marketing budget – from £90m-£100m to just £20m – as Betfair stopped trying to lure tiddlers interested only in £10 free bets. “You have to focus on the core customers and provide new products for them,” he says.

While it has long been clear that the cost to Betfair of acquiring new customers is high, the flaw in the ‘focus on the big fish’ theory is that big fish need tiddlers to feed on.

I would imagine a pool containing a small number of big fish would likely be a fairly quiet one with only sporadic bursts of activity. Unlike the minnows who are somewhat naïve about where to hang out, and as a consequence don’t last too long, the big fish are a little more savvy, and wait patiently until a clear advantage is seen. The frenetic activity seen in the pool a few years ago is seen no more.

One of the justifications for the implementation of the Premium Charge was that tiddlers were disappearing too quickly, and the big fish were to be discouraged. Unfortunately the plan doesn’t appear to have worked – the big fish swallowed the 20% commission rate, while still enjoying a healthy diet of tiddlers, but new tiddlers were now less inclined to enter the pool.

The Premium Charges, while unlikely to affect most newcomers, was nevertheless confusing and a disincentive to making the effort to learn a new platform. Many low tax-rate payers object to higher taxes because they believe that one day they will be in that group themselves. The Betfair Dream.

Most tiddlers at least like to dream of making it big, however unrealistic that dream might be, but the moving of the goalposts made many realise that the dream was now a lot harder. The presence of a Betfair Education / Training department (the collective noun for fish is ‘school’ for a reason) at least gave the impression that the sports investing world was your oyster, but the “Sharp Minds” that Betfair claimed to be catering for are, turned out to be not so good for business.

The Premium Charge though, didn’t thin the big fish out enough, so more drastic steps were taken. In an attempt to starve the biggies, up to 60% of their catch was now removed from their mouths before they could swallow, and it’s debatable how much of that stolen catch was then returned to the pool.

Meanwhile, the dream for newbie tiddlers was now even more unattainable. Who would enter the pool knowing that in the best case scenario, they had maybe 10 years earning an average income (without the National Insurance credits needed for a full state pension) before running afoul of the Super Premium Charge, and aware that the £250,000 ‘limit’ could easily become £25,000 or £2,500 at the drop of an email? Winners are always welcome" was no longer true. 

Betfair's former promise that "winners are always welcome", quietly withdrawn when the first 20% premium charge was introduced in 2008, clearly no longer seems to apply to this group [winners] and that's a shame (although Betfair would no doubt argue that winners remain more welcome with them than with fixed-odds rivals – they just have to pay more than they did before).

The rake might be good, but new customers are intimidated by the success of a few. Unfortunately for Betfair, increasing the rake does nothing to reduce the potential customer’s reluctance to join in, and in fact only exacerbates it by indicating that even were he to do well, he would then be heavily taxed.

The ones you have to feel sorry for are those mid-size fish who gave up jobs or even careers and made a positive decision to go full-time on Betfair and who never saw these changes coming. How many pros are now second guessing themselves and wondering where sticking to a more conventional career path might have taken them?

Meanwhile the big fish evolve. Some evolve legs and leave the pool, perhaps trying their luck at the Purple Pool and return for a nostalgic drink every now and then, while others splash around treading water, looking somewhat lost and making do with a few scraps. Some may have always had other food sources, so it’s not life or death to them - even half of a few tiddlers is better than nothing as a little extra – but for those who have no food other than measly benefits, it must be disheartening.

Big fish became big fish for the most part by feeding on tiddlers, and now have no desire to be swallowed up by an even bigger big fish.

Perhaps some even evolved wings, and took off for new pastures altogether, leaving behind the cutthroat world of sports investing?

Quite refreshing also to read that Koch believes “You just have to think carefully about what you do. The secret is to be lazy but also extremely ambitious. I don’t work very hard, probably about three hours a day.”

Work smart, not hard, in other words. Here is the article in full:

Richard Koch is not used to failure. The author, investor and 6.4pc Betfair shareholder puts his personal wealth at £140m, says his financial priority is “to become a billionaire” and has just published a book sub-titled “Ten Ways to Become a Great Leader”.

So ask him why his bid for Betfair fell over and he looks genuinely perplexed. Mr Koch, 62, had teamed up with private equity firm CVC to table a near-£1bn offer for the betting exchange group and came within a nose of landing the prize.

“We really should have got the company,” he says, giving his first interview since the collapse of the bid last month. “We had a lot of shareholder support – over 50pc. I still don’t really know why it failed.” He bursts out laughing, tending to back his claim that “there’s no point being cross” about the outcome.

“No doubt we made some tactical mistakes. But the main reason was probably time,” he says.

“Everything had to be done in a rush because of the requirements of the Takeover Code. We got the worst possible introduction to the chief executive, Breon Corcoran. I’m a great fan of his. But he didn’t really like some of the pressure he was being put under, I don’t think. And we weren’t able to talk to him until the very last minute.”

In a manic 48 hours, CVC twice raised its indicative bid from 880p a share to 920p and then 950p. And that was before it dangled the prospect of around 975p if the board let the private equity raiders talk to Mr Corcoran, who joined Betfair last August from rival Paddy Power.

“He was put in a very difficult position where he had to basically decide whether he was going to go along with it. And because we were such fans of his we didn’t have an alternative management team, which was probably a mistake,” says Mr Koch sheepishly. “If we had our time again we would do it slightly differently.”

Mr Corcoran’s position was made all the harder because he had outlined his own strategy for Betfair just days before meeting CVC. Upping the ante, he raised guidance for full-year profits, increased cost savings from £20m to £30m and provided early evidence of how adding the new sportsbook to the traditional exchange was boosting customers – though he stopped short of returning any of the company’s £150m free cash.

Mr Koch, a huge fan of the exchange model of peer-to-peer betting, had an altogether different plan for a business he had bought into in 2001, roughly a year after its launch. His £1.5m wager has already proved his “most successful investment” – better even than Filofax and Plymouth Gin. He sold 23pc of his holding to Japan’s Softbank in 2006, making a £27m pre-tax profit.

His plan for Betfair had echoes of the “Pareto Rule” that has come to shape his life since, as a 19-year-old student, he stumbled across the work of 19th-century Italian economist Vilfredo Pareto in Oxford’s Bodleian library. The rule broadly stipulates that 80pc of results come from a relatively small amount of causes – just 20pc. He has seen this everywhere, citing a historic survey from the Prudential insurer that showed “80pc of the sales were sold by 20pc of their salesmen”. Fifteen years ago, he wrote a book, The 80/20 Principle, which has sold more than 1m copies.

The principle, he insists, goes just as well for Betfair’s 900,000 customers. “One thing that relates to the book is that it is usually a small amount of customers that accounts for a large proportion of your profitability,” he says.

So he advocated cutting customer numbers to focus on the big fish, not the minnows. That would have allowed a drastic cut to the annual marketing budget – from £90m-£100m to just £20m – as Betfair stopped trying to lure tiddlers interested only in £10 free bets. “You have to focus on the core customers and provide new products for them,” he says.

There was another major difference, however, for a business still reeling from 2010’s £13-a-share float. “The basic thesis, apart from the change of plan, was that this should not have been a public company,” he says. “Let’s face it, it hasn’t been successful and it has a balance sheet that has got about £150m cash. It generates a lot of cash, so it’s a perfect proposition for a moderately leveraged bid.” The Koch/CVC plan envisaged “about £350m” of debt – and it’s easy to see why investors, including Softbank and co-founders Ed Wray and Andrew Black, were prepared to back it.

“Shareholders could keep their existing stake and pretty much get back what the share price was before the bid,” says Mr Koch. “They could have their money and still have the same percentage stake in the company, which is the magic of gearing. You can’t do the same thing in a public company.”

So how did his bid lose? The board had few cards, he says, but “the major card was Breon. We also had to get a recommendation from the board. Gerald Corbett, the chairman, played it extremely astutely. He had a weak hand but he managed to get a pretty high price and at the end I think he was pretty surprised it didn’t happen either.”

He says he understands Mr Corcoran’s position too. “Think about the psychology of it. He had been a loyal chief executive, trying to defend the company and make sure if it was sold it was sold at the best possible price. It was a friendly bid. But in the heat of battle people take up positions. So the psychology of it was all wrong. It had got to the end and then he gets told, 'perhaps we should accept the bid and do you want to go along with it?’. He was forced to make a decision in a very short period of time. And this is pure speculation on my part, but it sounded as if he just felt it was unreasonable.”

He believes the talks could have been extended, but is not one to dwell. “We had a chance.

We made some mistakes. And we came extremely close. But that’s life,” he says. “I am now a loyal shareholder. I have been put back in my box and I’m quite happy in my box.” He’s since had “a long friendly telephone call with Breon. I like the guy. He’s very humorous.” Both believe in new products making the best of the exchange and the sportsbook. So now it’s back to writing books. His latest is a familiar theme – The 80/20 Manager – which applies Pareto’s law to management. “I started thinking can you measure a chief executive’s productivity,” he says. “Their basic job is to make decisions. Only a tiny proportion of their time accounts for the good and bad that they do.”

He cites Michael Eisner, the former Walt Disney boss. “He was time-panicked because he was obsessed with working hard. He once said in 28 years he had only taken one day off. One day he gave a eulogy for Frank Wells, one of his key managers, and he said 'sleep was Frank’s enemy, he always wanted to get one more meeting in’. Well this was a eulogy given at the guy’s funeral. He died in a helicopter crash because he was rushing from one meeting to another. If it wasn’t so tragic it would be really funny.”

He says Eisner was “very successful in the early days at Disney. But they did a study and found that about 95pc of the profit improvement came from three decisions: he put the price up at the theme parks, he opened more Disney hotels and he put the animated classics, like Snow White and Bambi, on DVD. How long did it take him to make those decisions? Maybe a week.” So what did he do for the rest of the time. “Beats me,” he says. “I really think there is a myth about management. Everyone believes in hard work, but actually it’s about making the right decisions.”

Mr Koch dismisses the notion that it’s only by making thousands of decisions that you make the right three. “You just have to think carefully about what you do. The secret is to be lazy but also extremely ambitious. I don’t work very hard, probably about three hours a day.”

It’s a work ethic that has produced houses in the Algarve, Marbella and Cape Town, and time for “riding my bicycle through the orange groves” and “long walks with my partner and my dog”.

“I always say to people the most important decision you can make is which company to work for and which particular boss to work for. Unless the company is growing very fast and unless the boss is going places, you won’t.”

It was a philosophy that saw him leave Boston Consulting after being “effectively fired” and join a consultancy growing five times as fast – Bain – before leaving to start LEK, another management consultancy. “If a company’s growing at 40pc to 50pc a year, you can hardly go wrong.”

He grins. “If you seriously want to be rich, I don’t think it’s very hard, you just have to be crafty at spotting opportunities.” His current portfolio includes fantasy sports group Fan Duel, payments company Ixaris and hair-removal outfit CyDen. Who knows, one of them may even turn out to be the next Betfair.

I will not be needing the services of CyDen.  And on a lighter note, check this out: http://www.youtube.com/watch?v=a7mT9FM8BVw

2012-13 End Of Season Friendly Tipster League Review

The 2013-14 season is over, at least for the big boys, and not much changed in the FTL. One draw in the Extended Selections (Levante v Real Betis) from two selections (the other was Sevilla 4 Valencia 3 so I don't want to talk about that), and in the Classic Selections, yet another one goal game - of which more later. The game was Deportivo La Coruna v Real Sociedad.

So the results are all in, and it should be emphasised that the Friendly Tipster League table is for entertainment purposes only and that the differences in where we all get our prices from, and what commission rates / expenses / taxes / fess etc. we all pay, do not make this a scientific study. At best it gives a rough comparison between differing strategies, so with no more further ado, let’s look at the final table following the final results from La Liga this weekend.

XX Draws (+101.73)

The top three all come from the XX family of draws, and for the first time this season I tracked the results, not just of the draw and the Under 2.5, but added in the Under 1.5, the Under 3.5 and the Half-Time 0-0 (HT00) – my logic was that matches expected to end as draws should be lower scoring than the market expects. Although the total profit of 101.73 points was excellent, the performance of the Classic selections was very poor. Fortunately the addition of the Extended and Bundesliga selections saved the season. A full breakdown by group and bet type is shown below.

With three groups and five categories per group, it can be a little confusing, but the best returns were seen from the Extended HT00 selections, followed by the Extended Draws and the Bundesliga draws. Backing the Under 1.5 was the only category of bet profitable across all three groups, while backing the Under 3.5 was the only category to show a loss in total.

The results were a little surprising. While dividing the draws into Classic, Extended and Bundesliga is somewhat arbitrary, it was based on the fact that through the end of 2011-12, the Classic results were strongest, followed by the Extended, with the Bundesliga bringing up the rear. More research to do in the coming weeks, but I imagine the line between Classic and the rest has become a little less defined.

2012-13 turned these expectations on their head, at least in regard to the draw. While the under performance of the Classic selections was surprising, an even bigger surprise was how different the returns were for each of the three groups. I expected there to be little difference between the five categories of bet in each group – although with the larger sample number of Extended selections, this is truer than in the smaller samples of the Classic and Bundesliga, but even so, there are some big differences.

The simple conclusion is that there was an abnormally large number of 1-0 (or 0-1) results in the Classic group, and that we got a bit lucky in the Bundesliga finding rather more 2-2 (3-3) draws than we should have done.

Across the five leagues I cover, the percentage of games ending 0-1 or 1-0 was 16.6%, while my Classic selections hit at 18.44%, so the first simple conclusion appears true. The Bundesliga assertion, although based on a small sample size, is easier to confirm. There were just 21 draws of 2-2 or 3-3, and my Bundesliga selections found 10 of them. That 50.98% ROI is highly unlikely to be repeated, but perhaps my good fortune here made up for the unlucky breaks with the 1-0 / 0-1 Classic results.

Anyway, more of this in a future post, but here are the results in the FTL table for the XX Draw group:

While a relatively small number of people back the draw if it is value to do so, an even larger number of people, or rather more importantly an even larger amount of money, is staked on the two teams to win. Backing the draw is just not a popular bet for the casual punter, and in my opinion is where value is easier to find.

Drawmaster (+14.41)

The success of Peter Nordsted’s Drawmaster reinforces the idea that selectively backing the draw is a profitable strategy. While it is hard to knock Peter’s results, I do feel that his approach of selecting three draws in each round of ten EPL matches is flawed. As I have written before, some weeks there may be ten value draws, and other weeks none, but he continues to be profitable, so perhaps I should just shut up. Pete’s selections had an absolutely amazing run back in October and November when he found 9 consecutive winners and although a run of just 3 winners from 29 came along in December / January, Drawmaster found enough winners after that to ensure a decent profit. The longest sequence of losses was 13.

Bundeslayga (+5.45)

Although this simple system is an established part of my weekend investment routine, for some reason it didn’t occur to me to add it as an entrant in the FTL until mid-season, when I was looking to round out the total entrants to 30, so the results are from that time only. A profit of 5.45 points from just 49 selections was a good return, but long time readers have known of this little gem since 2010. The longest losing sequence was 5.

Premier Edge (+5.40)

Premier Edge had a good season finishing up 5.4 points. A low ROI but a decent number (220) of bets with most weeks seeing around eight picks. In November, Premier Edge were actually 6.63 points in the red, but six profitable weeks from the next eight saw them move to a +13.36 in late January, the high watermark for the season.

Premier Betting (Pro) (+1.65)

Premier Betting, Pete’s professional service, ended the season in profit, but not by a huge amount. From 101 bets, I have these up by 1.65 points, but I may have missed a bet or two as I believe Pete's numbers are a little higher. There didn't seem to be any long winning or long losing streaks here, with weekends alternating between up a little / down a little for much of 2013. Three winners from the last four ensured the season ended in profit.

The remaining entrants all ended the season in the red.

Ian Erskine’s Lay The Draw (-2.09)

The strategy of backing these selections to end as draws ended up showing a small loss, as indeed it should. The early season results saw just one winner from the opening 24 selections, but 10 winners from the next 16 took this strategy well into profit. Ian ended the season with 8 winners, which was enough to drop the backing strategy into the red by 2.09 points.

Talkbet (-6.47)

Jon kept the selections coming despite going down by 18 points on January 1st, so 2013 was actually profitable if the season overall wasn't. Just three winners from the opening 25 matches meant the season was always a bit of a struggle, but to end up less than seven points down and to keep the picks coming was creditable.

Free Under / Over Soccer Picks

These selections showed a steady loss on the season, which perhaps goes to show that a simplistic approach to statistics from matches across Europe is unlikely to reap rewards. You need to look a little deeper than than basic statistics such as 8 of the last 10 games have been Overs and 2 of the last three head-to-heads. But they are free.

Football Elite (Pro) (-13.25)

As Matt himself readily admits, this was a dreadful season ending down 13.25 points from 149 bets. I followed the Recommended Bets and with his selection method apparently not differing from previous (and profitable) years, the poor returns were either down to lower average odds or a lower strike rate, and it is the latter that appears to be the case with just 31% this season. Unfortunately it might also be the case that to some extent the markets have corrected themselves for matches of the profile that Matt looks for. Simply put, any inefficiency will not continue indefinitely, and it is unrealistic to expect them to. It will be interesting to see if this season is a blip or a market correction.

Neil (-16.06)

What a strange season it was for Neil. As late as the end of January, he was in extremely good shape, up 9.63 points, but then he hit the wall and found only 11 winners from his last 52 selections.

Little Al (-18.76)

Alan is another draw aficionado, only he differs in the profile of matches he looks at, favouring the relatively long-shot draws, 4.1 or higher – your Chelsea v Fulham type matches. The strategy looked good for a while, in profit as late as February, but just 4 winners from 36 selections since left Al at the wrong end of the table.

Football Formbook (-31.37)

By a long way last in the table, but this (along with the Free Under Over Soccer Picks) was another entrant who was the victim of impressment on my part,

Quitters (-41.71)

Several entrants decided to drop out after a run of poor results. Strangely, none quit while ahead. It’s human nature and the single reason that so many betting related blogs fall by the wayside after a short time.

Total (-10.72)

Overall, the combined totals for all entrants wasn't too bad, although again it should be noted that these returns exclude charges, fees, taxes and deductions.

A loss of just 10.72 points after 4,136 bets is certainly useful if you are looking to offset the Betfair Premium Charge for example, but it won't make you rich. Ditching the quitters and the two press-ganged entries would have boosted the bottom line, but looking back from the end of the season, that's easy to say.

Let me know if you are interested in joining the FTL next season. I am thinking of an entry fee to discourage quitters, with the pot being divided among the first three profitable entrants. 

Contacts: If you are interested in signing up for any of the professional services, please contact the below:

Matt (Football Elite):  contact@football-elite.co.uk

Pete (Premier Betting / Drawmaster) masteringbetfair@petenordsted.com

And if you are interested in the XX Draws / Bundeslayga selections next season, you can contact me at calciocassini@aol.com - the price through June 30th for the 2013-14 season is just £99, which for between 500 and 600 selections, is an absolute steal! PayPal to CalcioCassini @ aol.com