Unsophisticated v Quants

The Investor stopped by with an opinion on Analytical's Spiders comment that:

I find it highly unlikely there are many if any serious bettors betting weekly on the big leagues, using their opinion and making long term profits. I've never met or heard of any and I've met a few having been a full-time trader/gambler for 10 years.

Well they are certainly there. In play they are the match readers, and pre off there are also people making money from incorrect odds in big markets without using sophisticated databases, stats and quantitative info.

On the subject of match readers being serious investors, my doubts about this are that football is such a well studied and popular sport that it is unlikely that on any game with decent liquidity, i.e. being watched and traded by thousands, that any one individual is going to spot a significant edge that no one else has spotted. It's always possible, but they might be better employed managing the England team.

Football prices are derived from goal expectancies, the current score and the time remaining, and with occasional blips where a goal is more probable, the trend is pre-determined. Markets for many (most) other team sports are much more influenced by 'readable' factors, but football is unique in many ways. It is low scoring, substitutes are limited, once a player is replaced they can't come back, there are no time-outs, and no foul-trouble (well, yellow cards I guess), and no official reviews of critical situations.

Now if a football match starts and the pre-game goal expectancies are looking wrong, the market will of course adjust, but to me it seems incredibly arrogant to think that you have the ability to recognise that before all the other watching the same game.

The problem with trading football is that you need liquidity to make it worth while, but when you get the liquidity, your chances of finding an edge are reduced. I have no idea whether or not football professionals (not necessarily players) trade games or not, but it's unlikely that none do, and it's even more unlikely that I know more about football than they do. We might like to think we are experts, but few of us really are, and it's why I long ago gave up trying to trade football. I do think that there are often scenarios where someone with an understanding of probability can profit, but again, you're not the only one trying to do this.

For pre-off trading, I know personally that there is at least one professional set up profiting from the big leagues in Europe, (in this case the Dutch league), but they are a full-time operation with several employees and making extensive use of data. I do find it hard to believe that there are too many serious investors out there competing against such sophisticated organisations using only a subjective opinion, although what the definition of 'serious' in this context is should probably be established. 

I think a look at the financial world of day-trading is probably relevant here. In the days of the Dot-com bubble, many of us probably knew at least one person who gave up a career to day-trade full-time. It was easy money, with tech stocks on an upward trend, but the bubble burst, as bubbles tend to do, and I do not know a single day-trader these days. 

What made it viable for that short time wasn't that these full-time amateurs had an edge over the full-time professional traders, but that their gambles were kept profitable by the rising market. 

I remember asking my former chemist acquaintance how he could possibly think that he (looking at a blinking screen) could have an edge over the full-time traders fully aware of what orders and why, were coming in to the market.

The sporting markets are different, but one similarity would be that it seems unlikely that someone making little to no use of data would be able to consistently identify 'incorrect odds' and have a real and long-term edge over a more sophisticated (in technical / data terms) and professional (in every sense of the word) rival trader in a big market.