Undesirable Behaviour

In my last post, I mentioned a comment made by spanky, whose bio on Twitter describes him as a Professional Sports Bettor. Some of you follow him, and would have seen that a few days ago he posted some videos of himself being restricted at some sportsbooks.

At the time, my thoughts were that this might not be the smartest move to make. Not only do some of the videos show sportsbook employees, but his own face is clearly identifiable, and I'm not sure why someone already having trouble getting on would draw attention to themselves in that way. Sportsbooks in the US have strict rules about filming and clearly his actions with a hidden camera breached those rules. 

Spanky Tweeted on January 14th:

Yesterday, he gripes on Twitter that:

"I just got a certified letter dated January 16th banning me. My “Undesirable Behavior” is winning too much!?! I never even stepped foot in the joint! Regulated Bookmaking in America sucks!"

As quite an expert on undesirable behaviour myself, I'm not convinced that winning belongs in this category. My suspicion was that it was actually his filming in casinos which had brought about the ban, and had nothing to do with "winning too much" but this justification drew the sympathy of many followers judging by the comments. 

But sure enough, there in the comments several hours later was a credible reply explaining that:

Presumably the casino made clear the reasons for the eviction at the time, and leaving out this rather important detail, and promoting one more to his liking is poor form. I wonder why he might do that?

It's probably also not in his favour that he's previously been in legal trouble, with a criminal record, agreeing to a plea deal in Queens, NY, to stay out of jail after being charged by the FBI with:

"enterprise corruption; fourth-, third-, second-, and first-degree money laundering; first-degree promoting gambling; fourth-degree conspiracy; and fifth-degree conspiracy."

That's a lot of degrees! If spanky really has an edge, he should bet on the exchanges (now legal in New Jersey I am told) and keep a much lower profile than has been the case of late.  

The Super Bowl Trap

According to the NFL Players Association, the average career length is about 3.3 years, which makes it all the more remarkable that of the 18 Super Bowls since 2001, the New England Patriots will have played in exactly half of them. Since 1986, they will have played in 11, with a 5-5 record to date. Their opponents next Sunday are the Los Angeles Rams.

Seventeen seasons of data isn't much, but there are a couple of trends if you feel the need to bet on the biggest event of the year, the risks of which I have written about before. 

These big sporting events are seldom good for the serious investor. With so much interest, value is impossible to find. The Derby might be a big deal for the owners, jockeys, trainers, but for the sports investor a winner is a winner whether it be in a maiden race at Cartmel (I've been there too) or the Prix de l'Arc de Triomphe. It might not sound so good in the pub that you didn't have a bet on the Derby but that you had the winner (Breeze Out) in the 2:10 at Hexham, but then why bother? No one except you really cares anyway!

Here's Spanky's opinion on this topic:

The argument against this of course, is that because it's such a huge game, the ratio of sharp to mug money is at its lowest.

You have been warned. This season's game has (currently) the highest total since 2001 at 58.0 points. Of the four previous Super Bowls with a total at 50 or higher, three have gone Under, and the one Over outcome needed an overtime. Overs is historically the play when the line is 50 or less, with a 61.5% record, but the total won't be anywhere near this. But before you lump on Unders, read on.

For the line, Favourites have a poor record, covering the spread in just 5 of the 17 games. However in the five games with the narrowest spreads, Favourites have a winning record. 

The line (currently) for next week has the New England Patriots at -2.5 / -3.0, and a narrow spread tips the scales in favour of Overs, with 7 of the top 8 games ending Over. 

The Rams actually opened as one point favourites, but William Hill reported that 94% of money that came in at that number was on the Patriots, and the line moved. The amount of money bet is useful data - Pinnacle's 'Betshare' is not. 

NFL Divisional Round 2018

The New England Patriots are unique among NFL teams in that when it comes to the playoffs, there's a relative abundance of data to look at. 

While every NFL team has played in at least one playoff game since the current format was introduced, yes, even the Cleveland Browns, exactly half have played in games totaling in single digits. 

Far and away at the top of the list is the Patriots with 34 games, soon to be 35 following their not unexpected thrashing of the Los Angeles Chargers this evening in the Divisional Round.

The pre-game price of 1.59 on Betfair looked remarkably generous given the Patriots 18-3 record at home in playoff games including 10-1 in Divisional games. The last nine of these games have also been Overs, with the Patriots covering the spread in 6 of the last 7 games.

Overs is generally the value bet this weekend as I mentioned last week, but for matches played on grass, the value remains on Unders, as evidenced by the two Unders in yesterday's games hosted by the Kansas City Chiefs and Los Angeles Rams.

The upcoming New Orleans Saints v Philadelphia Eagles game is being played on an artificial surface, and while it's a smaller data set than for the Patriots, perhaps worth mentioning that Overs has been the result in all five Saints home playoff games, and that the Saints have a 100% record straight up.

Streaking On Ice

While the NFL playoffs are the most high profile thing going on in January for the sports I follow, the NHL and NBA continue on a daily basis. 

I mentioned the NHL system earlier this year, and two more wins in 2019, including the Dallas Stars last night, have extended the winning sequence to 12, which is just two shy of the record for any of my systems. 

14 consecutive winners in Baseball in 2013 is the record, but those selections were all in the 1.26 to 1.33 range, so the accumulator was 'only' around 40-1. 

By way of comparison, the NHL accumulator currently stands at 825-1, which certainly is a record. 

In the NBA, Overs continues to dominate. At last seasons 215.5 points entry level, the 2018-19 season has so far seen 423 bets, and has an ROI of 8%, while the more manageable 225.5 points mentioned pre-season currently has an ROI of 10.8%.

Not all matches are the same however, with the ROI increasing to 19% when visiting teams are from the West.

And not all Divisions are the same for that matter, with some Divisional teams pushing the ROI still higher this season to 35.2%. This is getting to be more profitable than UK horse racing!

American Football Pro Am

The NFL Wild Card Weekend "W" strategy (Unders and Underdogs) was again profitable this past weekend:

Small Road 'Dogs (receiving 7 points or fewer) are now 25-13-2 since the current format was implemented in 2002, with the NFC selections hitting at an astonishing 73.9%, with a verifiable ROI of 42.4%.

The upcoming Divisional Matches this weekend have their own personality, although the edge on Small Road 'Dogs continues in this round. The over / under advantage overall moves to Overs in this round, but not on all surfaces, so be careful. 

Last night saw the College Football season come to an end with the Championship game between Alabama and Clemson. The current playoff format was only introduced in 2015, so data is meagre, but these two teams have certainly dominated. Of the 15 matches, Alabama feature in nine, Clemson in seven, and Alabama v Clemson comprises four of them. The games are all on neutral grounds and one early trend suggests the Small Neutral 'Dogs are worth following in these games. But with almost a year to wait until the next playoffs, hardly worth detailing right now.    

NFL Wild Card Weekend 2018 Season

This weekend's Wild Card and next week's Divisional rounds are my favourite of the NFL season. Two elimination games a day, and with an average line of 4.8 points, the games are usually competitive. 

Although the format for both weekends is the same, the matches themselves, and thus the markets, are not. The biggest difference is that the Divisional Rounds sees the four home teams all rested after a bye week, their reward for being one of the top two teams in each Conference. It's a huge advantage. 

Since the current playoff format was introduced in the 2002 season, only three wild-card teams have won the three road games needed to reach the Superbowl, and none since 2010.  

As I mentioned earlier in the week, and last year, Unders is the value play on Wild Card Weekend. These games are similar in nature to the Divisional regular season games, and are sometimes between Divisional rivals. The most recent example was yesterday's Houston Texans v Indianapolis Colts match.

The table (left) shows the Unders results in regular season Divisional games since the 2008 season. 

Underdogs are also the play in Wild Card Weekend, as I tweeted yesterday. Road 'dogs by a touchdown or less cover the spread 64% of the time.

There's still one game to go this weekend, but followers will be happy with the results so far. 

I had a cheeky bonus bet on the Los Angeles Chargers to win outright at 2.46. 

My wife seems to have lost interest in her home town team since they relocated to Los Angeles, but her father's interest seems to be rekindled this season. 

What a difference a winning season makes.

Up next, my son's Eagles, looking to cover 6.5 points in Chicago. Well actually, they're probably looking to win, but I'll take the small loss and Under 42 points.

Fly Eagles Fly.

Law Of Anomalous Numbers

Life is full of coincidences. Yesterday I wrote a post and extolled the virtues of a certain Leighton Vaughan Williams, while almost ten years ago, I wrote about Benford numbers, and included an article written by the same Professor Williams on the subject. 

Casually included towards the end of that article, were these lines:

The same principle applies to trailing (i.e. last) digits. It's a great way, therefore, of checking the veracity of receipts. If, for example, there is an unusual number of trailing digit '7's, there's a decent chance that the figures are cooked. Tax authorities are alert to this.

In the past, I have published the Benford numbers from my Betfair trading spreadsheet, which is now into its 14th year, having been started on January 1st 2006. They're nothing more than a curiosity, but I like numbers so it's a fun annual exercise. 

Having re-read the article referenced above, I was a little sceptical that the claim that the law applies to trailing digits was correct, and sure enough it isn't. If tax authorities are analysing trailing digits, they are wasting their time.

Below are my 13 years of Benford data, including for the first (and last) time, the results for trailing digits:

Other than my 7s and 9s being 0.8% lower and higher than expected respectively, the numbers are pretty close to expectation, but for the trailing digits, the evidence is clear that every digit has pretty much the same chance of appearing. Benford's law does NOT appear to apply to trailing digits.

Benford's Law does apply to the second digit, although within a narrower range, and again my results are fairly close to those expected, but from third digit on the differences are even less. 

The law is useful for detecting bogus numbers, speaking of which, an astonishing claim was made overnight regarding my post on horse-racing and beating the insider traders.

Aluckyaday Tweeted:

The effort required to profit from horse racing at softbooks is very minimal. My selections take me about 15 minutes a day, and have over the last 3 years returned a 27.5% ROI. If you are able to bet with softbooks then racing offers more profit opportunities than any other sport

Goodness me. And there I was thinking an ROI of 2.75% over one year was good. 

Curious though as to what planet these soft-books are located on, that allow someone to win more than peanuts over three years at anywhere near this rate of return? 

An Acceptable Reward

There's nothing like a healthy debate to get the hit count climbing. The topic is the impact to the general public of the presence in UK horse racing markets of insiders, specifically can the advantage of insider information be overcome long-term?

Others, far more knowledgeable than myself about betting markets, and who also maintain a healthy attitude of scepticism, have reached the conclusion that 

"long term profitability in racing requires some form of insider knowledge" 

and I am with Joseph Buchdahl on this. With one caveat.

There seems to be no dispute that insider gambling exists. A 2010 paper from the University of Sussex stated that:

It has been suggested that insider gambling is an acceptable reward for those involved in owning and training horses (see the discussion in Crafts, 1985). However, in most countries of the world, the use of insider business information is illegal and it is difficult to argue that horse racing has any features that would make insider gambling acceptable. Thus, there is a strong economic argument for regulation of insider gambling. However, the detection of insider gambling raises many practical problems.

The question thus revolves around just how big a hurdle the advantage held by insiders is. Readers of this blog will know that one of the books that has had the most impact on my sports investing is Leighton Vaughan Williams' Information Efficiency in Financial and Betting Markets.

On this topic, he writes (p140) that:

On the basis of this evidence, Crafts concluded that British horse-racing betting markets do offer insiders the opportunity for profitable exploitation of information not publicly available.  

However, Williams also notes (p139) that some races are more likely to be influenced by insiders than others, an argument which makes perfect sense and which applies to other sports as well.

He [Crafts] reasoned that a shortening (lengthening) of the odds available about a horse during the course of the market may indicate evidence of insiders who knew the true probabilities of that horse winning were greater (less) than those implied in the odds offered early in the market. 

Williams' wrote a lot more in his ~390 pages, and if you are serious about making money from betting, you really should read every page, and probably more than once. It's not cheap, but you get what you pay for, and the book should pay for itself many times over. 

Insider information is logically much less of a concern in the Derby than a Maiden race at Cartmel, and while there is only one English Derby a year, there are certainly several high profile races a year where a disciplined expert bettor would be playing on a fairer playing field.

Again, the idea that anyone outside of the racing industry can be profitable long-term seems unlikely, but with a selective approach, I'm happy to concede that it is theoretically possible.

I was expecting someone to give this selectivity as a reason why my intentionally broad statement might be wrong, but that no one did, is interesting. 

I suspect that in practice, with account restrictions and premium charges, not many are able to make a good living even with such a selective approach. Perhaps the thrill is more in the mathematical challenge of it all rather than for the money. I can identify with that feeling. It would seem likely that the amount of time spent to gain an edge in racing would be significant, and of course, the higher profile the race, the more competition you are up against in the hunt for value, again something that applies to other sports too. The chances of having a genuine edge in the Superbowl would seem to be far lower than in say a season opening Arkansas Razorbacks v Missouri Tigers game.  

Hugh Taylor's name came up during the debate, and regardless of the extent of his relationship with the racing industry, consensus appears to be that his edge comes from poring over the numbers. A lot of hard work, and it does seems strange that he wouldn't quietly go about his business and milk the golden goose, (mixed metaphors intended), rather than give the value away to others. Possibly an At The Races salary exceeds what can be made from backing these selections? 

I'll continue to mostly leave horse racing alone. There are plenty of sports markets with inefficiencies that are easier to exploit. It was suggested that I...

... seem to have an axe to grind against horse betting, I suspect you tried and failed and its comforting to label everyone else the same. It appears you can make wild claims with no evidence and feel vindicated

It would be odd to have an axe to grind against an activity, but regardless, since tracking my results from 2006, my Horse Racing returns are surprisingly positive, (meagre, but nonetheless positive), so I wouldn't say that I have either tried or failed. I'm just not sure the rewards would justify the effort. 

Your Logical Fallacy Is Anecdotal

As I mentioned previously, I found myself dragged into a debate on the topic of whether it is possible to win long-term on UK horse-racing given that insiders are ever present.

It was @lordlard who included me in a response to @SmarterSig tweeting:

@SmarterSig then changed the topic, writing:

I do not agree with his assertion that you cannot beat the market in horseracing using publicly available data

I suggested that:

It’s fine to disagree with me but you should be able to support your assertion with a logical argument. Why would insider trading be unlawful if the public were not at a disadvantage? By its very nature, horse racing has its insiders. Good luck beating their edge long term.

My basic premise is this - Horse racing has always had its insiders as I have written about before. If you are not privileged to such information, then you are at a disadvantage, and have a negative EV. If others know more about a race than you do, the odds are against you. Sure, you might win over the short-term, but you are highly unlikely to overcome this disadvantage over the long-term.

SmarterSig claims that he and others are making money long-term from UK horse racing, but anecdotal evidence is limited in value. SmarterSig conceded that horse-racing markets are rigged but wrote that:

My numbers suggest that I am not being lucky

Hardly an unbiased opinion, and the suggestion that there may be skill at work rather than luck remains unproven.

I'm not the only one who is sceptical about the likelihood of overcoming a negative EV long term with no non-public information. Fellow sceptic Joseph Buchdahl joined the fray, adding:

I’m already on record as believing that long term profitability in racing requires some form of insider knowledge. Of course it’s not my field so I may be wrong. 

It's not my field either, because as an outsider, I see the challenge of beating horse racing as similar to trying to forecast a company's financial results. Others with inside (or privileged) information will always know more than I do. There's a reason why insider trading in financial markets is illegal - it is unfair to take advantage of those without access to this information.

If a horse can be backed at a certain price, it's because others more knowledgeable than you aren't interested in it at that price. Is it because they don't know what they are doing, and are missing out on the value? Unlikely, or they would soon be out of business. The only other reason is that it is poor value.

An optimistic attitude is all well and good, but a healthy dose of reality needs to be maintained.

If someone really does have an edge in UK horse-racing, they should soon be very wealthy indeed, if they can keep accounts open of course, and as @lordlard wrote:

Folk quietly making a living aren’t going to be shouting on Twitter about it. It’s at odds with the skillset required.

Quite. Returning full circle to the initial topic of complete frauds, you might expect the lifestyles of supposedly successful traders to be a little more reflective of their reported success than appears to be the case. I suspect that there is a direct (inverse) correlation between how much people talk about their success, and how successful they actually are. 

As unlikely as it is given the completely different structures of the betting markets in Hong Kong and the UK, if someone is 'doing a Bill Benter' in the UK, you won't know them by name. And no, it isn't, and wasn't, Adam Heathcote. 

Lennon, Marmite and Heathcote

These new years come around fast as you get older. 2019 is the twelfth year of this blog, and although my posts were down in number last year, the hits keep coming. I mentioned in the last post of 2018 that I'd be taking a break, although it wasn't as relaxing as I'd hoped.

My work trip to New York ended with my return coinciding with the night of the reported drone activity at Gatwick, resulting in my flight being diverted to the northern wasteland of Liverpool and its John Lennon Airport. Hard to 'imagine'. I arrived at Gatwick by bus about 18 hours later than scheduled, and my bags finally caught up with me two days after that. 

In the preceding few days, my stubborn Mum fired all the carers provided to her after fracturing her hip in a fall. One had put bone china into the microwave, one committed the heinous crime of making marmalade instead of Marmite on toast, and a third was too tall, although there may have been more to that story.

Having unilaterally declared her independence, she then proceeded to fall three more times in the space of five days, before one of my sisters took control and moved both of my parents into a care home. One of my nieces found her on the floor after fall number three, and her claim to have "suddenly felt tired and decided to lay down" was not the most convincing cover story.

While not happy at first, she does now seem to be resigned to the fact that after 63 years, her days at the home her father bought her as a wedding present may well be numbered. It's all rather sad really.

So to betting, and December was a great month for the NHL system which started the month with a loss but which is now on a winning streak of ten:

In the NBA, the West v East Road Dogs system also had a profitable December: 

The Beast continues to be profitable and at least one person is taking advantage. At last season's 215.5 entry point, the system has an ROI of 6.8% while at higher entry points, the ROI is as high as 12%.

The NFL Regular season wrapped up with the Small Road Dogs in profit again for the 11th time in 13 seasons, and the Division system also adding to the profits:

The NFL's Wild Card weekend sees the Unders as the value bet, with an ROI since the current play-off format was introduced of 14.4%, and over the last six seasons of 38.3%. Be careful though, as the sample size is small.

Twitter has been interesting so far this year, as I found myself dragged into a debate on the topic of whether it is possible to win long-term on UK horse-racing given that insiders are ever present. I actually have to work today, but a full blog post on the topic will surely be along soon.

In the meantime, my old friend Mark Iverson raised the name of Adam Heathcote yesterday:

Adam was a relatively short lived Betfair character who after months of publishing unverified and highly unlikely profits - coincidentally from UK horse racing - started a subscription service which, by all accounts, was a complete and utter disaster.

After raking in a supposed £360k in two years, why Adam would have needed the income from a subscription service, or more importantly, was willing to give away the secret to his self-proclaimed success, and thus his edge, were two questions that didn't seem to trouble his subscribers. And of course there's always the question of why anyone with a Golden Goose would be telling the world about it. As @Lordlard wrote today:

Folk quietly making a living aren’t going to be shouting on Twitter about it. It’s at odds with the skill set required.

As the 'nice blog post' about Adam Heathcote mentioned above said:

It is quite staggering how quickly he was able to scale up.

Indeed it was. 

I wrote a couple of posts on this topic back in 2009, one of which I noticed has recently been quite popular. 

Some commenters did share my concerns, and one comment supportive of Adam included this all-time favourite line (typos included):

Your the type of bloke that would marry a Thai bride, sport a little beard and wear crocs.

The second post from a few days later is here with several people complaining about the quality of the service.

There's also another more recent post which touches upon Peter Webb's tie-in with Adam, and indeed Webb's transparency, which may interest some readers.