Zero-Sum And Morals

The meme of the day in betting and trading conversation would appear to be the clarification that when betting, it is not you against the big bad bookie, it is you against other bettors.

My last post stated the fact that...

when betting, you are not betting against the bookmaker, you are betting against other market entrants

...and others have recently confirmed this on Twitter. Here's the esteemed Joseph Buchdahl yesterday:

As usual, Joseph phrases the facts far more eloquently than myself, but this is the truth of it. No one buys stocks or shares claiming that they are going to 'wallop Wall Street' or 'lash the London Stock Exchange', but the sportsbook is essentially the same middle man trying to balance the money coming in and guarantee a profit regardless of the outcome. 

They might not match up buyers and sellers in the same way that Stock Exchanges and for that matter Betting Exchanges do, but their role is still that of a middle-man. 

But still the myth persists. I guess it's a nice rallying cry for a tout to shout about "bashing the bookie" but it's ill-informed and clearly targeted at the less sophisticated punter. 

Here's the opening post which kicked everything off from spanky:

The thread is well worth a read, if only for the number of posts from people who clearly don't quite grasp the zero-sum (when including the vig) nature of the game, especially Diego for whom the whole thing is clearly beyond him. A Lucky A Day gets it:

The Church of Betting observed that:

A sportsbook may very well go bankrupt if they are not able to balance their books and end up being exposed on an outcome. It's why they minimise risk by having limits, line movement, and laying off bets, but a poorly run bookmaker, like any poorly run business, probably won't last long. The definition of a bookmaker is a person or entity which "accepts wagers in exchange for a premium" but if expenses exceed this premium, they will also fail.  

The thread also touches on the morality of gambling. If you are a long-term winner, then you know that it is highly likely that at least some of your winnings are coming from 'vulnerable and addicted' people. 

Finally, this comment from Phil Bull was, as Phil often is, amusing:

While spanky's profile does contain this message:

I'm sure it's simply that he's offering free advice about the betting industry in general and not anything... oh, wait:

Information? Presumably not tips, for moral reasons. 

Numbers, Not Teams

One advantage of work travel is the opportunity to read during flights, and on my latest trip I took the opportunity to re-read Jack Moore's 1996 book The Complete Book of Sports Betting, A New No-Nonsense Approach to Sports Gambling. 

It's a read more for US sports and readers, and it's a little dated, but it does explain how lines and spreads came about, how they work, and emphasises what I have said here many times, which is that when betting, you are not betting against the bookmaker, you are betting against other market entrants. 

Jack Moore writes:

The line, on any given game, is in no way an expression of the line maker's opinion on how the two teams will fare. Rather, it is the line maker's expert opinion on what number will sufficiently induce half of the collective betting public's money to come in on the underdog and and half on the favourite. The line maker is interested in what the public will do, not in what the ballplayers will do.

Later in the book, Jack Moore clarifies:

Keep in mind that it is not the number of bets that come in on one side or the other that matters but the sum total of those bets; thus in the extreme case, a hundred $10 bets are offset by one $1,000 bet.

It's something else I have written about in the past, and it's very annoying that Pinnacle keep tweeting out useless 'bet share' numbers, presumably thinking that their followers are stupid enough to pay such meaningless numbers any heed. No doubt some of them are. We need the total amount being bet too, but that's not free. Here is some analysis based on the money bet on NBA games:

I can't be sure, because it was a few years ago that I first read this book, but this may have been when I realised that betting the 'dime line' (i.e. Pinnacle's 1.952) on 50/50 bets, winning just 51.23% of bets would result in a profit. 

Given that my grandmother would be expected to pick winners at a rate of around 50%, and she's been dead for over 30 years, this didn't seem to be a hugely impossible task.

It's not as easy as it might seem of course, but as explained above, you're not betting against a sportsbook with otherworldly powers of prediction. You are betting against other members of the public, and in some markets more than others, the public aren't too smart. 

Should you require evidence of this, just look at the number of idiots following tipsters on Twitter. 

The goal is to take a contrarian approach, or to use the American expression, to fade the public.

While the following quote has its problems, the gist of it is correct:

Let’s start with a simple premise: The public loses. Not every time, but over the long haul being on the same side as majority of bettors isn’t a sound strategy. Why? Public bettors tend to rely on gut instinct, overvalue recent performance and usually gravitate toward favorites, home teams and overs. By taking a more contrarian approach, you’re capitalizing on public bias and taking advantage of artificially inflated numbers. As an added bonus, you also place yourself on the side of the sportsbooks.

As previously stated, the sportsbooks don't have a side. Their goal is to balance the money so that they win whatever the outcome of the event. Our goal is to identify markets where the money has made the sportsbooks adjust their lines and prices too far.

Bet numbers, not on teams.  

So if one assumes the sharper books know their stuff, and thus a significant move indicates pressure on them to change their 'accurate' prices, does this mean there is value to be had? Certainly in the image above, it would appear so, at least in the NBA, although the sample size was small. 

When it comes to football, I pretty much limit myself to the Draw these days, and I can tell you that if you backed the Draw in the English Premier League in every match where it closed with a 5% or more drift from its 'opening' Pinnacle price, you'd have an ROI of 24.6%.   

Don't try this on Chelsea home matches though. When the Away team shortens by up to 5%, jump on the steamer and back the Away team - 129 bets and an ROI of 34.8%. 

Flies Dropping and Bats Swinging

They're dropping like flies at the moment. Hot on the heels of the retirement of Simple Soccer Stats mentioned in my previous post, I return from my trip to read that Trader 247 is also calling it a day after ceasing trading last August:

I stopped trading last year after seeing the small profits disappear and not spending any time with the bot. My interest is in programming and as I moved from VBA to .NET and the wonders of Visual Studio, I was more interested in app development than raking over market data.

There's nothing like losing money for killing interest in blogging. On the other side of the blogging longevity coin, it's now more than eleven years since this inaugural post kicked off Green All Over. 

2,561 posts later, and it's still going relatively strong although 2018's 107 posts was a yearly low. Not all have been fascinating posts I freely admit, but the other 2,560 certainly have been (and yes, that is a joke you may have seen before as I repeat it on most anniversaries). 

Travel with work was the main reason for the decrease last year, and may restrict posting this year too, but a lifetime average of 473 hits a day, and 10k a month means that at least a few people are still reading.     

Someone emailed me a few days ago asking if I had any copies of 101Trader's blog:

Hi, someone suggested you might have stored offline a blog copy I was after. A real long shot, but do you remember @101trader a year ago, a seemingly successful overs trader. Looking at Twitter he directs people to his blog for answers that has been taken down. I don’t suppose you have or know how I can get my hands on it?

If anyone can help, let me know, but when someone takes their blog down, chances are there was something awry and the phrase "seemingly successful overs trader" is likely very well considered. It's very difficult to gain an edge in the Over / Under football markets.

We're so close to the end of the season, that I'll probably wait until it's over before looking at the Premier League Draw again, and it's the same with the NHL and NBA regular seasons which both conclude next month, but the MLB season has already started with two 'International Series' matches in Tokyo already in the books. Excluding international openers, this season's March 28th opening day is the earliest in history, and for London fans, there's a 'London Series' (Boston Red Sox / New York Yankees) at the Olympic Stadium at the end of June to look forward to.

Readers will know that I follow a couple of strategies in baseball, with the results of the T-Bone method in recent seasons below:

During the off-season, I've been looking at further improving the T-Bone, and have found some interesting opportunities.

MLB is of course two leagues, with the big difference between the National League and the American League that the latter uses the "Designated Hitter" - a player who does not play in the field, but is used to bat for the pitcher.

While I don't like to have too many qualifiers on methods, adding a filter or two and eliminating non-profitable selections can make a big difference to an ROI.

I'm also not interested in single season observations, but if I see something persisting over three of more seasons, I do take note.

Here's the basic return from the T-Bone system over the last five seasons (money line and run line bets) and below that, the same system with one simple filter applied: 

The differences are huge, especially on the Run Line bets. 246 bets saved, and the time they take to place shouldn't be underestimated, and ROI percentages into double figures. 

Baseball is a sport with definite trends showing as the season progresses. Readers will know of some early season trends (generally April and May) and other methods that are more profitable after the All-Star Break, so with such an early start to the season, there's not a lot of data for March matches. 

The profitability of backing hot favourites in recent years is another area readers will be well aware of, and here are the results month-by-month of that strategy:

April is perfect, and so is March I guess, but that number for March is from just seven matches. I tend to include the handful of March games with April and October games with September to make six full monthly regular season groupings.

Note that returns are all calculated using the US practice of risking the line to win 100 units when playing favorites, and risking 100 units to win the line when playing on underdogs.

Dispersion Of Skill

One of the longer running blogs linked to by the longest running of all sports investing blogs is that of Simple Soccer Stats where Leon Pidgeon has this week decided to hang up his keyboard after ten and a half years and return to his loft:

So much has changed in those years but right now I don’t have the time or dedication to continue with the site. I was a keen bettor with plenty of time on my hands staying up late and studying everything. I’m now 10 years older with a family and no spare time on my hands. I also don’t even bet on matches anymore so I am keeping the site going more out of a duty to the people who use it.

Leon certainly published a lot of stats, but as I have written previously, you're not going to find it very easy gaining an edge over the big players when trading top flight football. In his defence, he does refer to them as 'simple' stats, and looking at an edge from early goals, bogey teams, half-time scores etc. is unlikely to lead to riches. Leon doesn't mention how much he made in those ten years, but I hope it was worth the time invested and I wish him well in the future.

I'll leave the link up for a few months, before taking it down, but to compensate, I've added a couple of well-written and researched horse racing blogs from Gareth, one focused on the Grand National and one on Trainer Profiles. If horse racing is your thing, then check them out. 

I'm traveling to Texas this weekend hoping to catch a Golden State Warriors game there on Monday night, and there's an interesting article on the progress of sports betting legalisation in the US at Axios. Actually, it's not really an article but more of a list of bullet points, but a couple are interesting, if not news to readers of this blog.

The writer, Kendall Baker, writes that:

...too many of us equate sports betting to playing roulette (a game of luck), when in reality, it's much more like investing in a stock (a game of skill).

As I've written before, when someone writes or talks about 'bashing the bookie', they are showing their ignorance about how the industry works.

"Bookmakers operate in a manner strikingly similar to that of stockbrokers.The customers of each try to predict the outcome of events. The sports bettor thinks, feels, or relies on someone else's opinion that a specific team will win a game. An investor in securities also thinks, feels, or relies on someone else's opinion that a specific stock's price will increase or decrease. As more money is bet on a team than its opponent, the money odds, or point spread, will increase. As the demand for a certain stock increases, the price of the stock increases." - Jack Moore

Mr. Baker also quotes Ted Leonsis, owner of Washington D.C.'s Capital One Arena as well as the four teams who play there (Wizards, Capitals, Mystics, Valor), about this disconnect between how sports betting and stock trading are viewed:

"It's a generational thing. When someone my age closes their eyes and thinks of sports betting, they imagine some back room with cigarette smoke and cocktail waitresses and a mafia guy walking in with a paper bag full of cash."

"For the younger generation. what conjures up in their minds is playing daily fantasy sports. Rather than thinking of sports betting as this criminal activity, they associate it with the idea of 'how much smarter am I than you because I did my research.'"

Fortunately for those of us with an at least somewhat functioning brain, sports betting attracts not only those who understand what is required to gain an edge, but seemingly many more, almost always uneducated and almost illiterate, who think it is an easy way to get rich. It isn't, despite what you might read on social media, but this dispersion of skill is what we need to be profitable. 

Back in the US and the NHL regular season has just 23 days to go, with one team already guaranteed a play-off place. I'll update the numbers next month, but the basic system currently has an ROI of 12.2% while the more exclusive selections (only 36 bets) have an ROI of 22.1%. The Vegas Golden Knights play tonight and I'm hoping for 12 wins from the last 14. 

The NBA is also in the final stages of the regular season, and March has so far not been kind to the Overs on High Totals backers. It all depends on your entry point of course, and which sportsbook you use for your line, but if you are backing when the line is 225 and over, March has probably not been a pleasant time so far.

Some perspective though - the last full month when backing Overs in the regular season when the Total was 225 and higher was under 50% was December 2009.

Finally, MLB is poised to return. Will the famous T-Bone System be profitable for the 8th time in 9 seasons?  Last season certainly showed no signs of a slowdown and weaknesses in American sports markets certainly seem to persist a lot longer than in say European top-class football. 

Gone Dancing, Madness

One Draw from the ten English Premier League games this weekend, and it wasn't the Big 6 match, means that the percentage of Draws this season drops still further to 19.06% and is challenging 1929-30 for the third fewest in the past 100 years: 

If there should be no Draws in the five Premier league games next weekend (the big teams such as Crystal Palace are all engaged in F A Cup Quarter-Final action) then third place it will be. 

And if there are 10 or fewer Draws from the remaining 81 matches, the 1931-32 record is beaten. The all-time record 12.12% of 1890-91 is safe however, at least for another season.

Moving on to bigger balls, and it's March Madness time in College's version of basketball, and an event I have written about in the past both here and elsewhere. It's like the FA Cup from the third round, with four second round replays pending, played over three weeks on neutral courts, and it's hugely popular in the US.

The 'big dance' is preceded by Conference Tournaments, which for the major conferences, take place this week, but be wary that trends seen in regular season conference play do not often carry over.

Having lived for several years in SEC country, that's the conference I focus on, and while in regular season conference play, the money is on Unders in narrow spread games. The conference expanded in 2012, and over the last five seasons, this system has a 55.2% record in regular season games, but in the conference tournament, the edge on these games moves to the Overs with a 56.2% strike rate. 

With thirteen national champions this century between them, the ACC (7) and the Big East (6) are also worth following. 

The ACC expanded in 2014, and in the last five years, in conference tournament games Overs has a 65.6% winning record, while in 'league' games Unders has the edge at 52.7%.

In the Big East, since the conference was reconfigured in 2013, there have only been 16 qualifying matches in tournament play, far too small a number to be useful, but the regular season offers value on spread bets in close games. 

Stop The Press: Spurs Draw

So Spurs finally draw a league game, ending the streak at 32, their first 'Big 6' Draw in 11 months.

Qualifying Big 6 matches are now +3.62 points from 14 matches, with six games remaining this season.  

Before I departed for another work trip last month, overall the Draw in the Premier League was striking this season at exactly 20%, but since then has declined still further, currently at 19.4% which is the third lowest in top English division since the Second World War, and the 5th lowest in 100 years, in fact since the game-changing 1925 change in the offside law. 

For those who can't remember that time, the impact on goals per game, and thus on the probability of a Draw, was dramatic, In the 1923-24 season, the goals per game average was the lowest it had ever been at 2.474 with no less than 55 goalless draws. 

As attendances dropped, the FA looked at changing the offside law and the current rules, albeit with a few subsequent tweaks, were introduced in the summer of 1925. The result was that the 1925-26 season saw the average goals per game jump to 3.686, and goalless draws drop to just 15.

Averages (mean) can be a bit 'mean'ingless when there are outlier results such as 5-5, 8-3 and 11-2, but a more useful indicator perhaps is that the median goals per game doubled, from 2 to 4.

As readers of this blog and of my articles on the Draw elsewhere will know, the strike rate of the Draw has varied over the years. In the formative first eight seasons of the league, fewer than 16% of matches were Draws. As the number of goals dropped, so the number of draws increased, averaging 22% in the remaining seasons before the Great War stopped play. 

Draws increased after the war until the Offside Rules changed, and the higher number of goals of course meant fewer Draws.

Draws occurred in 29% of matches in 1920-21, a frequency not beaten until 1946-47, and coincidentally both seasons were just after a major war (something to make a note of perhaps, in the event that a Third World War takes place). That record was surpassed in the early days of the Premier League, with 30.74% in 1993-94 and the all-time high of 31.32% in 1996-97.

The first five seasons of the EPL saw Draws in 29% of matches, generally declining to this seasons EPL record low.

Backing the Draw in every EPL game this season (never a good idea) and you'd be down 74.43 points, a -26% ROI, but backing it in games where the difference in 'true' prices is less than 10% and you're again in profit (see above). This strategy is also profitable in every season in the Pinnacle era with an ROI of 20.6% from 159 matches.

Looking at the pre-Pinnacle years, using prices adjusted for the challenging over-rounds of those days (up to 112%), and it's interesting that when the Home team was the slight favourite, the Draw wasn't a value bet, but since Pinnacle came along, it is actually slightly more value then when the Away team is slightly favoured.

When the prices on both teams are exactly the same, the ROI is a rather impressive 96.6% in the Pinnacle era.   

As others have previously noted, in matches between evenly matched teams, backing the Draw is a solid strategy and the overall low strike rate for Draws this season shouldn't be of undue concern.

More interesting than that the Draws have dried up, is the question of where have they gone to? In a word, they have gone Away, with Away wins currently at 33.22% of matches which will be a record for the top division in England if it remains that way.