Stating The Obvious

It's not so much as whether you use ratings - elO or others - as to what you do with them. The elO numbers themselves are, in many ways, meaningless - Anon. (London)

Nevermind that the quote is on a post about Betfair's flotation plans, or that "Elo" proves once again too difficult a word for the anonymous mind to get right...

To be profitable from betting on sports, you need to be able to find an edge, which means that you need to be able to compare your rating of a selection (i.e the probability in your opinion) against the odds (implied probability) available on that selection.

How individuals reach their decisions is an individual choice. Elo ratings, form, historical performance, trends, weather, manager, trainer, jockey, "gut feeling", whatever - these are all inputs to the decision making process, and even if you your decision making appears not to be mathematical, part of the process of comparing probabilities means that it is. It has to be - probability is mathematical.

Unless you're an idiot, any time you place a bet, you have calculated the probability relative to the implied probability, and decided that the price is value.

To directly address the comment above, what you do with Elo, (or any other) ratings, is use them to assist in this search for value.

Of course an Elo number by itself is meaningless. I have Chelsea starting the new season with a rating of 2309. Obviously that information is totally meaningless.

I don't think anyone could think otherwise.

Ratings ARE meaningful for comparison purposes though. In horse-racing, Timeform ratings have been around for more than 60 years, and in the US, Beyer Speed Figures since the 1970s, and to be told that Dobbin has a rating of 120 in either method means nothing unless you know the ratings of its competitors, or the number is given some perspective.

For those who are anti-ratings, bear in mind that many experts and sports use rating systems. In the US, sports ratings systems are used to decide the teams in College Football who will play in the BCS championship game, or to determine the field for the NCAA Men's and Women's Basketball tournaments, men's professional golf tournaments, Pro Tennis, and NASCAR. FIFA ranks football teams, curiously based on Elo for women, but not using Elo for men.

I also keep Elo ratings for other sports including the NFL, NBA and NRL, sports where binary bets are available, calculating a handicap is relatively easy, and no pesky draws to confuse matters!

Not sure who will be able to use the Capello ratings though...

Britain's Secret Google

Betfair, the online betting exchange,

is targeting an autumn stock market listing valuing the company at about £1.5bn, I [Mark Kleinman] have learned.

I understand that Betfair held detailed talks earlier this week with its advisers at Goldman Sachs and Morgan Stanley about a plan that would see the company catapulted straight into the FTSE 250 as early as September.

It would be a landmark moment for a company dubbed ‘Britain’s secret Google’ and which was founded just 11 years ago. And it would provide a platform for Betfair to lead the consolidation of the online gaming market.

As I understand it, Betfair’s shareholders will not formally decide to press ahead with the flotation until after the summer break. It will undoubtedly take into account the performance of other IPO candidates, one of which – Fairfield Energy – cancelled its listing this week, before taking a final decision.

One person close to the betting exchange told me today that Betfair was “95 per cent certain” to announce an IPO in September. A flotation would give the company access to capital to accelerate its expansion, both internationally and by moving into other areas that use similar exchange technology. 

In one sense, as a tech company with no obvious listed peers, Betfair could be compared to another business experiencing a rather torrid ride as it prepares to go public: the online grocer Ocado.

The similarities between Betfair and Ocado are merely superficial, however. For one thing, Betfair recorded earnings (before interest, tax, depreciation and amortisation) in the year to April 30 2009 of just over £70m. That was on sales of about £300m – a very healthy margin indeed. Ocado, by contrast, has yet to make any money.

I’m told that Betfair, which abandoned an attempt to float in 2005, would be unlikely to use its listing to raise new money by issuing new shares but that some of the existing investors would seek to reduce their shareholdings.

Four blocs of shareholders each own about a quarter of the company, comprising: Ed Wray and Andrew Black, Betfair’s founders; Softbank, the Japanese bank; a group of venture capital investors including Balderton Capital; and company employees.

Betfair declined to comment.

Opinions - Summer Set

Anonymous from Somerset has some advice for us Elo aficionados:

None of the top professionals use ELO ratings. You are heading down the wrong path especially at the start of a new season.

Well, that's good to know.

Except for a few things.

1) The guy apparently has a short attention span, and failed to make it to the end of my post where I pointed out that the ratings are actually called Elo, not ELO, so immediately some doubts as to his credibility as an expert are raised. When you profess expert knowledge of something, it's always good to know how to spell it - especially when it is comprised of just three letters.

2) No one can know as a certainty that "none" of the top professionals use Elo ratings. For this statement to be true you would need to know not only all the "top professionals", but also the methods of all the "top professionals", and I doubt that any "top professional" would reveal his methods too willingly. I suspect that customised Elo ratings are used fairly widely, albeit often with other filters. What does the term "top professional" mean anyway? Is it based on income? Am I a "middle professional"? Are there "bottom professionals" and if so, what is their line of work?

3) The statement, as a fact, that I am "headed down the wrong path" is equally absurd, and if he had read some of my other posts, would have seen that I am well aware that any rating system needs to be used with extreme caution at the beginning, and indeed the end, of seasons.

While a constructive debate on the merits or uselessness of Elo ratings, or indeed any subject, is to be welcomed, (the comment from my post a couple of days ago may have been anti-Elo, but the commenter did at least support his comments with some reasoning) anonymously knocking an idea without a single fact or counter-idea in support of your comments is just silly, but again, it does give me something to write about.

There are many ways to skin a cat, and while Elo ratings served me well last season, I am well aware that it could have been a statistical fluke. But then again, because the ratings were relatively new, it is possible (he says optimistically) that the ratings will prove even better in their second season. The rating algorithm, for want of a better word, will never be finalised, but an ongoing work-in-progress. The factors I use, and the weightings applied to each of them, will always be subject to adjustment.

Gambling And The Gods

News from the BBC today that more than 5,000 arrests have been made in Asia, (China, Malaysia, Singapore and Thailand) for illegal football betting. As the article says

Gambling is mostly illegal across Asia. Despite the strict controls, though, it is hugely popular, hugely prevalent - it's just ingrained in the culture. There are calls for it to be legalised, and controlled. But that goes against some religious strictures, some social conservative strictures. They argue this is not the way they want society to go.

Clearly, if attempts have been made to fix matches or even events within matches (the so called spot-fixing), then this is cheating and needs to be addressed, but if it is individuals choosing how to spend their money, then the governments should not be involving themselves. “Religious strictures” my arse. Gambling comes as close to being a universal a trait as you can find. It is present in all major civilizations in some form or another.

Although I would hope that most people reading this blog are intelligent enough to have discarded religion from their lives (yes, there is a correlation between religiosity and intelligence), based on the IP addresses that access this blog, any readers who have not yet eliminated all gods from their belief system are most likely to worship one from an Abrahamic religion, and almost certainly the same one that their parents worship. (One's religion is very much influenced by your country of birth, and your parents' beliefs). If you are down to one god, then ask yourself why you reject the others and perhaps take that final step to atheism. It doesn’t hurt.

But until that day, it’s interesting that the Protestant and Catholic churches have very distinct views on gambling.

A strong moral opposition to gambling and lotteries has been an integral part of the Protestant movement since its inception, and many Protestants perceive gambling as a sinful activity. Although individual Protestant churches vary in the intensity with which they oppose gambling, the opposition to gambling is quite general. The largest Protestant group, the Southern Baptists, is particularly strident in their censure of gambling. In contrast, the Roman Catholic church maintains a tolerant attitude towards moderate levels of gambling and is less disapproving of gambling activities. It has even used gambling in the form of bingo and charitable gaming events as an important source of fund-raising.

The United Methodist Church’s 2004 Book of Resolutions says: “Gambling is a menace to society, deadly to the best interests of moral, social, economic, and spiritual life, and destructive of good government. As an act of faith and concern, Christians should abstain from gambling and should strive to minister to those victimized by the practice.”

The position of the Catholic Church on gambling is summarized in the New Catholic Encyclopedia: “A person is entitled to dispose of his own property as he wills. . . so long as in doing so he does not render himself incapable of fulfilling duties incumbent upon him by reason of justice or charity. Gambling, therefore, though a luxury, is not considered sinful except when the indulgence in it is inconsistent with duty.”

Further, The Catechism of the Catholic Church (2413) states: “Games of chance (card games, etc.) or wagers are not in themselves contrary to justice. They become morally unacceptable when they deprive someone of what is necessary to provide for his needs and those of others. The passion for gambling risks becoming an enslavement. Unfair wagers and cheating at games constitute grave matter, unless the damage inflicted is so slight that the one who suffers it cannot reasonably consider it significant.”

Among other prominent religious denominations in the U.S., people of Jewish faith are like Catholics and accept gambling activities more readily, while the gambling attitudes of Latter-Day Saints (Mormons) are aligned more closely with those of Protestants.

The Catholic approach to gambling (as opposed to their approach to just about everything else) seems almost sensible – gambling is fine, so long as it is with money you can afford to lose.

Weighting For Elo

Anonymous from London has a thought:

When trumpeting ELO and the fact most of these statistical models use ELO, have a think:

If ELO is so widely used then the market-makers (vague term I know, not time to be more specific) will of course be aware of it.

If ELO is good then the market-makers will use it.

If that is the case then you have no edge from using ELO - you need a different approach.

Or, you need to use an ELO rating system which is superior to those used by others.

Typed this in a bit of a rush, may not quite make sense so feel free to pull apart.

Agreed, it would indeed be a big shock if market-makers were unaware of Elo ratings, and it is true that if all Elo rating systems were the same, then it would not be possible to gain an edge using them, but the key is that not all Elo ratings systems are the same.

The basic Elo algorithm is fairly simple. The complexity comes in to play when you start adding variables, for example how much weighting to give a certain competition, how much allowance do you award for home advantage, what differences do you include to account for the different ‘personalities’ of leagues, how do you reward a one goal win versus a five goal win, do you accept the result alone or do you factor in other statistics such as shots on goal or corners, is a 2-0 win with the second goal in stoppage time the same as a 2-0 victory sealed 20 minutes earlier etc.?

Everyone has different ideas on these. The data for football these days is available to all of us and while I do not know if the bookmakers use Elo, another method, or a combination of methods (most likely) to price up matches, given that differences exist between the prices offered by individual bookmakers and on the exchanges, it is fair to assume that similar, but nevertheless different, pricing models are used.

And where differences exist, opportunities exist.

All rating models are likely to have their strengths and weaknesses. For example, it was apparent last season that, for whatever reason, the selection of draws in my Elo based system worked very well in the English Premier League, not so well in other leagues.

So it’s worth remembering that a big advantage punters have versus bookmakers is that the former always have the choice of whether to bet or not. We have the luxury of being patient and using a sub-set of the predictions if and when we determine that we have an edge.

It would be highly unlikely that an Elo based system would consistently be more accurate across all leagues than those used by bookmakers, but the wealth of data available and modern day computing power means that at least the playing field is relatively level, and that a good rating system, selectively applied, has the potential to be profitable.

Finally, a small point perhaps, but it is Elo, not ELO. Elo is not an initialism. Elo ratings are named after Arpad Elo, a chess master who come up with the basic idea for the United States Chess Federation to improve upon the Harkness rating system they formerly employed.

Kaggle

Anthony Goldbloom of the data prediction website Kaggle.com sent me this piece on the competition they ran for quants to predict the World Cup.

In the lead-up to the world cup, Kaggle invited statisticians and data miners to take on the big investment banks in predicting the outcome of the World Cup. Now that the final has been decided, we can take a look at how Kagglers stacked up against the quants at JP Morgan, Goldman Sachs, UBS and Danske Bank in forecasting the World Cup.

In total, 65 teams participated in the Take on the Quants challenge. JP Morgan finished 28th, Goldman Sachs 33rd, UBS 55th and Danske Bank 64th. The betting markets fared better, finishing 16th.

The winner of the competition was Thomas Mahony, an Australian economist. His approach relied on Elo ratings with an adjustment for home country/continent advantage. His strategy correctly tipped Spain to win, the Netherlands to finish second and Germany to finish in the top four. The investment banks all had their top picks bow out early (UBS, Goldman Sachs and Danske Bank picked Brazil and JP Morgan picked England), hurting their overall performance.

The next big question is whether Kagglers can also outperform the quants in forecasting financial markets (we won’t have to wait long to find out, as Kaggle is currently hosting a competition to predict stock price movements).

I did a little poking around and for those like me who have faith in Elo ratings, not only was it good to see that the competition winner used these, but also:

When statisticians entered Kaggle’s World Cup forecasting competition, they had the option to give a brief outline of their methods. A glance at these description tells us what ingredient statisticians think is most important in predicting the World Cup winner. The variable that appears in most statistical models isn’t FIFA ranking, betting prices or the aggregate salary of a team’s players. It is the Elo rating. 

With the new football season just around the corner, I have made the updates to my spreadsheet so that superiority will no longer be rounded to a whole number, but will be to 0.25 of a goal. I'll wait until September before using the ratings for real, to give the summer changes and promotions / relegations time to settle a little, and also I shall be away from my computer until the middle of the month anyway.

More Resigned, More Civil, More Intellectual

I wrote yesterday about “The Big Short” by Michael Lewis, and thought I had made it clear that the book was written in a style that made a complex subject very understandable. Apparently at least one of this blog’s readers in Tel Aviv, Israel, did have trouble understanding it, because he thinks you need to be an "intellectual" to do so.

This is not the case. As this reviewer put it:

If you read only one book about the causes of the recent financial crisis, let it be Michael Lewis's, "The Big Short."

That's not because Lewis has put together the most comprehensive or authoritative analysis of all the misdeeds and misjudgments and missed signals that led to the biggest credit bubble the world has known. What makes his account so accessible is that he tells it through the eyes of the managers of three small hedge funds and a Deutsche Bank bond salesman, none of whom you've ever heard of.

All, however, were among the first to see the folly and fraud behind the subprime fiasco, and to find ways to bet against it when everyone else thought them crazy.

Again, this book is highly recommended.

An intellectual is a person who's found one thing that's more interesting than sex - Aldous Huxley

Lay CDOs - For Three Years

I have recently finished reading “The Big Short” by Michael Lewis, who is fast becoming one of my favourite authors. He has a way of making the driest of subjects most interesting. "Moneyball" was the first book of his that I read, and I have written before that for anyone interested in baseball, this is a very good read. For those who prefer to wait for the movie to come out, filming begins in Oakland this week, with Brad Pitt playing the role of Oakland Atheltics GM Billy Beane.

But back to "The Big Short", where Michael Lewis has achieved the near impossible by making the story of subprime mortgage backed Collateralized debt obligations (CDOs) not just understandable, but also interesting.

While I have noted in the past the similarities between financial market investments and those in sporting markets, the book reaffirms this view with a definition of investing as “betting with the odds in your favour”.

Significant differences are found in both the amount of money in the market, and in the time frame over which the outcome is determined. The principal players in the book held their positions for around three years before the bet, or investment, against the CDOs paid off, but when it did the reward was huge, in the millions or billions of dollars.

Trading the sports markets is typically a much shorter time-framed event. The longest are probably the quadrennial World Cup / Euro football tournaments, the next Presidential / UK Election market or the next Manchester United Manager market, which has been running for years and may yet have a few more to run!

But typically sports markets last longer than a week. Excluding the bigger races, horse racing markets must typically be formed and settled in a matter of a few minutes. For the sports that I trade, the in-play time is typically less than four hours, and the markets are often only formed a day or two ahead of event time.

The story of "The Big Short" revolves around a number of individuals who each came to the realization that subprime CDOs were being rated too highly by the credit agencies, and that big Wall Street firms really didn’t understand the risk they were taking with them. The individuals found a way to effectively bet against them, and although it took three years or so for the bet to pay off, ultimately it did, and in a big way. They had correctly calculated that the odds were in their favour, stuck by their bet when it appeared no one else was sharing their opinion, and ultimately they hit the jackpot when they were proven right. People were being encouraged to take out mortgages that they could not afford, or would not be able to afford once the two year teaser rate expired, and however much the banks kept the price of the CDOs buoyant either through ignorance or deceit, ultimately the reality was that the loans would be defaulted upon.

Sports markets are of course different. The nature of sports means that what should happen, doesn’t always happen. It’s what makes sports so fascinating and interesting. After all, if stronger team A always beat weaker team B, then sports would not hold so much appeal. Quants would just run the numbers and announce the winners. Somehow, not quite as exciting. The element of chance is always going to be a factor. Players have good days and bad days. A gust of wind or a bad bounce can make all the difference, but in the long run, if your selections are fundamentally sound, the profits will follow. Just not in the millions, most likely!

Sir Geoffrey On World Cup FInal Day

I wonder if Sir Geoffrey Charles Hurst MBE wakes up on the morning of every World Cup Final in a cold sweat, worrying that his achievement of a hat-trick in the final might be matched or even beaten later that day? Does he watch the game or putter around in the garden pruning his roses hoping there's not a sudden arrival of reporters at his door asking for his reaction?

Ronaldo scored his second for Brazil in the 79th minute of the 2002 final and Sir Geoff must have breathed a sigh of relief when he was substitued on 90 minutes, but that was nothing compared to four years earlier.

Zinedine Zadane had scored two goals by half-time, and that must have been an uncomfortable second-half for England's hero.

We have to go back to 1978 for the previous time that one player scored twice in a final, with Mario Kempes scoring his second for Argentina in the 104th minute.

I do have a few concerns about the accuracy of the entry for Sir Geoff in Wikipedia. It claims:

The son of a lower-division footballer, Hurst's own footballing career began when he was apprenticed to West Ham United. When he was scouted for West Ham United, he played for a Sunday team in the Tandridge League (Surrey area), Chipstead.

The Tandridge Football League wasn't formed until 1976, which was the year Geoff's career was winding down playing for the Seattle Sounders and Cork Celtic. He did open Chipstead's clubhouse though. There's a plaque on the wall commemorating the occasion, which perhaps is the source of the confusion.

My son really DID play for Chipstead for many years, and I have high hopes that in 2018 he will surpass Sir Geoff's record with four goals in the World Cup Final at Wembley, perhaps v Germany.

Update: All was calm in Hurst Castle as no one came close to usurping Sir Geoffrey's great record.

World Cup Final

A perfect outcome in the third place match with Overs and Germany both coming in for a nice pay day. That's nine consecutive overs, and eight consecutive third place finishes for UEFA countries.

The final is a little tougher to call.

I have read that Spain are on a run of eight consecutive 1-0 wins in knock-out matches, but this is incorrect. True, they have won all three such games at this World Cup by that score, but prior to that they lost 0-2 to the United States in the 2009 Confederations Cup - the game that ended their record runs of consecutive wins and without defeat. They did win the Euro 2008 final 1-0, but their other knock-out wins that year were 3-0 over Russia in the semi-finals and a win on penalties over Italy in the quarter-finals after a 0-0 draw.

Nevertheless, Spain do not concede many goals in these matches. The only game where they did was v USA, a game where Spain dominated the statistics, but lost. The USA had two shots on goal that game, and scored both. Spain had 29 shots, 8 on goal, won the corners 17-3, and had 56% of possession.

Spain to keep a clean sheet are 2.42, Spain to Win to Nil are 3.35. 3 of 6 finals since 1986 have been 0-0 at Half-Time, two have gone to Extra-Time, two have been decided on Penalties, and 67% were Under 2.5 goals. Including recent Euro finals, and the numbers are 60%, 40%, 20% and 80% respectively. Round numbers as you might expect from a small sample.

Under 2.5 goals at 1.6 looks value with the 0-0 at Half-Time worth a bet at 2.44. The Elo ratings and the bookmakers have Spain as favourites at 1.59 but there's not too much between the teams and I'm sticking with the Netherlands, ideally winning on penalties after a 0-0 draw. For those who took my pre-tournament tip of the Netherlands at 10.0, go Green-All-Over after the first semi-final, or now if you haven't already!

The Netherlands have been in one World Cup shoot-out losing to Brazil in the 1998 Semi-Finals, while Spain have been in three, losing twice (to Belgium and South Korea) and winning once (v Ireland).

Bronze Medal Match - Butt Debut

Today sees the 17th third place game in World Cup history, and of those 17, just one has finished as a draw after 90 minutes. Four have been scoreless after 45 minutes, and 14 have been Over 2.5 goals, which is unsurprisingly favourite at 1.78.

The last eight matches have all been Over 2.5 goals, including all six matches since the current format was adopted in 1986. Two of those have been close however with Italy - England scoreless until the 71st minute, and the third goal not scored until the 86th, and the last match in 2006 between Germany and Portugal didn't see the thirds goal until the 78th minute.

Germany have been in four of these matches, winning three, and Uruguay in two, losing both, the last being in 1970 to West Germany.

I am on the Overs, and Germany to win in 90 minutes, but wary of the fact that this is always a match that the two teams didn't want to be involved in. Klose on the bench and Butt making his debut suggest Germany are a little more relaxed about this game, (drifting to 2.03) but when the game starts, the players want to win the game like any other, and the game is played competitively enough.

Psychic Cephalopod

Paul has gone for Spain, but before you all lump on, a word of caution from one of the best science blogs out there.

The BBC is covering Paul's 'abilities' too.

I'll be looking at the numbers myself. Boring I know, but the scientific approach works so much better in all walks of life than the touchy-feely new-age psychic nonsense out there.

Someone In Ohio Is Not Happy

Cleveland Cavaliers owner Dan Gilbert posted this letter on the team's website after LeBron James' announcement he was leaving for the Miami Heat.

Dear Cleveland, All Of Northeast Ohio and Cleveland Cavaliers Supporters Wherever You May Be Tonight;

As you now know, our former hero, who grew up in the very region that he deserted this evening, is no longer a Cleveland Cavalier.

This was announced with a several day, narcissistic, self-promotional build-up culminating with a national TV special of his "decision" unlike anything ever "witnessed" in the history of sports and probably the history of entertainment.

Clearly, this is bitterly disappointing to all of us.

The good news is that the ownership team and the rest of the hard-working, loyal, and driven staff over here at your hometown Cavaliers have not betrayed you nor NEVER will betray you.

There is so much more to tell you about the events of the recent past and our more than exciting future. Over the next several days and weeks, we will be communicating much of that to you.

You simply don't deserve this kind of cowardly betrayal.

You have given so much and deserve so much more.

In the meantime, I want to make one statement to you tonight:

"I PERSONALLY GUARANTEE THAT THE CLEVELAND CAVALIERS WILL WIN AN NBA CHAMPIONSHIP BEFORE THE SELF-TITLED FORMER 'KING' WINS ONE"

You can take it to the bank.

If you thought we were motivated before tonight to bring the hardware to Cleveland, I can tell you that this shameful display of selfishness and betrayal by one of our very own has shifted our "motivation" to previously unknown and previously never experienced levels.

Some people think they should go to heaven but NOT have to die to get there.

Sorry, but that's simply not how it works.

This shocking act of disloyalty from our home grown "chosen one" sends the exact opposite lesson of what we would want our children to learn. And "who" we would want them to grow-up to become.

But the good news is that this heartless and callous action can only serve as the antidote to the so-called "curse" on Cleveland, Ohio.

The self-declared former "King" will be taking the "curse" with him down south. And until he does "right" by Cleveland and Ohio, James (and the town where he plays) will unfortunately own this dreaded spell and bad karma.

Just watch.

Sleep well, Cleveland.

Tomorrow is a new and much brighter day....

I PROMISE you that our energy, focus, capital, knowledge and experience will be directed at one thing and one thing only:

DELIVERING YOU the championship you have long deserved and is long overdue....

Dan Gilbert
Majority Owner
Cleveland Cavaliers

I don't claim to be an expert on the NBA, but I have watched hundreds of games over the last few years, and found the end of the Cavaliers last match versus the Celtics very strange viewing. Typically NBA teams claw, stratch and fight for every point in the last few seconds of a play-off game, but against the Boston Celtics it appeared that the Cavaliers, including James, just gave up. It was strange to watch, and not much was said about it at the time, but there may well be some revelations now James has moved on. Those are some angry words from the owner.

Miami Heat are now favourites for the NBA title next season. Not surprising really. Given that Dwayne Wade won a championship just four years ago, and that Chris Bosh is highly rated, the addition of LeBron James in a game that has just five starters is a mini Dream Team. Their coach, Erik Spoelstra, is relatively inexperienced, and is the NBA's youngest coach, but waiting in the background is team President and seven time NBA champion (as player, head coach and assistant coach) Pat Riley who is a former Laker. What price a Lakers - Heat NBA Final?

Money To Burn

I'm sure most of you read this already, but next time you have a bad day, think of this Anonymous person:

A William Hill betting customer who bravely staked a record 500,000 euros on Germany to beat Spain has lost his wager - the largest World Cup bet ever, after a late Carles Puyol goal saw Spain win the second semi-final last night.

William Hill spokesman Graham Sharpe said: “Not only did the 500,000 euro bet lose, but so did the 100,000 and 80,000 euro bets on Germany to win the tournament, and another 75,000 euro wager on them to get past Spain”

“Even though we have clients with £25,000 and £10,000 on Spain to win the World Cup we will be going into the Final celebrating the fact that Germany aren't there.”

“Germany losing that game made a difference of around £5million to us - it was almost certainly our best World Cup result ever. Now we'd like the Dutch to round off a fantastic tournament for us by beating Spain”

Decisons, Decisions

The sporting world is anxiously awaiting “The Decision”. Where will LeBron “The King / LBJ” James be playing next season? ESPN have a one hour prime time special to announce it; a little build up, the decision itself, and then 45 minutes of analysis.

The Decision is also having an effect on options prices.

He could stay at Cleveland, and earn more than he would playing anywhere else, plus a lot of respect I would suggest, but right now it seems he is leaning towards joining Chris Bosh and Dwayne Wade in Miami and opting for Championships over money. The Chicago Bulls have a chance, or he could join Carlos Boozer in New York where his “Decision” is being announced. The hapless Clippers seem to be out of the running for his services.

All will be revealed in less than six hours, and it’ll be interesting to see what effect “The Decision” has on the NBA Winner market for 2010-11. Summer League starts today or tomorrow for those who can’t get enough NBA, but I suspect we won’t be seeing King James in action whoever he decides to join.

Update: No big surprise. James has made his decision, and will play for Miami Heat next season. Computer predictions have the Heat going 66-16 next season, and winning the East. The Lakers three-peat faces a big challenge.

FIFA have made a decision too – and the Three Lions make it to the World Cup Final after all. Howard Webb and his team have done England proud! I remember Jack Taylor awarding the Netherlands a penalty in the first minute in the 1974 final against West Germany, and later reading how Franz Beckenbauer had strolled over to say “Taylor – you’re an Englishman” to him.

Semi-Final - Germany v Spain

The Netherlands beat Uruguay but with too many goals to make it a perfect day, and UEFA gets to win its first World Cup outside of Europe.

It sounds redundant to say that any World Cup semi-final should be a great game, but we've had some in the past that haven't exactly set the pulse racing: Germany v South Korea and Brazil v Turkey from 2002 spring to mind. However, a repeat of the 2008 Euro Final with no strong favourite has a lot of promise.

The Elo ratings have Spain on top, but whereas Spain are exactly where they were when the tournament started, Germany is a lot higher and there's not too much between them now. Germany's wins over England and Argentina were, from an Elo perspective, better than Spain's wins over Paraguay and Portugal.

Historically goals are at a premium in World Cup semi-finals with 77% finishing under 2.5, and this will be my main bet. There is a little value in the draw at 3.45, but someone has to play the Netherlands on Sunday, and I'm picking Germany to qualify at 2.06. The half-time 0-0 also looks value at 2.72. At least one semi-final since 1986 has been scoreless at half-time, and Spain have been 0-0 in their last two matches. Yes, it's a small sample, but a small bet to add a little interest.

My tip of Netherlands pre-tournament at 10.0 is looking tasty right now, and my interest in taking Elo ratings more seriously at the international level has been piqued. I was looking at the Euro qualifiers yesterday - they start in just two months!

Sports Betting Professor Rubbish

The Sports Betting Professor, Rich Hill, has given me a truly fantastic opportunity to make my fortune but I feel bad about keeping such a great offer to myself.

Seriously, the guy must think we are all complete idiots.

‘Lottery research’? ‘Smart pick’ feature? ‘Most of it is junk’? How about ALL of it?

Here’s his latest load of rubbish (the link is not activated because I am sure most of my readers are too smart to waste their time on it, but if Anonymous is interested, I can always include it):

I'm not sure if you've seen or heard about the Lotto products that are out there. Most of it is junk but there is one worth your time.

If you want the best lottery software, then check out the "Lottery Circle" software.

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Semi-Final - Netherlands v Uruguay

The tipsters seem unanimous that Netherlands are the pick today, and the consensus favours the Under 2.5 which were my unimaginative picks a couple of days back, and the prices haven't moved since then. I also think the HT 0-0 bet at 2.54 is value.

As exciting a game this could be, I'm a little concerned that the Netherlands may be looking ahead to the Final already. Stay focused.

Still on the World Cup, and someone told me a few days back that only two teams had ever come from two goals down in World Cup finals matches. I was able to think of three off the top of my head, one team coming from 0-3 down to win, to put that number to rest, but after doing some research it's still not that high a total. Any guesses? They can be anonymous!

Several blogs seem to have gone on hiatus, while Edgehunters has called it a day. Meanwhile, the suspense of waiting for Adam Heatchcote's next trading tip is killing me.

Semi-Finals By The Numbers

After the quarter-final matches, the World Football Elo ratings now have a dead-heat for first place between the Netherlands and Spain. Germany are ranked fourth, and Uruguay are sixth.

World Cup Semi-Finals since 1986 have seen the overall draw hit 33% of the time, but when the 'strong favourite' matches are excluded, this number increases. When recent (1996 on) Euro tournaments are factored in, the overall percentage of draws rises to 45%. The draw looks good value at 3.45 for the Germany - Spain Euro 2008 re-match.

Under 2.5 goals in semi-finals matches in the World Cup hits at 83%, and including Euros still comes in at 75%.

The Netherlands are strong favourites against Uruguay, and every odds-on favourite in the knock-out phase has won in 90 minutes, all but one incidentally were Over 2.5. A little misleading perhaps, given that Brazil were close to odds-on at 2.0, and Spain left it late, but they all count.

Nevertheless, Netherlands at 1.68 is the pick versus Uruguay, with Under 2.5 goals in both matches (1.65 NET-URU, 1.76 GER - SPA).

60% of matches are 0-0 at half-time, (20% finish that way, and 30% go to Penalties.

The Spain - Netherlands final is available at 2.66, which is value based on the To Qualify markets, and finally, the winning confederation market saw CONMEBOL traded as low as 1.52, but their hopes now rest with Uruguay and are out to 14.5. Europe clear favourites to win their first World Cup outside the continent.

Hot Dog Hubby

With no World Cup action today, the eyes of the sporting world were no doubt on the United States and the traditional July 4th Nathan's Coney Island Hot Dog Eating contest sponsored by the International Federation of Competitive Eating.

There was high drama when former champion Takeru (The Tsunami) Kobayashi, banned from competing by a contractual dispute with the rival Major League Eating, (I am not making this up), tried to rush the stage after watching Joey (Jaws) Chestnut retain his title.

Kobayashi was arrested and led away in handcuffs. For those into stats, and who isn't?, Chestnut won by 11 hot dogs against a weak field, and well short of his world record total last year when he ate 68 hot dogs, buns and all, in 10 minutes.

I had Chestnut value at 1.2 on the Elo ratings, but unfortunately was unable to find any market, which is surprising for such a prestigious sporting event. Get your acts together betting exchanges!

How demeaning the term 'wifey' is, yet at least one blogger thinks it acceptable to use the term in approximately 1 in 3 posts.

The urban dictionary definition is:

Wifey - adjective for NAIVE, DUMB, STUPID, girl who has no mind of her own and is only good for serving the needs of her "HUBBY"

The wifey hands him over her paycheck, while he spends it on drinking with his boys and hitting up the clubs. While wifey, ever the housewife, sits at home blowing up his phone in between either breastfeeding, doing the dishes, or watching TV.

UEFA 3 CONMEBOL 0

So much for the draw! The most one-sided Quarter-Final since the new format started in 1986 saw an extremely solid win for Germany 4-0 over Argentina. After all the talk of South American domination, no European team has lost to a non-European team in the knock-out stage, and are again on course to fill three of the semi-final places as per usual, comprising the top three in the betting as well. And the other quarter of the draw had no European team in it.

As I wrote before the World Cup started, Argentina looked too short, and Netherlands looked the best value. With the lay of Argentina now in the bag, and the Netherlands at 10.0 looking good, down to 3.35, the month is off to an excellent start.

As an Englishman, I'm a little confused about who I want the eventual winner to be. I don't particularly want to see a first-time winner and have the 'importance' of England's place as a former winner diluted, but that leaves just Uruguay and Germany.

Nothing against Uruguay, 1954 was before my time, but as a European I suppose it has to be Germany, but I'm English, so maybe it wouldn't be so bad after all if the Netherlands won it after all. They were a little unlucky in the 70s, losing twice in the final, both times to the host nation.

So we should see a repeat of the Euro 2008 final between Germany and Spain next week. Spain's price v Paraguay has come in to 1.46 as I write this, and the 1.53 is looking even better.

QF - Day Two

A nice return from Friday's games, with both being close as expected. One draw with a penalty shoot-out was a good return.

Today's first game is a repeat of 2006, with Germany and Argentina meeting again. If this game is as exciting as that one, and finishes the same way, I'll be happy. The draw is 3.45.

The second game is a Quarter-Final featuring a strong favourite, with Spain at 1.53. Paraguay under-performed against Japan, and Spain are value to win in 90 minutes. They beat Chile in the group stage, a team who had a higher Elo rating than Paraguay do, and their price that day was a similar 1.52, and were this game not a quarter-final I would expect the price to be shorter. I think class will tell, and Spain will prevail.

QF - Day One

Four years ago today, I was in Gelsenkirchen with my son awaiting Saturday's England v Portugal match. On the Friday night, we went to the FanFest viewing area to watch Germany play Argentina, and that one is being repeated this year, but only one other team from the 2006 Quarter-Finals has made it through this time around.

As I wrote a couple of days ago, the draw is historically a 46% probability at this stage, and there are no strong favourites to remove today to increase this figure still further. Incidentally, someone asked the other day what a strong favourite is, and for me in this context it is a team trading around or below 1.67.

The final (90 minutes) score has been 0-0 in 29% of matches, and 42% of teams have failed to score.

As I keep cautioning, the sample is unavoidably small, but the evidence suggests that the draw is where the value is to be found.

Brazil v Netherlands has the draw available at 3.45 and in the Uruguay v Ghana match, the draw is 3.35. The 0-0s are 9.2 and 7.4 respectively.

In the Elo ratings, Brazil are top, the Netherlands third, Uruguay sixth and Ghana down in 25th spot. No African side has ever reached the semi-final of course and missing key players through injury and suspensions won't help Ghana's efforts to become the first.

While the draw at 90 minutes is value, someone has to go on and Uruguay To Qualify at 1.55 and Brazil To Qualify at 1.48 are my bets there.

For the records, in penalty shoot-outs the Dutch lost their only one (v Brazil), while Brazil are 2 and 1. Uruguay and Ghana have never been involved in one.

Amateur Hour

One of the few Betfair forum posters who is held in high esteem, at least by me, is Lori, who always has something sensible to say.

He recently had this to say:

As long as you're betting in a neutral period in a match (between games in tennis, between deliveries in cricket) so you have the same information as everyone else 99.9% of the time, then in-play is going to be a better option than pre-match.

One "given" in american sports, and likely in other sports these days is that the Closing line (probably called starting price here) is the most efficient time for the markets. A decent way of testing your pre-match betting is to see how you do compared to the closing line.

(There, I shared a winning player's strategy without giving anything away that will harm me)

Those markets will have 24 hours to converge to that line, and often a week in the case of the NFL. If you're betting in-running, they don't have that time to hone in on the "true" price, so you have more chance to find an inefficiency.

That being said, a lot of Betfair users have very strong in-running strategies and it's getting harder to beat over time.

Two things caught my attention there. One was this statement on the SP, that a "given in American sports, and likely in other sports these days is that the Closing line (SP) is the most efficient time for the markets".

Our old friend Rich Allen, the Sports Betting "Professor", had this to say

I also tend to disregard the last hour flurry that happens as well. This is more driven by the public at large, and believe me, it doesn't make sense to put much stock in what they think. We used to love having a game the general public loaded up on because more often than not, they were dead wrong. My system found at The Sports Betting Professor is entirely based on these spreads so I have to pay very close attention. That's why it's so vital to have this knowledge in your back pocket. Remember you don't want to bet a game when it first comes out. The wiseguys and sharp bettors are just licking their chops waiting for that line to open, and when they bet they bet big and this will move the spread by as much as a couple of points. What if you bet a game at -3 when the real spread should've been -1.5? The same goes for the last minute activity, or as we used to call it, Amateur Hour. Everybody and their brother is trying to get down now and if you waited this long you might as well just forget it. The line is like a pogo stick at this point. You want to make sure you get your bets down at the 'true' number if you want to be successful at betting on sports.

Rich likes to talk a lot, but surely the idea is not to get your bets down at the 'true' number if you want to be successful. You want to get your bets down when the market has the 'true' number wrong. IS the number wrong at game time because the public is wrong? I don't think so. If the line is -3, and the true line is -1.5, then you back the +3 (or lay the -3). Is the line more likley to be 'true' at the off or someime earlier? I'm with Lori on this one.

The second comment that caught my eye was Lori's final line that "it's getting harder to win in-running than it used to be".

My profits for the half-year just finished are down on those of both 2008 and my annus mirabilis of 2009.

The NBA season finished disappointingly (again) which accounts for part of it, but my baseball returns at the approximate half-way point of the season are also down. All the US sports are down on last year, American Football, the NHL, and the NCAA Basketball tournament was a bit of a disaster.

At least my soccer returns are better than before, but then that's not saying much! Tennis, Rugby League, Aussie Rules and 'Other' (UK Election and Academy Awards mostly) also fared well this past six months, but none of those are sports that I expect to make too much from because I don't risk too much on them. Hobby bets.

Since I use different strategies in different sports, it's unlikely that they are all less efficient than they were before. Reduced liquidity is to blame for the baseball and NHL being down - it's often to the point where it's just not worth bothering with.

Basketball was still profitable, but not as much as previously. The play-offs are always poor, and I should seriously consider just leaving them alone. April was my second worst month ever, and is just a bad month.

But the money I do make all helps. I'm just pleased that this isn't my only income stream. That would make life very stressful, but as it is, the worst that can happen is that the edges in all sports vanish, I can't find new ones, and I move on to something else.

I think there's life in the old dog yet though, even though the next two months will be quiet.

A quiet July to get the Elo spreadsheet up and running, then a 17-day break ending as the 2010-11 football season gets underway, followed soon by the NFL, the baseball play-offs and the NBA and NHL.

As Yogi Berra said, "It's déjà vu all over again".

Unreasonable Expectation

A few comments to address.

First, on the subject of Slicer and his Holy Grail, Brian Bee wrote: Maybe I imagined it but I'm sure around the time of the thread there was a few matches that would fit the criteria whereby the FT 0-0 would be so high and the half time 0-0 not high enough so that come half time you could green up the full time 0-0 to cover your lay loss on the half time market thus giving you a risk free punt on their being a goal in the 1st half. However once it was realised the FT 0-0 would get backed in so much the edge vanished.

The vanishing edge, if it really existed, is just one problem with this Holy Grail. The market is efficient and will soon correct if any price in a market is out of line. In the scenario outlined above, there would never be any need for the third bet anyway, and something as obvious as that is unlikely to have ever existed. It's not uncommon for the price of the same event to be slightly different in separate markets (Correct Score 0-0, No Next Goal, No First Goalscorer, Total Goals < 1 etc.) but it's usually only briefly and rarely for a big enough differential to make it a viable proposition.

Anonymous, but a reasonably eloquent one and only slightly patronising, so I will address the comment, had something to say on the R16 results and my Quarter-Final write-up.

Whilst I don't agree at all with your reasoning on the penalty shootout, there probably was some small value on the 12-1 shots.

A far better way of assessing the true odds (compared to your over-simplistic method based on a limited sample size) is as follows:

If, say, the draws were around 30% in each match - which is probably roughly in keeping with betfair prices - then approx 60% will then go to penalties (read that somewhere, may have been here?) then around 18% can be expected to go to pens. So 9% for either team if shootout assumed to be 50-50. Therefore some value at 12-1

NB - I am assuming the 60% is correct but haven't checked it. First impression is it seems a little high but on reflection it's probably about right given the pressure in extra-time and a probably reluctance to attack as much as usual.

Your stats on the tightness of 1/4 final games make interesting reading given the huge difference in draws and 0-0s compared to "normal" matches. If under 2.5 goals is 58% then the "normal" draw %, assuming equally matched teams, would be in the region of 30%. The 45% you suggest being the "true" price is way too high. But, 30% is perhaps a little too low due to "abnormal" factors in the games and hence there may well be some value in backing the draw.

(and if the draw is greater than 30% in the 1/4s it can reasonably be expected to be higher in last 16 as well. Which would mean there was greater value on the 12-1 than suggested in the earlier explanation)

My 'over-simplistic method based on a limited sample size' isn't from choice. There is only a small amount of data to work with when investing on World Cups, but what data there is appears to be solid, at least in the knock-out stages. We can either while about the lack of data, or make use of the limited data we have. At least teams need to advance and can be relied upon to do their best to do that.

The statement that "if the draw is greater than 30% in the 1/4s it can reasonably be expected to be higher in last 16 as well" is totally incorrect however. In the R16, the probability of a draw is 29%, but the careless statement does help to illustrate the importance of drilling down into the data rather than simply 'reasonably assume' that data will be consistent across rounds. It isn't. We shouldn't expect it to be.

I did try to highlight previously how the knock-out rounds are all a little different. While the draws at the R16 stage are 'only' 29%, probably due in part at least to some relative mismatches with weaker teams making it out of the group stage and facing one of the big boys, the probability of a draw in the Quarter-Finals is much stronger, and the 'over-simplistic reasonable expectation' that the R16 should reflect the QF stage in draws is very wrong.

The two are close however, when it comes to the Under / Over 2.5 markets.

The HT 0-0 is also, unsurprisingly, much more likely in the Quarter-Finals - 29% v 11% in the R16, so if anyone is thinking of trying Slicer's bet on this round, good luck.

I might also mention that only two matches at the QF stage have been won by more than one goal. Italy beat a weak Ukraine team in 2006 by 3-0 and Croatia beat Germany by the same score in 1998.

Then Googly asks:

I was just wondering by using your rating systems exactly how you came up with the fact that the difference in rating, equates to 1/2 or more goals?

My "superiority predictions" are based on the result needed for the Elo ratings of the two teams to remain unchanged, so usually the result needed is not a whole number, but a fraction. One of the improvements I'll be working on this summer is a more accurate measure of superiority. Last season I lumped the +1.5 teams into the same bracket as the +2.49 teams which is clearly not ideal. Hard to believe the new season is just around the corner!