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Right now no one. Betfair only takes a commission on money that changes hands. As fair as I understand, they are not openly laying or backing bets. Backing is

Right now no one. Betfair only takes a commission on money that changes hands. As fair as I understand, they are not openly laying or backing bets. Backing is the simplest way of making a bet which ensures positive expected return. That is, if you can get the bet matched. I tried my hand at making some back bets by hand using the terminal programme I made illustrated in [2], and no bets were matched. This is because the only people making and matching bets with positive expected return are the ones laying, and they are laying at odds which ensure a negative expected return for the backer. Now the problem is to figure out how to, given the exact odds for each outcome, successfully lay all outcomes. This involves ensuring the correct amount of money is matched for each outcome.

jonahx 6y ago
> I tried my hand at making some back bets by hand using the terminal programme I made illustrated in [2], and no bets were matched. > Now the problem is to figure out how to, given the exact odds for each outcome, successfully lay all outcomes. This involves ensuring the correct amount of money is matched for each outcome. I must be still missing something... If no one is matching bets, why would figuring out how to "successfully lay all outcomes" change that? At some point don't you need a "sucker", no matter how many outcomes you lay?
- jpcooper 6y ago
  If I backed the odds which people were laying at, then my bets would match, but I would be losing money in the long run and I would be a sucker. As far as I understand, there are plenty of suckers in the game, but they are mostly backing and not laying. No one is laying at odds which would leave them out of pocket in the long run. I could lay a specific outcome at favorable odds for that outcome alone, but laying makes sense only if you can lay the right amount of money for _all_ outcomes. This is the job of a traditional bookmaker. He sets and updates his odds such that he can match exactly the right amount of money for each outcome such that he makes a profit no matter the outcome. Given that I have the exact odds for the game, I would like to understand how this balancing is done on a Betfair exchange game in an efficient way.
  - jonahx 6y ago
    > He sets and updates his odds such that he can match exactly the right amount of money for each outcome such that he makes a profit no matter the outcome. This is only one way bookmakers work though and not the most profitable. If you have deep pockets, and there is tons of action on a bet that is very +EV for you, you will just let the action keep coming in rather than adjusting the odds to encourage balancing action on the other side. That would reduce variance (potentially to 0) but at the cost of EV. In your case, at the end of the day you make money iff you get people to make individual bets that are unprofitable to them. If "there are plenty of suckers in the game," then you'll be able to do that. The other problem you're talking about is just variance control -- it won't affect your profits.
    - jpcooper 6y ago
      I was convinced for some reason that you need balance on all sides to ensure profit. I don't know how I arrived at this conclusion, as doing the (very simple) maths again, it does indeed seem possible to make a profit on independent lay bets. You are of course right in asking why a bookmaker would increase odds on a bet which is both bringing in good money and has favourable odds. Thanks a lot! This makes things a whole lot easier.

jonahx 6y ago

> I tried my hand at making some back bets by hand using the terminal programme I made illustrated in [2], and no bets were matched. > Now the problem is to figure out how to, given the exact odds for each outcome, successfully lay all outcomes. This involves ensuring the correct amount of money is matched for each outcome. I must be still missing something... If no one is matching bets, why would figuring out how to "successfully lay all outcomes" change that? At some point don't you need a "sucker", no matter how many outcomes you lay?

jpcooper 6y ago
If I backed the odds which people were laying at, then my bets would match, but I would be losing money in the long run and I would be a sucker. As far as I understand, there are plenty of suckers in the game, but they are mostly backing and not laying. No one is laying at odds which would leave them out of pocket in the long run. I could lay a specific outcome at favorable odds for that outcome alone, but laying makes sense only if you can lay the right amount of money for _all_ outcomes. This is the job of a traditional bookmaker. He sets and updates his odds such that he can match exactly the right amount of money for each outcome such that he makes a profit no matter the outcome. Given that I have the exact odds for the game, I would like to understand how this balancing is done on a Betfair exchange game in an efficient way.
- jonahx 6y ago
  > He sets and updates his odds such that he can match exactly the right amount of money for each outcome such that he makes a profit no matter the outcome. This is only one way bookmakers work though and not the most profitable. If you have deep pockets, and there is tons of action on a bet that is very +EV for you, you will just let the action keep coming in rather than adjusting the odds to encourage balancing action on the other side. That would reduce variance (potentially to 0) but at the cost of EV. In your case, at the end of the day you make money iff you get people to make individual bets that are unprofitable to them. If "there are plenty of suckers in the game," then you'll be able to do that. The other problem you're talking about is just variance control -- it won't affect your profits.
  - jpcooper 6y ago
    I was convinced for some reason that you need balance on all sides to ensure profit. I don't know how I arrived at this conclusion, as doing the (very simple) maths again, it does indeed seem possible to make a profit on independent lay bets. You are of course right in asking why a bookmaker would increase odds on a bet which is both bringing in good money and has favourable odds. Thanks a lot! This makes things a whole lot easier.