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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 und

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

> 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.