4 ms·

I'm sorry, but the sports betting analogy is hilariously wrongheaded. In order to set any prices at all, books have reasonably good models for the sports they o

I'm sorry, but the sports betting analogy is hilariously wrongheaded. In order to set any prices at all, books have reasonably good models for the sports they offer, including NFL. But these models are not and do not need to be perfect, in order for a profitable business model to exist. There are in fact, plenty of "sharps" who can beat the books on certain sports or certain types of markets (e.g. maybe you can model O/U markets very well, but money line not so much). The book does not "stop taking bets" on the entire event in question. The book simply has to limit the "sharp" individually. Of course then we get into the whole cat and mouse game of chasing sharp action through straw bettors and playing games of information theory (i.e. how much money can a sharp win while still plausibly not outing themselves as an obvious sharp). The book only would have a serious problem, if the entire world became sharp and every bettor was betting sharply. But alas there you have a paradox: anyone who is currently a sharp, has a strong self interest to preserve the secrecy of their models and methods, because knowing something that nobody else knows is precisely what creates their edge. And so therefore, as long as sharps have this self-interest, then there is no problem for books to keep operating, and the problem is reduced to one of identifying and limiting sharps occasionally (basically a "cost of doing business" that books acknowledge). The only way for the scenario you describe to happen, is for disinterested actors with no thought of profit for themselves, to not only "solve" a particular market, but also release it to the entire world and make it a commodity. I'm not saying it's impossible, but I'm saying that normal economic incentives work against this outcome.

fwungy 4y ago
The book just moves the line so they're covered in either direction. The sharp works on inside knowledge, not advanced mathematic modeling. The sharp is someone with inside information, e.g. star player twisted his ankle recently and no one knows. Bit if any moron could pull up a perfect model of the game outcome they'd all do it and the book would have no line to play. Books are happy to take action on anything where they have the advantage and are always wary of sharps ( won't take their money if known). I really could have picked any prediction model though so we shouldn't get hung up on sports Books. For example, why are banks still lending big money on expensive sea side property? Shouldn't their internal modeling be showing that these places will soon be flooded? Oceanside property should be a bargain right now. It isn't though, because the people on charge don't actually believe in the climate change models they push.

fwungy 4y ago

The book just moves the line so they're covered in either direction. The sharp works on inside knowledge, not advanced mathematic modeling. The sharp is someone with inside information, e.g. star player twisted his ankle recently and no one knows. Bit if any moron could pull up a perfect model of the game outcome they'd all do it and the book would have no line to play. Books are happy to take action on anything where they have the advantage and are always wary of sharps ( won't take their money if known). I really could have picked any prediction model though so we shouldn't get hung up on sports Books. For example, why are banks still lending big money on expensive sea side property? Shouldn't their internal modeling be showing that these places will soon be flooded? Oceanside property should be a bargain right now. It isn't though, because the people on charge don't actually believe in the climate change models they push.