10 ms·

Beating the bookies with their own numbers

72 points by hemant1041 2y ago

hemant1041 2y ago
[flagged]
- lelandbatey 2y ago
  The bio of this account is lorem Ipsum text and this comment is a copy paste of the first 2 sentences of the paper abstract. Feels like this could be spam.
ano-ther 2y ago
Interestingly, the gambling platforms restricted them after they got too successful. This is from 2017, so I am wondering if the strategy would still work (and how much faster they would be blocked).
- yapyap 2y ago
  > This is from 2017, so I am wondering if the strategy would still work Knowing the gambling industry, I bet it doesn’t work now
  - tanbog45 2y ago
    Knowing the gambling industry, it likely does still work, they just ban you if you use it.
- seizethecheese 2y ago
  In a recent interview with Nate Silver, he talks about how it’s basically impossible to make sustained edge from online sports books. They just ban you if you consistently make large, winning bets.
  - beoberha 2y ago
    Anyone who makes a living off of sports betting is paying other people to put the bets down for them. Even the in person casinos will ban you if you win too much.
- ungreased0675 2y ago
  How has this survived legally? Only non-winners are allowed to gamble?
  - lurkshark 2y ago
    Yeah it’s extremely sketchy but legal. Sports betting is treated as a game offered on the casino’s terms and they get to choose who and for how much they’ll play with. You can see it in the financials of the big companies. Where the theoretical win for the casino on most sports bets is around 5%, DraftKings and the others are regularly hitting 3x that much. They ban/limit winners and push everyone else toward bad bets (e.g. same game parlays).
- kqr 2y ago
  This has always been the case throughout history. The difficult part of winning big or consistently is not doing the probability judgments or expected value computations -- it's getting the counterparty to pay you. The actual long-term winners have to win small and inconspicuously.
MacsHeadroom 2y ago
Prediction markets like Polymarket solve this by not having bookies. Just bet against other players. Why bet against a house who takes an enormous cut even when you win when you could bet in an efficient market and keep 100% of your winnings?
- Waterluvian 2y ago
  Are prediction markets essentially zero sum where every outcome is fully covered by all the bets? Minus fees I’m guessing.
  - maxbond 2y ago
    Yep. For the ones I've looked into, orders match when they sum to $1. Eg, I bid $0.75 on yes and you bid $0.25 on no. The contracts are very carefully written such that they are mutually exclusive, only one of us gets $1 when the contract resolves. And like you suggest, you pay a fee on the way out.
  - zarmin 2y ago
    If this is the case, it kills me that online poker is still illegal federally. Zero sum skill game minus fees.
    - zahlman 2y ago
      The issue here is that "skill game" is something that lawyers would have to prove to judges.
    - Waterluvian 2y ago
      Is it technically possible to encode a whole game of hold’em using one of these markets?
  - snthpy 2y ago
    That's called parimutuel being and the broker just takes a vig (vigorish). It's analogous to agency based trading in finance. The broker can also set the odds and act as a market maker, like principal based trading in finance.
mannykannot 2y ago
Given that the sports-betting population is not entirely rational, and perhaps in predictable ways, would it be surprising if the odds that maximize profit in the real world differ from those which would be optimal given only rational and informed punters?
- ChocMontePy 2y ago
  Here in Australia the average punter on horse-racing is normally competing against his fellow rational and informed punters. But every November we have a huge Melbourne Cup race where millions of people make their selection because they like the jockeys' colours or the sound of the horse's name. So the serious punters are competing against uninformed punters and on that day they are in a much better position to make some $$$.
TZubiri 2y ago
I didn't understand, how would you use the information given by the bookie ( the prices) to find inefficiencies in that same information. Unless the bookie made arithmetical mistakes? From the abstract it sounds like maybe they are finding differences across different sportsbooks, i.e. arbitrage?
- kqr 2y ago
  I don't think it counts as arbitrage, strictly speaking, because from what I can tell, the authors are not making offsetting bets with different bookies to expose themselves only to the difference in odds. They are, however, finding opportunities where one bookie has odds much longer than others for the same outcome, and betting on that. This means they expose themselves both to the difference in odds and the outcome of the event, but opportunities are plentiful enough that on average it is possible to show a reliable profit in a few months, apparently. What surprises me about this is that some bookies still offer odds out of line with others. The article mentions that they might do this to counterbalance the risk of large amounts of bets on another outcome, which makes sense. But! I was under the impression bookies placed bets with each other to even out those risks, specifically to avoid creating arb opportunities.
  - robertlagrant 2y ago
    > I was under the impression bookies placed bets with each other to even out those risks, specifically to avoid creating arb opportunities. Doesn't that just mean they don't lose money? You can still make money as a punter in that scenario?
    - kqr 2y ago
      My intuition is that it would mean these underpriced outcomes would go away.
  - TZubiri 2y ago
    I'd say it's a type of arbitrage. The typical arbitrage in bookies (scalping I think they call it), hedges one bet against the other. But in the case of the paper, as I understand it, they just take the bet unhedged for some reason. Which unlike most other forms of arbitrage is sustainable. If you were buying commodities you would also need to sell the commodities, but since these pseudo-securities coalesce into money, they don't need to make the inverse trade to sustain their alpha-seeking fund. With that difference aside, I'd say it shares many of the same properties of arbitraging, I don't know how translateable it would be to stocks, but many of those assets coalesce into cash as well, especially fixed income (at a much slower rate), and options (albeit in more complex manners). I imagine that with the amount of new currencies that exist, a big part of the job is going to be moving currency of one form into another and essentially forming a new circuit, for example buying crypto with fiat to bet in a crypto sportsbook, and the selling that crypto to buy more fiat. In essence there's also the risk of becoming a money launderer doing this, whether trading stocks, currencies or betting, it's a form of arbitrage and you are getting money from ???.
55555 2y ago
>> While several betting strategies have been proposed to beat bookmakers, from expert prediction models and arbitrage strategies to odds bias exploitation, their returns have been inconsistent and it remains to be shown that a betting strategy can outperform the online sports betting market. This is the most academic sentence I’ve ever read. There’s always been an industry of professional gamblers with various successful strategies. Some have become billionaires.
- foobar1962 2y ago
  > There’s always been an industry of professional gamblers with various successful strategies. Some have become billionaires. Be the house.
injidup 2y ago
The only gambling strategies that work are the ones nobody tells you about.
- vdvsvwvwvwvwv 2y ago
  You can tell people the 30k ft version but you wont get the lines of code, or the smart operators needed to keep the system running for that matter. Data science, dev, ops etc.
saxelsen 2y ago
I'm not sure if you're aware of this, but this is literally how the market becomes more efficient: by allowing participants with more information and reducing the arbitrage opportunities. The bookmakers don't set the odds based on their own expectations, they set the odds compared to how the market bets and then add their own margin on top (the "vig"). Just like a stockbroker would. In sports betting, compared to financial markets, the general reason why people aren't wildly successful is that if they have too much of an edge the bookmakers find some way to limit their succes (limited bet sizes, banning, etc)
- lurkshark 2y ago
  A caveat here with the stock market comparison, although there are some betting exchanges like Matchbook, most betting is done with fixed odds. That is, the book isn’t letting the market set the odds in the sense of trying to balance their action and add vig, they’re trying to get the most “correct” odds. Often this involves tracking the sharp bettors within the market, but not the market as a whole. The sharp odds is another factor that makes it impossible to be wildly successful (in addition to your callout on banning/limiting). Like NFL lines as an extreme example are so sharp that I don’t think anyone could reliably beat them.
lurkshark 2y ago
The strategy this paper seems to be describing is well known as “chasing steam”. You keep an eye on the odds at a “sharp” book, one that’s good at tracking which clients of theirs often win and adjust their odds accordingly, then find books that are slower to adjust their odds. There’s a long tail of “pay per head” bookies, basically your classic street corner bookie but with a SaaS for taking bets, and they’re often the slowest to adjust. The problem is that identifying this is very easy for a sports book. Basically “show me all accounts that consistently make bets right before we adjust the odds” and then they ban/limit those accounts. In practice the heavy lifting for winning sports bettors is building a network of “outs” or players that will place bets on their behalf. The idea is that you have a recreational bettor (i.e. bets for fun and usually loses) that puts down a bet on your behalf with your money, and if it wins they get to keep a slice. This masks the sharp bets with their personal bad bets. Really the strategy to beat the odds is one of the easiest parts of the equation. It’s good old fashion people management that’s the biggest part of what makes it work.
- Scottn1 2y ago
  When I moved to Las Vegas in the late 90's, I became friends with someone in my new circle who was from Brooklyn, NY and a pretty active sports better. I mean this wasn't the recreational type doing for-fun $20 parlays on Sunday, he was routinely doing $500 and $1k bets ("dimes" he called them). I had been to Vegas on trips before and remember bringing $300 for gambling for a weekend and thinking that was a lot. I was in utter shock at how much he would be riding on a typical NCAA Football Saturday and NFL Sunday. It was one of my first true experiences in my life of what hardcore gambling was and a side I have never seen or known. Anyway, I remember very clearly how serious his betting was and how he solely looked to find any edges he could. It wasn't about handicapping a game, he was a line sharp. Remember this was a time where Internet was still dial-up and wagering off-shore was still very early days. Many times he would be calling old-fashioned bookmakers back home. He was paying for a service called Don Best and at the time it was pretty expensive but was able to get line-moves almost in real time. He was "Chasing Steam" as you called it. Watch for big line moves in Best and place bets where he could that haven't caught it yet. He was pretty successful and quit his full time job while buying a house, cars, etc. Not flashy but just a living. Eventually, as all things gambling, it started to turn bad for him. He was getting accounts suspended and getting listed as a sharp. He would call customer support playing dumb and I remember one guy at an offshore book on speaker-phone flat out told him basically no longer want his business as every time he places a bet with them the lines were moving shortly after in his favor and wanted to know what he was using. I remember his downfall being pretty fast after that. It started with just getting blacklisted at some and the few reputable offshore books left wouldn't keep him long when they discovered he was a steam chaser. He tried changing phone numbers and fake ID's and they caught onto that. Eventually any book that did take his action he started to hear Don Best line moves in the background on the phone and they would tell him to "hold on something is happening" then just give him the new adjusted line. The edge was gone and he started to bet with shadier old-school bookies that didn't have the technology, but they just didn't pay him anyway. He started to see the writing on the wall and the bill pressures started to effect him as he started to just push into trying to handicap and pick winners based on gut and dabble into some line making software. At one point he was in for a very large sum after a bad Sunday, something like $70k he owed. He struggled for a good 5 years after that, divorced and back to a 9-5. Last I seen him was right before Covid and he was out of that world not having placed a bet in a long while he said and was now into options trading. I doubt betting line moves is even a thing anymore. Information just moves so fast now and books have evolved way beyond. Plus with how big sports wagering in in the US, lines probably only move now because of large public betting waves or injuries.
vdvsvwvwvwvwv 2y ago
> We provide a detailed description of our betting experience to illustrate how the sports gambling industry compensates these market inefficiencies with discriminatory practices against successful clients. Correct. I have written that code in a past life. Some clients get rate limited. Keep their bets as a nudge to check your odds. Poor big betters (these days called whales) get taken out to dinner. Also worked on the other side and you can avoid being shutdown by using 2 sided markets. Pools, betfair, crypto, for example.

72 points by hemant1041 2y ago

hemant1041 2y ago

[flagged]

lelandbatey 2y ago
The bio of this account is lorem Ipsum text and this comment is a copy paste of the first 2 sentences of the paper abstract. Feels like this could be spam.

ano-ther 2y ago

Interestingly, the gambling platforms restricted them after they got too successful. This is from 2017, so I am wondering if the strategy would still work (and how much faster they would be blocked).

yapyap 2y ago
> This is from 2017, so I am wondering if the strategy would still work Knowing the gambling industry, I bet it doesn’t work now
- tanbog45 2y ago
  Knowing the gambling industry, it likely does still work, they just ban you if you use it.
seizethecheese 2y ago
In a recent interview with Nate Silver, he talks about how it’s basically impossible to make sustained edge from online sports books. They just ban you if you consistently make large, winning bets.
- beoberha 2y ago
  Anyone who makes a living off of sports betting is paying other people to put the bets down for them. Even the in person casinos will ban you if you win too much.
ungreased0675 2y ago
How has this survived legally? Only non-winners are allowed to gamble?
- lurkshark 2y ago
  Yeah it’s extremely sketchy but legal. Sports betting is treated as a game offered on the casino’s terms and they get to choose who and for how much they’ll play with. You can see it in the financials of the big companies. Where the theoretical win for the casino on most sports bets is around 5%, DraftKings and the others are regularly hitting 3x that much. They ban/limit winners and push everyone else toward bad bets (e.g. same game parlays).
kqr 2y ago
This has always been the case throughout history. The difficult part of winning big or consistently is not doing the probability judgments or expected value computations -- it's getting the counterparty to pay you. The actual long-term winners have to win small and inconspicuously.

MacsHeadroom 2y ago

Prediction markets like Polymarket solve this by not having bookies. Just bet against other players. Why bet against a house who takes an enormous cut even when you win when you could bet in an efficient market and keep 100% of your winnings?

Waterluvian 2y ago
Are prediction markets essentially zero sum where every outcome is fully covered by all the bets? Minus fees I’m guessing.
- maxbond 2y ago
  Yep. For the ones I've looked into, orders match when they sum to $1. Eg, I bid $0.75 on yes and you bid $0.25 on no. The contracts are very carefully written such that they are mutually exclusive, only one of us gets $1 when the contract resolves. And like you suggest, you pay a fee on the way out.
- zarmin 2y ago
  If this is the case, it kills me that online poker is still illegal federally. Zero sum skill game minus fees.
  - zahlman 2y ago
    The issue here is that "skill game" is something that lawyers would have to prove to judges.
  - Waterluvian 2y ago
    Is it technically possible to encode a whole game of hold’em using one of these markets?
- snthpy 2y ago
  That's called parimutuel being and the broker just takes a vig (vigorish). It's analogous to agency based trading in finance. The broker can also set the odds and act as a market maker, like principal based trading in finance.

mannykannot 2y ago

Given that the sports-betting population is not entirely rational, and perhaps in predictable ways, would it be surprising if the odds that maximize profit in the real world differ from those which would be optimal given only rational and informed punters?

ChocMontePy 2y ago
Here in Australia the average punter on horse-racing is normally competing against his fellow rational and informed punters. But every November we have a huge Melbourne Cup race where millions of people make their selection because they like the jockeys' colours or the sound of the horse's name. So the serious punters are competing against uninformed punters and on that day they are in a much better position to make some $$$.

TZubiri 2y ago

I didn't understand, how would you use the information given by the bookie ( the prices) to find inefficiencies in that same information. Unless the bookie made arithmetical mistakes? From the abstract it sounds like maybe they are finding differences across different sportsbooks, i.e. arbitrage?

kqr 2y ago
I don't think it counts as arbitrage, strictly speaking, because from what I can tell, the authors are not making offsetting bets with different bookies to expose themselves only to the difference in odds. They are, however, finding opportunities where one bookie has odds much longer than others for the same outcome, and betting on that. This means they expose themselves both to the difference in odds and the outcome of the event, but opportunities are plentiful enough that on average it is possible to show a reliable profit in a few months, apparently. What surprises me about this is that some bookies still offer odds out of line with others. The article mentions that they might do this to counterbalance the risk of large amounts of bets on another outcome, which makes sense. But! I was under the impression bookies placed bets with each other to even out those risks, specifically to avoid creating arb opportunities.
- robertlagrant 2y ago
  > I was under the impression bookies placed bets with each other to even out those risks, specifically to avoid creating arb opportunities. Doesn't that just mean they don't lose money? You can still make money as a punter in that scenario?
  - kqr 2y ago
    My intuition is that it would mean these underpriced outcomes would go away.
- TZubiri 2y ago
  I'd say it's a type of arbitrage. The typical arbitrage in bookies (scalping I think they call it), hedges one bet against the other. But in the case of the paper, as I understand it, they just take the bet unhedged for some reason. Which unlike most other forms of arbitrage is sustainable. If you were buying commodities you would also need to sell the commodities, but since these pseudo-securities coalesce into money, they don't need to make the inverse trade to sustain their alpha-seeking fund. With that difference aside, I'd say it shares many of the same properties of arbitraging, I don't know how translateable it would be to stocks, but many of those assets coalesce into cash as well, especially fixed income (at a much slower rate), and options (albeit in more complex manners). I imagine that with the amount of new currencies that exist, a big part of the job is going to be moving currency of one form into another and essentially forming a new circuit, for example buying crypto with fiat to bet in a crypto sportsbook, and the selling that crypto to buy more fiat. In essence there's also the risk of becoming a money launderer doing this, whether trading stocks, currencies or betting, it's a form of arbitrage and you are getting money from ???.

55555 2y ago

>> While several betting strategies have been proposed to beat bookmakers, from expert prediction models and arbitrage strategies to odds bias exploitation, their returns have been inconsistent and it remains to be shown that a betting strategy can outperform the online sports betting market. This is the most academic sentence I’ve ever read. There’s always been an industry of professional gamblers with various successful strategies. Some have become billionaires.

foobar1962 2y ago
> There’s always been an industry of professional gamblers with various successful strategies. Some have become billionaires. Be the house.

injidup 2y ago

The only gambling strategies that work are the ones nobody tells you about.

vdvsvwvwvwvwv 2y ago
You can tell people the 30k ft version but you wont get the lines of code, or the smart operators needed to keep the system running for that matter. Data science, dev, ops etc.

saxelsen 2y ago

I'm not sure if you're aware of this, but this is literally how the market becomes more efficient: by allowing participants with more information and reducing the arbitrage opportunities. The bookmakers don't set the odds based on their own expectations, they set the odds compared to how the market bets and then add their own margin on top (the "vig"). Just like a stockbroker would. In sports betting, compared to financial markets, the general reason why people aren't wildly successful is that if they have too much of an edge the bookmakers find some way to limit their succes (limited bet sizes, banning, etc)

lurkshark 2y ago
A caveat here with the stock market comparison, although there are some betting exchanges like Matchbook, most betting is done with fixed odds. That is, the book isn’t letting the market set the odds in the sense of trying to balance their action and add vig, they’re trying to get the most “correct” odds. Often this involves tracking the sharp bettors within the market, but not the market as a whole. The sharp odds is another factor that makes it impossible to be wildly successful (in addition to your callout on banning/limiting). Like NFL lines as an extreme example are so sharp that I don’t think anyone could reliably beat them.

lurkshark 2y ago

The strategy this paper seems to be describing is well known as “chasing steam”. You keep an eye on the odds at a “sharp” book, one that’s good at tracking which clients of theirs often win and adjust their odds accordingly, then find books that are slower to adjust their odds. There’s a long tail of “pay per head” bookies, basically your classic street corner bookie but with a SaaS for taking bets, and they’re often the slowest to adjust. The problem is that identifying this is very easy for a sports book. Basically “show me all accounts that consistently make bets right before we adjust the odds” and then they ban/limit those accounts. In practice the heavy lifting for winning sports bettors is building a network of “outs” or players that will place bets on their behalf. The idea is that you have a recreational bettor (i.e. bets for fun and usually loses) that puts down a bet on your behalf with your money, and if it wins they get to keep a slice. This masks the sharp bets with their personal bad bets. Really the strategy to beat the odds is one of the easiest parts of the equation. It’s good old fashion people management that’s the biggest part of what makes it work.

Scottn1 2y ago
When I moved to Las Vegas in the late 90's, I became friends with someone in my new circle who was from Brooklyn, NY and a pretty active sports better. I mean this wasn't the recreational type doing for-fun $20 parlays on Sunday, he was routinely doing $500 and $1k bets ("dimes" he called them). I had been to Vegas on trips before and remember bringing $300 for gambling for a weekend and thinking that was a lot. I was in utter shock at how much he would be riding on a typical NCAA Football Saturday and NFL Sunday. It was one of my first true experiences in my life of what hardcore gambling was and a side I have never seen or known. Anyway, I remember very clearly how serious his betting was and how he solely looked to find any edges he could. It wasn't about handicapping a game, he was a line sharp. Remember this was a time where Internet was still dial-up and wagering off-shore was still very early days. Many times he would be calling old-fashioned bookmakers back home. He was paying for a service called Don Best and at the time it was pretty expensive but was able to get line-moves almost in real time. He was "Chasing Steam" as you called it. Watch for big line moves in Best and place bets where he could that haven't caught it yet. He was pretty successful and quit his full time job while buying a house, cars, etc. Not flashy but just a living. Eventually, as all things gambling, it started to turn bad for him. He was getting accounts suspended and getting listed as a sharp. He would call customer support playing dumb and I remember one guy at an offshore book on speaker-phone flat out told him basically no longer want his business as every time he places a bet with them the lines were moving shortly after in his favor and wanted to know what he was using. I remember his downfall being pretty fast after that. It started with just getting blacklisted at some and the few reputable offshore books left wouldn't keep him long when they discovered he was a steam chaser. He tried changing phone numbers and fake ID's and they caught onto that. Eventually any book that did take his action he started to hear Don Best line moves in the background on the phone and they would tell him to "hold on something is happening" then just give him the new adjusted line. The edge was gone and he started to bet with shadier old-school bookies that didn't have the technology, but they just didn't pay him anyway. He started to see the writing on the wall and the bill pressures started to effect him as he started to just push into trying to handicap and pick winners based on gut and dabble into some line making software. At one point he was in for a very large sum after a bad Sunday, something like $70k he owed. He struggled for a good 5 years after that, divorced and back to a 9-5. Last I seen him was right before Covid and he was out of that world not having placed a bet in a long while he said and was now into options trading. I doubt betting line moves is even a thing anymore. Information just moves so fast now and books have evolved way beyond. Plus with how big sports wagering in in the US, lines probably only move now because of large public betting waves or injuries.

vdvsvwvwvwvwv 2y ago

> We provide a detailed description of our betting experience to illustrate how the sports gambling industry compensates these market inefficiencies with discriminatory practices against successful clients. Correct. I have written that code in a past life. Some clients get rate limited. Keep their bets as a nudge to check your odds. Poor big betters (these days called whales) get taken out to dinner. Also worked on the other side and you can avoid being shutdown by using 2 sided markets. Pools, betfair, crypto, for example.