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I would guess this is not true for betting exchanges where backers and layers are directly connected to eachother and the exchange takes a small cut of every tr

I would guess this is not true for betting exchanges where backers and layers are directly connected to eachother and the exchange takes a small cut of every transaction regardless of which side wins or loses. I wouldn’t have thought it would matter to them if you were a consistent winner because your repeat business helps to provide liquidity to the exchange.

dist-epoch 1y ago
This might come as a surprise to you, but the more volume you trade, the higher commission you pay (in percentage terms) on sports betting exchanges. BetFair calls it the Expert Fee :)) If you make more than $100k profit, you pay 40% extra Expert Tax on it :) https://support.betfair.com/app/answers/detail/expert-fee-faqs https://support.betfair.com/app/answers/detail/expert-fee-fa...
- tough 1y ago
  lol how is that legal
  - genewitch 1y ago
    25% of their 40% take goes to lawmakers?
    - tough 1y ago
      oh, I see, incentives alignment eh
    - bartread 1y ago
      Ah, yes, now that's interesting. In the UK you do not pay tax on winnings from gambling so, assuming the government gets a cut, this might be in lieu of tax that they would otherwise not accrue from the professional/expert gambler due to their winnings not being taxable. And modern KYC checks mean, I'd imagine, you can't simply subvert this by running multiple accounts or by periodically shutting down your accounts and setting up new ones.
- bartread 1y ago
  > This might come as a surprise to you You're right: TIL, so thank you. I've done no more than dip my toe in the water on betting exchanges. That level of expert tax seems... rude. Really rude. But I wonder if some goes to the government in lieu of taxes that would not otherwise be payable on winnings from gambling (at least not here, in the UK, since winnings from gambling aren't taxable).
joezydeco 1y ago
I thought the same thing, and that's typically how pari-mutuel betting works (horsetracks, Jai-Alai, etc). But if some whale comes in and wants to drop a large bet, I suppose the house doesn't want to sit around and wait for the same amount of action on the other side before they take the bet or the game starts. And now they're exposed if the whale wins.
- deleted 1y ago
  [deleted]
- natmaka 1y ago
  AFAIK in a pure 'parimutuel' setup ( https://en.wikipedia.org/wiki/Parimutuel_betting https://en.wikipedia.org/wiki/Parimutuel_betting ) the house is never exposed, and if this holds I see no reason for someone understanding this to place a non-parimutuel bet.
- bartread 1y ago
  No, let's say I bet £100[0] on an exchange. That doesn't guarantee the bet will be matched. Maybe only £10 of my bet is matched. And it's the counterparty or counterparties to the bet that are on the hook, not the exchange. I.e., it works much like a marketplace for other financial instruments, and the situation I'm describing is much like a "partial fill" on a stock order. The exchange takes its commission on the matched value of the bet no matter what, and they don't care which way it goes. [0] I'm using small numbers because the total value of matched bets on many horse races can be small. If you go in and drop £100k or £10k, or even £1k, especially if you did it all in one go (and assuming the exchange would allow it), there are plenty of races where only a tiny portion of that would be matched. In fact most races have only thousands of pounds or low five figures matched.
skippyboxedhero 1y ago
This is how Asian books work, they move prices early, and make it back on volume (this is not a wholly geographical designation, Pinnacle Sports is also an Asian book but operates in the Caribbean...iirc). The problem in the US is that it is a highly competitive market so you have to acquire your customer base every weekend, and these customers don't actually care so much about prices. So having weaker prices is a more effective way to deliver the product. In addition, US gamblers like parlays, parlays are more profitable, have lower volume per bet, and (so far) the economics of the Asian book don't work for this market (i.e. get syndicates to bet your lines early).
cameldrv 1y ago
Regular sportsbooks (i.e. non-exchange, they're making the market) don't necessarily want the "liquidity." At least many years ago when I was doing this professionally, there were "sharp books" and "square books." The sharp books more or less operated the way you're describing. They would try to set the line as close to the true odds as possible. They knew who the sharp bettors were, and they may have limited their bets to some degree, but they would take them and adjust the lines accordingly. You have to be a very good bookmaker for this strategy to work, because every line that's a little bit off is going to get pounced on for the max bet. The square books' strategy was to keep the sharp bettors out by limiting their bets severely or kicking them out entirely. This also lets them set the lines in a way that makes them more money, because there are a number of biases recreational bettors tend to be subject to. In particular, they tend to overbet on favorites, and they tend to underappreciate the home team advantage. There's also an effect where people will tend to bet on their favorite team, and so teams from large markets get more bets than teams from small markets. By moving the line a few percent one way, they can make significantly more money on average.

dist-epoch 1y ago

This might come as a surprise to you, but the more volume you trade, the higher commission you pay (in percentage terms) on sports betting exchanges. BetFair calls it the Expert Fee :)) If you make more than $100k profit, you pay 40% extra Expert Tax on it :) https://support.betfair.com/app/answers/detail/expert-fee-faqs https://support.betfair.com/app/answers/detail/expert-fee-fa...

tough 1y ago
lol how is that legal
- genewitch 1y ago
  25% of their 40% take goes to lawmakers?
  - tough 1y ago
    oh, I see, incentives alignment eh
  - bartread 1y ago
    Ah, yes, now that's interesting. In the UK you do not pay tax on winnings from gambling so, assuming the government gets a cut, this might be in lieu of tax that they would otherwise not accrue from the professional/expert gambler due to their winnings not being taxable. And modern KYC checks mean, I'd imagine, you can't simply subvert this by running multiple accounts or by periodically shutting down your accounts and setting up new ones.
bartread 1y ago
> This might come as a surprise to you You're right: TIL, so thank you. I've done no more than dip my toe in the water on betting exchanges. That level of expert tax seems... rude. Really rude. But I wonder if some goes to the government in lieu of taxes that would not otherwise be payable on winnings from gambling (at least not here, in the UK, since winnings from gambling aren't taxable).

joezydeco 1y ago

I thought the same thing, and that's typically how pari-mutuel betting works (horsetracks, Jai-Alai, etc). But if some whale comes in and wants to drop a large bet, I suppose the house doesn't want to sit around and wait for the same amount of action on the other side before they take the bet or the game starts. And now they're exposed if the whale wins.

deleted 1y ago
[deleted]
natmaka 1y ago
AFAIK in a pure 'parimutuel' setup ( https://en.wikipedia.org/wiki/Parimutuel_betting https://en.wikipedia.org/wiki/Parimutuel_betting ) the house is never exposed, and if this holds I see no reason for someone understanding this to place a non-parimutuel bet.
bartread 1y ago
No, let's say I bet £100[0] on an exchange. That doesn't guarantee the bet will be matched. Maybe only £10 of my bet is matched. And it's the counterparty or counterparties to the bet that are on the hook, not the exchange. I.e., it works much like a marketplace for other financial instruments, and the situation I'm describing is much like a "partial fill" on a stock order. The exchange takes its commission on the matched value of the bet no matter what, and they don't care which way it goes. [0] I'm using small numbers because the total value of matched bets on many horse races can be small. If you go in and drop £100k or £10k, or even £1k, especially if you did it all in one go (and assuming the exchange would allow it), there are plenty of races where only a tiny portion of that would be matched. In fact most races have only thousands of pounds or low five figures matched.

skippyboxedhero 1y ago

This is how Asian books work, they move prices early, and make it back on volume (this is not a wholly geographical designation, Pinnacle Sports is also an Asian book but operates in the Caribbean...iirc). The problem in the US is that it is a highly competitive market so you have to acquire your customer base every weekend, and these customers don't actually care so much about prices. So having weaker prices is a more effective way to deliver the product. In addition, US gamblers like parlays, parlays are more profitable, have lower volume per bet, and (so far) the economics of the Asian book don't work for this market (i.e. get syndicates to bet your lines early).

cameldrv 1y ago

Regular sportsbooks (i.e. non-exchange, they're making the market) don't necessarily want the "liquidity." At least many years ago when I was doing this professionally, there were "sharp books" and "square books." The sharp books more or less operated the way you're describing. They would try to set the line as close to the true odds as possible. They knew who the sharp bettors were, and they may have limited their bets to some degree, but they would take them and adjust the lines accordingly. You have to be a very good bookmaker for this strategy to work, because every line that's a little bit off is going to get pounced on for the max bet. The square books' strategy was to keep the sharp bettors out by limiting their bets severely or kicking them out entirely. This also lets them set the lines in a way that makes them more money, because there are a number of biases recreational bettors tend to be subject to. In particular, they tend to overbet on favorites, and they tend to underappreciate the home team advantage. There's also an effect where people will tend to bet on their favorite team, and so teams from large markets get more bets than teams from small markets. By moving the line a few percent one way, they can make significantly more money on average.