4 ms·

There is a deficiency - but it'd be hard to exploit at great scale, because as you bet the advantage goes away, and then later bettors might leave your stake wi

by gojomo 12y ago

There is a deficiency - but it'd be hard to exploit at great scale, because as you bet the advantage goes away, and then later bettors might leave your stake with bad odds. Only being the 'last mover' in all the pools allows definite arbitrage.

jessaustin 12y ago
Only being the 'last mover' in all the pools allows definite arbitrage. If so, now we know the actual profit model of this business. Actually there would still be value in getting one's arbitraged wagers in just before the window closes: at this moment the general public would be unlikely to drive one out of the money and the site operator would have no incentive to do so.
- gojomo 12y ago
  Actually, assuming that bets are respected up through one atomic blockchain block before pool closing, the operator can't ensure they're last-to-move, because of the mechanics of Bitcoin-transactions-into-blocks. All bets are public, and all bets into the 'last block' before the pool closes would be equally valid. (Bitbook.ie could use some other 'we saw your transaction in time, even though it didn't make a block' approach... but that would be so open to abuse and customer complaint I doubt it'd fly.) So this again presents more problems for potential arbitrageurs as soon as there's more than one last-minute "sniper": not only are they unsure if their bet will be minted into a block in time, they can't be sure N others following the same strategy don't try the same thing, making the final odds awful. To the extent the operator has any discretion, it's just to make a final ruling on whether a block arrived "soon enough", or is the first block for which bets are a "no-go". There's a very, very slight abuse potential in such discretion: their decisions are publicly observable, and biased/arbitrary decisions would result in a lot of griping and lost credibility. On the other hand, large mining pools would have significant power to control the 'last money in', in the blocks just before an event closes. (If they see imbalanced odds they like, they could blockade other bets, and only allow their own confederates' late money in, and only to the extent that the odds remain favorable.) Maybe that's the real business model: kickbacks from side-betting mining pools!
  - jessaustin 12y ago
    ...they can't be sure N others following the same strategy don't try the same thing, making the final odds awful. Sure, but this is a challenge with parimutuel wagering in general. It's why the lines at the window are longest with one minute to post: there is more information about odds closer to the end.

by gojomo 12y ago

jessaustin 12y ago

Only being the 'last mover' in all the pools allows definite arbitrage. If so, now we know the actual profit model of this business. Actually there would still be value in getting one's arbitraged wagers in just before the window closes: at this moment the general public would be unlikely to drive one out of the money and the site operator would have no incentive to do so.

gojomo 12y ago
Actually, assuming that bets are respected up through one atomic blockchain block before pool closing, the operator can't ensure they're last-to-move, because of the mechanics of Bitcoin-transactions-into-blocks. All bets are public, and all bets into the 'last block' before the pool closes would be equally valid. (Bitbook.ie could use some other 'we saw your transaction in time, even though it didn't make a block' approach... but that would be so open to abuse and customer complaint I doubt it'd fly.) So this again presents more problems for potential arbitrageurs as soon as there's more than one last-minute "sniper": not only are they unsure if their bet will be minted into a block in time, they can't be sure N others following the same strategy don't try the same thing, making the final odds awful. To the extent the operator has any discretion, it's just to make a final ruling on whether a block arrived "soon enough", or is the first block for which bets are a "no-go". There's a very, very slight abuse potential in such discretion: their decisions are publicly observable, and biased/arbitrary decisions would result in a lot of griping and lost credibility. On the other hand, large mining pools would have significant power to control the 'last money in', in the blocks just before an event closes. (If they see imbalanced odds they like, they could blockade other bets, and only allow their own confederates' late money in, and only to the extent that the odds remain favorable.) Maybe that's the real business model: kickbacks from side-betting mining pools!
- jessaustin 12y ago
  ...they can't be sure N others following the same strategy don't try the same thing, making the final odds awful. Sure, but this is a challenge with parimutuel wagering in general. It's why the lines at the window are longest with one minute to post: there is more information about odds closer to the end.