The Bookmaker vs The Punter in the modern age
Oct 14th, 2011 - Posted by Stephen_Harris in Betting Theory
Racing Editor for bettingexpert. Always searching for winners "against the crowd" and trying to find the value.
Twitter: @Stephenh61
Email : stephen at bettingexpert.com
What impact has the computer age, and the rise of Betfair had on traditional betting markets? Today our horse racing editor and writer Stephen shares with us his insight and experience from the other side of the fence and tells us how online bookmakers are keeping pace with a whole new ball game.
Why was my account closed? Why can't I get on the size I requested? Why has the price always gone?
These are common complaints among punters, especially in the online age where at the click of a button a trader can see exactly what pattern of bets a particular punter has struck in his entire betting "career" and more importanty his bottom line profitability.
In the past, layers generally allowed winning accounts so that they effectively had their cards marked by these shrewder individuals, moved the prices accordingly and tried to get "with" the winning customers selection. For example Mr A has won £10,000 in the past three years specifically betting horses from a certain stable. He requests 400 at 5-2 on a runner from that yard in the 2.00 at Sandown. The astute layer lays the bet, clips the price into 7-4 and immediately pushes out the prices of the other runners, going top industry price the next few in the betting. The public seizes on this "value" and in his book he eventually ends up with Mr A's selection a decent winner, preferably getting a similar or bigger price himself than the punter did (by collectively laying the rest of the field heavily).
With Betfair now dominating the betting market in virtually every sport, this "inside information" is usually clearly visibly available for all to see. The price movement and cash traded has given every punter with eyes the "perfect" prices for virtually every event, and this in turn has created a small army of "arbers" who try and beat the Betfair "perfect" price with any bookmaker putting up a bigger one.
Usually any punter taking an "arb" price will have his account marked up and immediately factored. For example an online layer will have a maximum liabiity per bet for all events. If it's a big event, for example a Barcelona match where the prices are long established, this maximum loss will be set very high. However a lesser contest, for example the 2.00 at Sandown mentioned earlier, where fluctuations in price are assured, it will be set a lot lower. An account marked as an arber may be factored to 1/10th so he will only be able to bet his selection to 1/10th of the maximum liability.
This factoring bewilders many and causes frustration as often after very few bets an account can get severely limited to stakes that are basically pennies, (and often when the account is actually showing a net loss). However it is a catch 22 situation as experience has taught the layers that they cannot win laying bets at bigger than the "perfect" Betfair price.
From my experience in the industry, where I was a senior trader at one of the first companies to offer horse racing prices on every race, every day in the morning. It was right at the very start of Betfair's rise and we were unaware of its impending impact on the prices. The business showed a healthy profit after six months (there was very little competition then) but there were around fifty winning accounts. After researching and monitoring these we discovered everyone was arbing on any price we offered that was bigger than Betfair. Immediately we heavily factored these accounts and at least reduced (but didnt end) the losses to these punters.
With Betfair's liquidity now twenty times bigger than it was then (about 10 years ago) the prices on so many events are even more accurate and very few layers offer arbs intentionally. Indeed some operate an entire pricing policy governed by computer "bots" ensuring that no price is offered bigger than the betfair price.
It is an added complication in the punters ongoing daily battle with the bookmaker, but I hope I have provided some answers to commonly held grievances held by bettors.
You can follow Stephen on Twitter @stephenh61
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Stephen, in fairness though: The 5% commission is nothing else than the vig that bookies charge just as well. It is true however that people tend to overlook the commission factor, and compare the 100% book of Betfair to the 105% or whatever it is of the bookies. (but 5% commission still only amount to a 102.5% book which still is more generous than most bookies, and also the commission can be reduced) I don't know about the new incarnation of the Premium Charge, but at least the old one only targetted (and effectively hit) traders. Normal bettors with realistic winning yields were unaffected. Still that wasn't a nice or good move by Betfair, that I agree with. But for the European action there's also Betdaq, and the previously mentioned Matchbook is big on American Sports (and actually charges less commission). Personally I don't believe that betting markets and their prices are overly efficient, there are edges to be had, betting exchanges or no betting exchanges. But that's a different discussion altotgether, and this isn't the time and the place.
Yes betting exchanges cannot close winning accounts Wettfairy....but they do charge upto 5 per cent commision on all winning bets and have recently introduced a huge premium charge on their most successful clients!! However I do agree they have revolutionised the entire betting scene. I was referring to the fact that they now provide very accurate prices to the entire industry, and removed the "edge" that shrewder punters once had.
*with anything else I mean basically the other major sports to bet on, NFL, MLB, NBA, NHL and the college action.
Betting Exchanges aren't the problem, they are the solution. People can actually win there. The Euro bookies all simply won't tolerate winners in the long run. Apart from betting exchanges only very few will do: Some Asian bookies will, but first and foremost: Pinnacle does. At great odds. If you're into horse racing, Betfair/Betdaq is where you need to be at, as well as for home-draw-away betting on soccer. Anything else you better bet at Matchbook and Pinnacle if you expect to turn a reasonable profit longterm. Or the Asians, but I never tried them myself.
The problem does stem from betting exchanges I am afraid. Basically the layers now have the answers to the exams we are all sitting everyday when we have a bet. The betfair price is simply "right" and anyone they see beating it more than once is immediately restricted. Punters who won before betfair existed are increasingly frustrated. They realised what was good value on a regular basis by using judgement...now value is clearly defined and easily visible to all...and it doesn't really help anyone! The game is ever evolving and that is what makes it so fascinating....Many thanks for your feedback!
That's very interesting to know about ladbrokes and William hill as I haven't had these problems with these companies yet.. If in the uk you may wish to try placing these bets in different shops, without using the loyalty card as this making tracking your history more difficult..
Thanks for terrific article, this explains a lot about having my account suspended at some bookmakers - not because I was arbitrage betting but because I used best odds from betbrain. Somehow they accused me of arbing, and belive me - when you are not arbing that is just unfair. So now, I am avoiding ladbrokes and willhill - if you use betbrain you will get suspended (ladbrokes) or heavily reduced limit (willhill) :(
Perhaps your account is now flagged up as "warm" and you have been factored. Firms tend to have monthly culls of any accounts that have beaten them over the preceding period. I imagine you are now limited to a percentage of their maximum loss on any event. This can be frustrating, but there are so many firms out there now, it should be possible to open new accounts and stay ahead of the game. Much obliged for your thoughts and best wishes for all future punting.
Does this same logic apply with the football, i guess it should. I turned a Gamebookers prize over fairly comfortably and have just tried to put £25 on a treble at odds of 4.00 (2 games in Finland and 1 in Norway) and been told maximum I can place is £15.. I don't know if it is just European books that restrict fairly small bets of this type as i haven't come across something like this in Paddy Power, Ladbrokes & William Hill shops, maybe their limits are set high than what I punt at.. I am abit confused if Gamebookers just have small limits for everyone or they are not letting me accumulate as I want to, cause in all fairness I usually place my accumulator bets in the UK in different shops each time so it becomes very difficult to track as their are no accounts involved.. Confused if gamebookers dont take higher yielding bets on leagues in smaller countries or they dont want to take mine cause I could walk into a Ladbrokes shop and they would happily take this bet.. By the way bet is FC PoPa, JJK & Molde all to win today,it will probably lose anyway but after reading this I would be interested in your thoughts...?
Great blog post Stephen. It's lovely to get some insights from the bookies' perspective. I remember the old odds comparison sites and as you say 10 years ago, it's was a wild west for arbing. Look forward to reading more from your hand! Jesper, BettingExpert
Good stuff. I've always felt life is too short to chase arbs, but each to his own.
What an article, Stephen props to you my friend haven't read a blog like this in a while... Thank you sir....
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yes but by shopping around these days the margin for conventional layers has all but disappeared..in reality by searching you can see less than 100 pc on a regular basis, particulary on a Saturday when around 15 firms price up feature races the night before relatively unguided by an established betfair market. I personally play solely on betfair at the moment because my online accounts have been factored to death....it really is a catch22 situation for all punters. Still it is finding solutions to these problems that ensures we all have to stay on our toes in the betting world!