How a sports betting hedge fund works
businessweek.com
businessweek.com
What is also interesting to me is why the internet betting is prohibited in USA, but buying stock or forex trading is not prohibited. So you can't bet on sport outcome, but you can bet on companies stock prices or currency fluctuations.
Apart from that, the addictive aspect of gambling is in many places a major argument to prohibit or severely restrict gambling.
As to why paying someone to play badly is illegal, it's because the information asymmetry distorts 'normal' trade relations. It's a consumer protection mechanism. Of course it could be dealt with by a civil claim, but that may not have enough of a deterrent effect.
Sports leagues don't have much power in this matter. They can only influence the player being bought off, not the one paying the player.
We (http://www.smarkets.com) are about to launch our own free RESTful trading API.
2) When will the RESTful API be available? Can you email me when it's ready?
Also the Smarkets founders are US citizens and they'd quite like not to get arrested when they go back home.
For API news, follow our blog: http://blog.smarkets.com/
Some markets are suspended and all unmatched bets cancelled when a significant event happens (such as when a goal is scored in football).
Any in-play market places a 5 second delay between placing a bet and having it matched, giving the market makers a chance to get out.
They write their own market data and execution feeds from various sports betting facilities, abstracting everything, and handle it exactly like they're running their own exchange.
They were looking for people a little while ago - I had an interview there and bombed after spending an hour trying to find their office - but they're friendly guys.
What exactly do you mean? The have their own betting agency and selling their customers bets to betfair?
It's prop trading only AFAIK.
Of course, it might happen that as the match going on, the draw is more and more likely, so the odds for a draw is getting lower. Then at some time, the trader can still bet on a draw (like in the first example), but this time he will have a loss, but a lot lower loss as if he would place just only one bet and lost. And that's I think is called hedging, you bet on all outcomes in different time points.
That is not hedging; hedging is the process of considering (at the point of purchase) how you can protect your investment against unquantified events. For example you might decide that Apple as a company is undervalued so you want to buy some of their shares, but the markets seem volatile at the moment so you want to hedge yourself against large movements in the index.
You can do this by selling short on the index at the same time as you buy your Apple shares. So suppose you're correct about Apple (that they're undervalued) and the market realises this and their share price increases by 1% relative to the index, without your hedge this could see your investment say gain 4% if the index goes up 3%, or lose 2% if the index falls by 3%, so you get either +4% or -2%.
Now suppose that you have your index hedge in place, if the market rises by 3%, you get 4% on Apple -3% on the index = 1%, if the market falls by 3% you get -2% on Apple and 3% on the index = 1%. So either way you get the 1% profit through your Apple intuition. By selling the index you've hedged yourself against movements in the underlying market.
So to hedge a bet on something like Roger Federer winning against Rafael Nadal in a match today, you need to try and find something else to bet on at the same time. I can't really think of how to do this though.