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Comment by efavdb | Hacker News Reader

I had thought bookies set the odds so that half of incoming bets were on either side. They don’t care which outcome occurs and just take their cut either way. I guess at low volume it’s hard to find that optimal spot and this is what results in losses.

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Odds providers have their models on how likely each outcome is. They add a spread to this (for example if it's 50/50, they'll pay out 1.8x instead of 2x). The line can also be affected by other factors, like how likely it is one side is oversubscribed. They don't make money on all markets, just most

But if someone has a model that is so significantly better than theirs that it beats the line _and_ spread, they will make money in the long run. Haralabos Voulgaris for example is likely one of the most successful sports bettors. Very interesting guy imo

> Haralabos Voulgaris for example is likely one of the most successful sports bettors. Very interesting guy imo

Anyone whose name sounds like a Harry Potter spell is bound to be an interesting person. I'll have to dig into him some more

There's more to it. Even if the sports-book functions as an exchange, holding ~zero stake in the outcomes, they still want to ban anyone who consistently wins.

That's because if you have a few smart players who consistently win, that means you have a lot of fools who will consistently lose money on the platform - which will drive them away, and impact both betting activity and the spread you collect.

Ideally, you want a bunch of uninformed fools generating huge volume gambling against eachother, while you siphon away spread.

It's a deplorable, lose-lose industry.

This isn't correct.

Asian books (not a geographical distinction but a business model) are not exchanges and they effectively pay sharps to bet with them. This is why betting syndicates exist, they set prices, and the business model of Asian books is to make it back on volume from having the best prices (and before legalisation, these were the biggest books in the world, they did billions every week in handle).

But the business model is different: retail-facing bookies have to win their customer base back every week so they need to spend more marketing. Asian books also do promos but they tend to be one-time (which are cheaper to run), they don't have a non-sportsbook business typically, and they don't comply with regulators.

Exchanges do not drive away sharps either. Their business model is largely about providing an environment for sharps. The only times were that hasn't been true is when a syndicate has owned an exchange (this happened with Matchbook). The exchange provides an incentive to invest for people to invest in price discovery, which happens. There is no way for the business to run without someone being incentivized to discover prices. People randomly gambling against each other isn't a business model.

AIUI, two other factors are:

the most lucrative (sports) bets are complex and highly unlikely parley bets, betters here naturally tend to all take one side

They want to offer bets on many sports, matches, and specific events that don't get a lot of bets, so they have to take the risk

I mean, yes, obviously being a bookie where you can set a crazy spread on convoluted bets is more profitable than being an agnostic, fair betting exchange - but I was pointing out that even a fair betting exchange has every incentive to kick winners off its platform.

The price on most betting exchanges is unbeatable without significant resources (it is set based on Asian books, they will open lines to sharps before betting exchanges list the market).

The price on parlays, with the huge spread, is far more vulnerable because there is no large market for these events. Prices for large events are mostly gathered from third parties, parlays will tend to be priced in-house.

This is part of the reason why bookmakers control who can bet on what on their site. If they opened parlay line with $100k limit to anyone, they would be bankrupted by the end of the day. The purpose of these bets is to create a product that is exciting for customers and is economic for them to provide...but that requires there to be limit on how much customers can bet.

The most profitable product are the handicap markets and point spreads even though the margin for these is usually low single digits. Asian books usually only provide these markets...but the problem is that customers don't like these as much as parlays. The product is entertainment.

Do you think the Chicago Mercantile Exchange kicks out the brokers that make the best futures trades? How is this any different?

CME is a bad example, because large market participants actually go there to buy stuff like commodities that they need to keep their businesses going, and many trades are often net-win-win for both parties. (The active trader made a buck, the producer/consumer of the commodity got their goods. They might have preferred getting them at a better price, but they are still net positive from making the trade at the price they got/paid.)

The retail day traders trying to play there are, of course, in a win/lose fight.

> It's a deplorable industry.

If we start decrying every industry whose business model is based on information asymmetry we are going to have a lot of uncomfortable folk on this forum

Perhaps we should. There's no shortage of absolutely predatory behavior out there.

You think he's calling the gambling industry deplorable because of information asymmetry?

Might have more to do with exploiting addiction and ruining lives for profit.

> Might have more to do with exploiting addiction and ruining lives for profit.

Thank you for proving my point. The ad industry and the mobile game industry are both tech based industries that engage in those behaviors just off the top of my head.

If you utilize dark patterns to make a profit and then look down on the gambling industry for abusing addictive behaviors, you are just a hypocrite who wants to excuse their own sins

What if I think all three of those industries are bad?

They have to compete with others. If the 'good' betters go with you that means you have worse odds that your competition and anyone else who knows goes elsewhere.

the real money is in pools where only a few people bet. however that works best if you get people to bet on the unlikely thing you want to take the other side as you can win more often. Often the unlikely thing is only possible because you take a side - so the savey better is taking away your bets.

No, it doesn't work that way. Bettors, in this context, aren't price-sensitive so the book is never balanced. There are some tools that bookmakers use to get more balanced - handicap markets - but it still never ends up being balanced if you are a largely retail-facing book.

If you dive into the article you'll see where the big winners, that they call "sharps" have found ways around this, like exploiting differences between multiple books, finding arbitrages and betting heavily and quickly in changing situations before the market has a chance to settle. I play a browser game called Torn that has a play money sportsbook and I've absolutely identified scenarios where either side of a straight win/loss bet was paying out positive. What this effectively meant is that I could bet the same amount on each team in the match to win and be guaranteed to walk away with money.

No this is a big misconception in my opinion. It may be the case at bookmakers like SBOBet, Pinnacle etc. who have fewer markets and higher liquidity (but I'm not sure as I never worked for one). I worked as a trader and it was extremely rare to end up with a balanced book like that. We did sometimes move the odds slightly based on liabilities but we never wanted to move them so much as to arb with the wider market.

Depending on how the money comes in for a given line, the line will move to account for possible losses for the book. So the odds aren’t just set once, they slide around.

Generally this happens based on how the sharks bet, not dissimilar to how market-makers affect stock prices, as a bad/loose analogy.

This is why the sports books ban so few people. 1% gets thrown around a lot but most places that disclose this say “less than 1%” and it’s likely pretty well below 1%. The sports books like the top 5% who aren’t top 0.5% because those people give them information and information is profit.

I have had a suspicion for a while now that my accounts have eyeballs on them. I think you are correct.

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