October 30, 2012
Betting syndicates are groups or organisations whose goal is to make a profit from sports betting using different methods. There are a variety of tools they can use for this, two of the main ones are arbitrage and fundamentals trading.
We’ve already covered arbitrage in detail here. But essentially, it’s the practice of buying and selling stakes in the same event across different markets in order to guarantee a profit. People who arbitrage are taking advantage of a discrepancy in prices and placing opposing bets so that they make money no matter what the outcome of the event is. It’s also very short-term, with most arbitrage opportunities disappearing within minutes.
Fundamentals or value betting is slightly more complex than arbitrage. Fundamentals betting syndicates work by exploiting instances where they believe the market has mispriced assets. They analyse past and current statistics on participants in events, or companies in the case of syndicate groups on the stock markets, and try to find assets which they believe will do well long-term. This is usually done through a combination of computer and human analysis of past performance and the fundamental (hence the name) strengths and weaknesses of the particular asset. In sports betting, this would typically be horses, sports teams, or individual players which the syndicate believes will do well in the future. It can make you a lot more money, but doesn’t guarantee a profit in the same way, because it relies on your analysis and conclusions about the participants in events being right.
A famous example of this would be the man who’s known as probably the most successful gambler ever: Allan Woods. Woods moved to Hong Kong in the 1980s, ditching card-counting in Blackjack (dangerous, as Casinos tend to…vehemently dislike card counters, to say the least) to set up a syndicate with two friends. After consistently losing hundreds of thousands of dollars in the first two years, Woods and his friends turned a $100,000 profit in their third year, and continued to make millions for years after. Woods used complex computer programmes which he wrote himself to attempt to predict the outcome of races, and was remarkably successful in so doing. He’s considered the richest gambler of all time, and amassed a personal fortune of over $670m before his death in 2008.
Allan Woods is an outlier, a somewhat extreme example of the success one can have with programmed analysis and syndicate betting over a long period of time. But he is an illustrative one, as he lost nearly as much as he made at various points (he lost over $100m trying to short the NASDAQ exchange at one point, for instance). While betting syndicates do use complex computer programs to analyse past performance of, for instance, a particular horse or football team to attempt to determine whether they’ll bring in returns over a long period, there’s no guarantee that their analysis is going to be right. However, they often are and when the analysis -human and machine- is correct, they make a lot of money. When new information about events or the market is made available, the parameters are adapted and new prices generated based on those data. It isn’t uncommon for these operations to make millions on a yearly basis, though not usually quite so much as our example above.
Syndicates which use fundamentals analysis to make money from a spread of bets rely heavily on programmers and statisticians to work. They’re effectively trying to predict the future of an event or market from past performance and statistical probability, and that requires both a huge amount of data and processing power, as well as complex algorithms, to work. As with trying to predict the stock exchange, if a particular team, athlete, or horse is doing well, the likelihood is that they will continue to do well, and therefore they’re a safe bet. However, no one can predict when a team or player is going to burn out, or when a company’s fortunes will take a turn for the worse, taking yours with them. Consequently, fundamentals betting is best undertaken when you can spread your bets widely enough to avoid investing too heavily in one asset, thereby avoiding over-exposing yourself and your funds.
That’s not the only pitfall, however. Syndicates also occasionally find their accounts shut down by bookmakers, as they’re often considered to have an unfair advantage over regular bettors. However, syndicates are certainly not illegal, and practices like arbitrage and fundamentals analysis are entirely above board and considered necessary instruments to rebalance markets and exchanges. They’re a very good way of making money, if done properly.
December 19, 2011
Smarkets CEO Jason Trost was asked to write a piece about online gambling for the inaugural issue of new UK technology magazine The Kernel. Jason’s op-ed piece appears in today’s digital issue – click on over here to read it.
November 21, 2011
Huge news at Smarkets headquarters today as we confirmed we have now traded over £50 million lifetime!
Just ten short months ago we were chuffed to have passed the £3 million mark. In June we toasted to reaching the £20 million mark. To be up to £50 million less than six months later is no easy feat.
We’d like to thank all our users for their continued support and feedback – we couldn’t have achieved this milestone without you. We’re looking forward to soaring past £100 million in the new year!
In other news, you may remember reading about a Wired UK article that featured our founders Jason Trost and Hunter Morris. If you didn’t get a chance to pick up a print copy, you can now read it online.
September 28, 2011
As you may be able to tell from the terrible pun in the title we have some Facebook related news to announce. As of yesterday news users are now able to sign up to Smarkets via their Facebook account. This new process makes it even faster to join the site and start enjoying the exciting world of online betting! However this is just the start – so look forward to being able to invite your Facebook friends into the action and bragging on their walls when your bets win you some big money.
It isn’t all just awesome bells and whistles on the agenda at Smarkets HQ however. We’ve also been hard at work making the site even better for all those hardcore bettors as well. Not only have we revamped our search functionality to make it even easier to find that obscure football match we’ve also made available ALL of our match odds in a handy XML feed. This opens up a wealth of opportunities for the developers in our betting community as now they have access to every price in every market updated every 10 minutes. Couple this with the new Smarkets API that is currently in development and the amount of power at a Smarkets user’s fingertips is growing bigger everday. If you’re interested in either of these new features please email us for more details.
So whether it is Facebook for the fun of it, or a desire for data, there are less and less excuses for why you wouldn’t want to be part of the fastest growing Betting Exchange in the UK.
September 16, 2011
It is always great to be a sport lover in Autumn. All over the world fans are enjoying the top class excitement offered by Football, NFL and the Rugby World Cup. In a giddy fit of celebration we here at Smarkets have decided to reward all our customers with a new lower commission rate of just 4%. That’s right whether you’re a new or old customer if you were on 5% then your commission is now 20% less than before – and notably less than what certain other exchanges have to offer.
So if you still haven’t signed up to enjoy the Sport-fest this Autumn then what are you waiting for? Join the thousands of other Smarkets users already enjoying this great rate now! While you do we’ll be following the lead of our favourite numerically challenged sports stars and be giving 110% to make Smarkets the best simple, social betting exchange there is.
April 5, 2011
We’re really excited to have been listed as one of Europe’s most promising start-ups by the Daily Telegraph!
A panel of judges, chaired by TechCrunch‘s Mike Butcher, selected entrants to form a list of the top 100 young technology companies in Europe. At Smarkets we’re trying to do something innovative and different, creating a new user-orientated gambling experience. It’s great for that to be recognised and to be listed alongside so many other promising European technology firms!
Fingers crossed for the awards ceremony on Tuesday April 12!
December 7, 2009
Smarkets attended a fascinating presentation by Paul Davis from Counting House at eGaming Review Live last week. Paul talked about how there is a trend towards paperless banking in general life but online gaming is actually an exception. Counting House’s figures showed that electronic payouts were nine times higher than cheques by volume (from January to July 2009), but those cheques were actually worth 8 times more than the electronic payouts.
If gambling is frowned upon (or even illegal) then many punters will request large cheque payouts rather than electronic transfers. Cheques are easier to turn into cash without the accounting trail associated with bank transfers and cheques are a physical piece of paper, this makes bragging in front of your mates much more effective.
Another interesting slide Paul presented was this table which shows the percentage split of payouts:
|Country||Bank Transfers||Payments to Cards||Cheques||eWallets|
Payment wallets (such as Moneybookers and Neteller) are gaining ground in popularity in many markets. This an area Smarkets has been investigating and (if we can get the costs to the right level) it’ll be something we’ll be adding in future releases.
March 13, 2009
Sports betting might be legalised in Delaware? That’s what Chad Millman writes in the latest ESPN magazine. The governor is looking for ways to increase revenue and betting is one way to generate a lot of tax money for the state. In the coming months, it will be interesting to see if any states follow suit. There has been a lot of chatter about this happening. With the popularity of online poker and casinos now popping up over the US, attitudes have changed greatly since the Atlantic City and Las Vegas only days.
February 5, 2009
There’s a a great article in yesterday’s FT explaining the current state of the online gambling industry. Many governments (eg France, Spain) are in the process of creating legal frameworks for the $17 billion industry since it has proved extremely popular all over the globe. Also, there are some developments in the US as Congressman Barney Frank moves to regulate and legalise the industry.
Online gambling As broadband enters ever more homes and many governments relax previous restrictions, opportunities increase sharply for an industry that has had a troubled start, writes Roger Blitz