Smarkets Blog

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.