The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit?

[F.]

I made up the following situation because I hope to raise some interesting questions. This thread requires some suspension of disbelief.

Let’s say that a greedy but lazy SOB decides he will enter the bookmaking business. But he is so lazy he doesn’t want to bother setting up odds for every match in the English Premier League. His “solution†is to offer the same odds for all of the Premiership matches using the average pct. of home wins, draws and away wins to come up with the numbers. These are stats he uses:

2001 - H:42.37% / D:26.32% / A:31.32%

2002 - H:48.95% / D:24.47% / A:26.58%

2003 - H:44.74% / D:28.42% / A:26.84%

2004 - H:45.79% / D:28.95% / A:25.26%

2005 - H:50.26% / D:20.53% / A:29.21%

2006 - H:47.89% / D:25.53% / A:26.58%

TOTL - H:46.67% / D:25.70% / A:27.63%

FAIR ODDS – H:2.14 / D:3.89 / A:3.62

To lock in his profit the Abusive But Lazy (ABL) bookmaker decides he will use a huge overround of 30% evenly distributed among all the options. So the final prices he come up with are:

LAZY - H:60.67% / D:33.41% / A:35.92% (130% total) ABUSIVE ODDS - H:1.65 / D:2.99 / A:2.78

In order to enlarge the pool of available matches to bet on please assume the bookie applies this same strategy for all the main leagues using the corresponding percentages.

Some (initial) questions for you: 1) Would you open an account with the ABL bookie? Or is the overround simply too big? 2) Do you think you could find value for some EPL matches at these odds? 3) Is there a strategy that could beat the ABL bookie over a series (100+) of bets?

However, there are some constraints for this fictional exercise: - You CAN’T use the ABL odds to arbitrage with other bookies. - You CAN’T compare the ABL odds to other bookie’s odds, current or past.

That is, you must determine if there’s value for any given match using the ABL odds exclusively and you have to profit placing bets only with the ABL bookie. Why these constraints? I want to foster a discussion about if it’s possible to beat a big overround in the long run if I think there’s value in those odds nonetheless. Therefore I don’t want answers such as “I would arbitrage using the ABL odds†or “I would place bets when ABL odds are above Betfair oddsâ€.

I know this is a very artificial situation and that’s why it requires some suspension of disbelief. I welcome your thoughts on this issue.

F.

[Datapunter]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit?

I want to foster a discussion about if it’s possible to beat a big overround in the long run if I think there’s value in those odds nonetheless

There is no discussion, if there actually is value you will make a profit over time. Doesn't matter how big the overround is. Of course the bigger the overround the more difficult it will be to find any value, and indeed maybe you won't find any value ever. The only course in that case is not to bet.

you must determine if there’s value for any given match using the ABL odds exclusively

You do not use anybodies odds to find value. First you determine what the odds should be according to your own method. Then you check if you can get a price bigger than your own estimation. Maybe i'm stating the obvious but nevertheless; the bookies odds only come in at the end, not at the start, in the search for value.

[F.]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? Hi DP, your comments are always welcome... :D

There is no discussion' date=' if there actually is value you will make a profit over time. Doesn't matter how big the overround is. Of course the bigger the overround the more difficult it will be to find any value[/quote'] That was precisely one of the points I was trying to make. I just didn't count with you bringing it forward so soon. ;) I agree with you but I'd like to know if there is someone (anyone?) that has a different opinion. Then I admit I still have a lot to learn. However, I'm not sure many members of the forum bet the way you do. I'm under the impression that many people (myself included) first take a look at the available odds and then decide if any of those represents value. It is basically the opposite of what you do. But does it make any difference anyway? I mean, I could just check the odds first and ask "does that price represent value?", work out my fair odds estimation and then compare them. In the end it's the same, isn't it? Now please tell me, could you work out a strategy to profit from the ABL bookie? F.

[F.]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit?

You do not use anybodies odds to find value.

What I meant is that I want to setup a basic, "old fashioned" betting situation where the punter has only one bookmaker, in this case the ABL bookie.

First you determine what the odds should be according to your own method. Then you check if you can get a price bigger than your own estimation.

Then let me rephrase my questions: do you think that any of the odds offered by the ABL bookie will be bigger than your own estimation (and therefore represent value)? If so, would that happen only once in a while, or do you think it would happen consistently? And finally, would it be possible to develop a profitable system / strategy? F.

[jonnyb1978]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? The only time i would think about placing a bet with these bookies is if the big clubs (Man Utd, Chelsea, Celtic etc etc) would be playing one of the smaller clubs. Eg Celtic home or away to Gretna at odds of 1.65 and 2.78 respectively i would think as good value. Any other teams its just not value, unless any other aspects of the teams playing are known nearer to kick off. Injuries etc. For Eg Portsmouth v Liverpool at the end of last season. I knew Liverpool were going to field a very week side and portsmouth were fighting for a european place. I had a bet on Portsmouth to win and it came in. But even at odds of 1.65 i wouldnt of bothered at this bookie. I think you could profit but it would be slow and only on very selective bets.

[Rushian]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? My guess is that, if you are using a "reasonable"* (I know, it lacks definition, hence the quotation marks!) statistical model to estimate the probabilities of Home, Draw and Away then Yes, value picks will be highlighted. These picks will be fewer as the overround increases. Think for example the cases: 1. No overround is applied: since the bookies probabilities (or the inverse odds) add up to 1 and your estimations add up to 1, then unless all three of the bookies probabilities are exactly equal to your corresponding estimates, at least one of them will be higher hence offering value. 2. Overround exists: As this is increasing then fewer and fewer picks will be selected because your estimations still add up to 1, and it would take a match with a probability which is higher than the implied probability (including the overround) to be selected as a value pick. From a personal experience, in the Yet-To-Be-Named System thread (paper trail) I have used a "safety factor" which essentially is the same thing. The probabilities are adjusted (edit: downwards) so that you don't bet on every single game... I did this to "protect" the system from mis-estimation but I think that I overdid it :rollin hence the current results! Just my thoughts. *By "reasonable" I mean one that will give you the general structure of the probabilities (i.e. high probability of winning for the favourite, lower for the outsider and in-between for the draw, all adjusted for home advantage).

[F.]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit?

The only time i would think about placing a bet with these bookies is if the big clubs (Man Utd, Chelsea, Celtic etc etc) would be playing one of the smaller clubs. ... I think you could profit but it would be slow and only on very selective bets.

Hi jonnyb1978, thanks for your thoughts. I'm also under the impression that most of the value would be found on backing home teams against weak sides. But then you'd need to develop a system to choose which games to bet on and which ones to leave out, right? However, why do you think it would be a slow system to profit from? Sure, you won't place many bets a week but I believe that odds of 1.65 for every correct selection would make up for that !! F.

[F.]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? Thanks for dropping by, Rushian :)

My guess is that' date=' if you are using a "reasonable"* (...) statistical model to estimate the probabilities of Home, Draw and Away then Yes, value picks will be highlighted.[/quote'] This is also one of the points I'm trying to assess: If a big overround can be overcome using a "reliable" (I'd rather use that word) system to come up with the probability of an event happening. And then, as previously stated, you just compare your estimates to those offered by the bookmaker to find value. Besides, the development of a selection system would make it possible to come up with winning picks regularly and therefore make a profit from the bookie in the long run, right? So I see a trend emerging in the thread: the overround just makes it harder to find value picks, or as you just put it, a big overround *decreases the number* of available bets to place. I feel we're moving forward :D. Now I have another question: is there any way to speed up the profit making process given the low number of available bets? F.

[jonnyb1978]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit?

Hi jonnyb1978, thanks for your thoughts. I'm also under the impression that most of the value would be found on backing home teams against weak sides. But then you'd need to develop a system to choose which games to bet on and which ones to leave out, right? However, why do you think it would be a slow system to profit from? Sure, you won't place many bets a week but I believe that odds of 1.65 for every correct selection would make up for that !! F.

I may be wrong here but the only reason i stated this was say out of 10 bets you have a strike rate of 70% (Pretty impressive). All bets were home wins at level stakes of 10 pts. Thats a total of 100 pts staked and a total return of 115.50. Thats only a profit of 15.50. Obviously better than nothing but you will have to find 10 value bets which like i said before would be only on the big clubs playing the smaller ones which dont come around very often. My guess is you would find about 3 value bets from a full fixture list. Mabe im completely wrong who knows!!!

[Rushian]

[Rushian]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? D'Oh ! :spank " As mentioned before, I have used a "safety factor" which is essentially the same thing as reducing the bookies odds by a margin" I didn't edit since the table becomes a mess!

[Datapunter]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit?

I'm under the impression that many people (myself included) first take a look at the available odds and then decide if any of those represents value. It is basically the opposite of what you do.

This is actually a key element in being succesfull or not ! You actually do exactly the same as i do. When you look at a bookmakers odds in order to find something of value you say to yourself: "Hmmm that price looks a bit big, maybe there's some value there" But what are you comparing the odds to so you can say "they look too big" ? You are actually comparing them with some intuitive figure you have in the back of your head. It is the same thing as working out what the odds should be according to your own method and then checking if you can find a price that is bigger. The difference is that in your case, your judgment is biassed by the info from the bookmaker right from the start. And your decision if something is value or not is based on intuition and memory. Not the most reliable, accurate and most important not the most consistent basis for a strategy. Sure once you "think" there is some value somewhere you examine in more detail. Find some stats, lookup some team news, compare some prices. But you are already working from an unreliable and biassed situation. The only way to go about it is to set your own odds BEFORE looking at any bookie. Then check the prices to find value. And yes, it takes more work and it's probably a lot less fun.

[Datapunter]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit?

Then let me rephrase my questions: do you think that any of the odds offered by the ABL bookie will be bigger than your own estimation (and therefore represent value)? If so, would that happen only once in a while, or do you think it would happen consistently? And finally, would it be possible to develop a profitable system / strategy?

Already answered i guess, only way to find out would be to try it. But using ONLY my intuition and memory ;) I would say the selections, if any, will be so few it will not merit the time it takes. If the ABL bookie is the only one available to you then i suggest you find another hobby.

[F.]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? Well, the dominant opinion so far is that the reduced selection stemming from the lowered odds will limit the number of value bets and therefore wouldn't make it worthwile to use this bookie. However, I have a different view: since the odds are the same all the time you could also develop some truly stupid strategies that wouldn't be suitable for staking with other bookies but that would make a profit with the ABL bookie. For example, using ABL's odds I came up with the following strategy: since (aparently) most of the value would be found backing home favourites, what would happen if I blindly backed Arsenal, Chelsea, Liverpool and ManU at home? Together they played 76 matches in the 2006-07 season with 53 home wins and 23 draws/away wins. Therefore, for that simple strategy: Bets: 76, 1 unit level stakes strategy Profit: (53*0.65) - 23 = 34.45-23 = 11.45 Yield: 11.45 profit /76 staked = 15.06% Now, if I were to try that same strategy with the other big European leagues (Spain, Italy, France, Germany) I could raise the number of bets from 76 to 380 (OK, take a few games since Bundesliga plays with only 18 teams but you get my point), and placing 380 bets with 15% yield in one season would be an awesome figure, wouldn't be it? F. P.S.: I will run the numbers to try to back my point. I want to see if we can get rid of the "not enough matches to bet on" argument...

[F.]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? OK, this is what I found:

LEAGUE	HOME WIN PCT.	ABL ODDS	HW 2006-07	D/AW 2006-07	PROFIT (UNITS)	YIELD (PCT.)
ENGLAND	46.42%	1.65	53	23	11.45	15.07%
SPAIN	46.26%	1.66	55	21	15.3	20.13%
ITALY	44.79%	1.71	40	17	11.4	20.00%
GERMANY	48.85%	1.57	22	12	0.54	1.59%
FRANCE	47.48%	1.62	33	24	-3.54	-6.21%

(sorry, table editing in PL sucks!!) This is what I did. I calculated ABL odds considering 5 seasons (2001-02 thru 2005-06). Then I chose the teams that, based purely on name recognition, I think usually dominate a league. These teams were: England: Arsenal, Chelsea, Liverpool, Manchester Utd. Spain: Barcelona, Real Madrid, Valencia, Sevilla Italia: Inter, Milan, Roma Germany: Bayern Munich, Werder Bremen France: Lyon, Bordeaux, Lille And then I applied the blind strategy of backing these teams at home for al the 2006-07 season. I want to highlight some points: - I am somewhat familiar with EPL, La Liga and Serie A, but not with Ligue 1 and the Bundesliga and it shows on the final results!! Actually I chose the teams in those two leagues taking a look at their finishing positions in the 2005-06 season. Therefore I think it'd be a wise strategy to expand to as many leagues as possible, but at the same time sticking to those leagues you are familiar with. - There were 209 bets for EPL + Liga + Serie A; 300 bets if I chose to bet in all 5 leagues. What's my point? I want to show that a bookie setting odds in such a lazy way is vulnerable to simple 'brute force' strategies like the one outlined above, and that the huge overround isn't enough protection for the bookmaker. Additionally, if you expand to more than one market without losing focus you can increase the number of available value bets to make the profit worthwhile... What do you think? F.

[jonnyb1978]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? I think you have a point F. and understand were you are coming from but i dont think in reality you would bet all these games at ABL bookie. If any odds above 1.65 were at any other bookie, then common sense would tell you to bet there to get the better price, and hence using your statistics would create a better yield and profit margin.

[F.]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit?

I think you have a point F. and understand were you are coming from but i dont think in reality you would bet all these games at ABL bookie. If any odds above 1.65 were at any other bookie' date=' then common sense would tell you to bet there to get the better price, and hence using your statistics would create a better yield and profit margin.[/quote'] That's why I stated the "only bet at ABL bookie" restriction. Yes, I know this example doesn't hold in real life because the H/D/A market is offered by several bookies. But what if I found a market like the one I'm describing here? And what if that market is available exclusively from just one bookie? That's why I'm making this exercise... ;) F.

[jonnyb1978]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? Then i guess you are right. Bet on big clubs and you should be able to lock in a steady profit. But if it was that easy would it warrant good business for the ABL. Would there not be any demand for any other bets?(Aways, Draws etc), if you could make money guarenteed and by the looks risk free over a period of time why would anyone want to bet on anything else apart from these home wins. Would the ABL just be paying out and therefore go out of business. I guess you would need casual or greedy punters who will ultimately lose their money to ABL. But people will get wind of the guaranteed profit and will soon join the band wagon. In theory it seems a very good idea but in reality i do not think it will make good business sense and would not last long as a business. Very interesting discussion tho:cheers

[F.]

Re: The (Fictional) Abusive but Lazy Bookmaker: Could you make a profit? OK, I think this thread has given everything it had to and I'm happy with the points that you guys raised through it. Thanks a lot, and now let me explain the purpose of this thread to put it in perspective. I do most of my betting with only one bookie, one of the worst by the way but that happens to have a large selection of L!VE ;) (in-play) events. Over the course of time I've noticed that there are some "scripted" situations in football matches and when they take place the bookie usually turns on the automatic pilot and set odds according to a set of rigid rules that don't take into account other aspects. For example: a red card for the away tem in a tied match with 30 mins to go. When this situation happens the formula usually tells the bookie that the home team will win the match. Therefore, it adjust many markets at the same time (H/D/A, over/under, next team to score, time of next goal, number of corners, and so on...) Most of the times the home win assumption is correct but there are times when one or more of the markets get out of synch with this assumption, or the markets for the opposite point of view shoot up opening windows of opportunity. I noticed that the odds are remarkably consistent among matches with similar scripted situations, disregarding other (sometimes obvious) factors. And the bookie's protection is usually a high (30%) overround. So the ABL bookie does exist after all... it's just that it shows its head only once in a while. It is slightly more complex than what I'm describing here (the H/D/A market is *not* one where I find value), but once I got the hang of it I have profited in those situations, but overcoming a 30% overround seemed like I was being just plain lucky. But your posts held my belief that there is value to be found even in 30% overround markets :loon. And your criticisms about the lack of opportunities are indeed true. I've had to look at many leagues in order to pull a decent number of opportunities to make the effort worthwhile...

But if it was that easy would it warrant good business for the ABL? (...) I guess you would need casual or greedy punters who will ultimately lose their money to ABL.

I guess that's exactly what's happening. The big overround and the casual punters keep the market profitable for the bookie AND at the same time the savvy punter can make a profit. :loon

But people will get wind of the guaranteed profit and will soon join the band wagon.

Why doesn't more punters take advantage of this situations? I guess it's because it requires systematic live betting, i.e., you have to be there week after week, waiting for the opportunity to arise. But I wouldn't know for sure...

Very interesting discussion tho:cheers

Thanks !! :cheers I put some effort trying to keep it interesting. In the end the conclusions are valuable for me and at the same time I feel the thread has value on its own. Thanx to all for your contributions. If you feel there's something else to add please do so ;) Cheers :clap:clap:clap F.