How sports betting really works and how it is a lot like financial markets

This is a very interesting interview from a Bloomberg podcast called Odd Lots.

They interview a professional sports bettor.

https://tinyurl.com/bboddlots240528

This is a gift link. A Bloomberg subscription is not required. The link expires in seven days.

The page has a transcript of the interview. There is also a player that will allow you to listen to the podcast.

 

The huge difference is that if you consistently win in Sports Betting they cut you off and not so in the financial markets. Technically they don't cut you off they just limit your bet size to about 1% of what you were betting.

 

That's because in the financial markets, in general, you are not playing against the house.

 

In otc markets they'll provide wider and smaller size quotes. It was builtin to a lot of bank fx streaming systems a while ago

 

We make every derivatives trader read up on parimutuel betting. Keep a case in every location.
They're cheap and still available.

 

Horse racing is fixed as it has always been fixed. The insiders own the tote system and know finish positions and odds ahead of time.
It's beyond fixed, it's more like how a corrupt (well managed) gov't operates.
Gov't manipulates everything, it's like we're inside of some A.I. machine.

 

Wrote a parimutuel system. Thought it would be cool at gatherings

PHP:

import numpy as np
from fractions import Fraction
import pandas as pd
from odo import odo


def dec2percent (dec):
    """dec2percent(2)
    """
    return np.reciprocal(float(dec))


def fractional2percent (fractional):
    """fractional2percent(Fraction(3,1))
    """
    return float(fractional.denominator) /(fractional.denominator + fractional.numerator)


def moneyline2percent(moneyline):
    percent = 0.0
    if np.sign(moneyline) < 0:
        percent = (-1*moneyline) / ( -1.0*moneyline+100 )
    else:
        percent = 100 / (moneyline + 100.0)
    return percent


def percent2dec (percent):
    """percent2dec(.5)
    """
    return np.reciprocal(percent)


def percent2fractional (percent):
    return Fraction(np.reciprocal(percent)-1).limit_denominator(100)


def percent2moneyline(percent):
    if percent > .5:
        return  (percent / (1 - percent) ) * -100
    else:
        return  ( (1 - percent) / percent )  * 100


if __name__ == '__main__':
    """
    parimutuel betting example with odds, payouts for win, place, show
    """

    df = pd.DataFrame({
         'betters': ['fred', 'barney' ,'wilma', 'tom' ,'john' ,'jerry','tom','mo','larry','eddie']
        ,'bets' :   [100 ,200, 100, 50 ,20 ,30 ,100,20,40,60]
        ,'horse' :  ['cigar' , 'brownie' , 'neptune', 'neptune','cigar','delroy','cigar','delroy','neptune','neptune']
        ,'type' :   ['win', 'win', 'win' ,'win', 'win', 'win' , 'place', 'place', 'place','place']
        })
    pdf = df[df.type=='place']
    sdf = df[df.type=='show']
    wdf = df[df.type=='win']

    bets = df[['bets','betters','horse','type']]

    x= wdf.groupby('horse',as_index=False)['bets'].sum()
    wdf= wdf.merge(x,on=['horse'])
    wdf['pcttotal'] = wdf.bets_x / wdf.bets_y
    wdf['payout']  = wdf.bets_x.sum() * wdf.pcttotal
    wdf = wdf.rename(columns={'bets_x':'bets','bets_y': 'totamtperhorse'})
    wdf['decodds'] = wdf.bets.sum() / wdf.totamtperhorse
    wdf['percent'] = wdf.decodds.apply(np.reciprocal)
    wdf['moneyline'] = wdf.percent.apply(percent2moneyline)
    wdf['fractional'] =  wdf.percent.apply(percent2fractional)
    wdf['fractional']=wdf.fractional.apply(str)

    tote = wdf[['horse','fractional','decodds','percent','moneyline','totamtperhorse']].drop_duplicates()



    def placeOrshow (pdf,*args):
        """placeOrshow(pdf,'cigar','neptune')
        """
        pool = pdf.bets.sum()
        z= pdf.groupby('horse',as_index=False)['bets'].sum()
        pdf= pdf.merge(z,on=['horse'])
        pdf= pdf[pdf.horse.isin(args)]
        profit = pool - pdf.bets_x.sum()
        pdf['pcttotal'] = pdf.bets_x / pdf.bets_y
        split = len(args) - len(set(args).difference(set(pdf.horse)) )
        pdf['payout'] = profit / split * pdf.pcttotal + pdf.bets_x
        return [pool,pdf]



    odo(tote,'sqlite:///bettingwindow.db::toteboard')
    odo(bets,'sqlite:///bettingwindow.db::bets')

    print placeOrshow(pdf,'cigar','neptune')



 

In financial markets, you at least have positive carry so most people will make money unless you're trading in zero sum markets.

In sports betting, the vig is 5%, so your edge has to be significant to actually make money and the vast majority of people lose money.

 

Very true. That is why these books like Draft Kings and Fan Duel are evil to their very core. They advertise like hey making money is great come join us. They know that almost 100% will lose and those very few that can analyze a game in progress and profit accordingly, are banned. Losers only accepted as customers. What a business model!! Can not fail!! Treat the losers like royalty and kill off anyone who shows like they might be able to make good judgment bets. I know a person (not me) very well who has learned his sports betting trade very well over the last 25 years and has been banned by every book in Illinois. So I feel very strongly about how the state legislature doesn't give a crap about how these immoral bastards fleece their state residents.

One book did not ban him they just held all his bets and if subsequent game action pushed the line in favor of the book they would fill his bet. It the game action went in favor of the better they would say the line has changed. That is even worse than banning as it is actual cheating.