11 ms·

Why is it harder to win?

au_gambler 9y ago
In paramutuel betting the prices are not fixed, so you cannot leverage differences between the odds on offer and your estimate of the prospect's chances. The final odds you receive are equal to the total stakes placed on that prospect divided by (sum of all stakes less the operator's take). You can't formulate an optimal staking plan with unknown odds, and you're forced to compete on win rates rather than price ineffeciencies.
- SubiculumCode 9y ago
  I don't think your reasoning is correct. A bookmaker setting the odds presumably would hire the most accurate handicapper analytics team to set the odds appropriately, then take their cut. In paramutual betting, you need only be better than the average bet..and there are a lot of stupid betters. You know the odds pretty well by posttime.
  - au_gambler 9y ago
    My reasoning is that the 'invisible hand' of many less informed bettors leads to market efficiency in aggregate, particularly in highly liquid markets. Greater liquidity in parimutuel markets makes for odds that are less of a moving target, but it leaves fewer mispriced prospects to capitalise on. So not only do you have to beat a fairly efficient market, but you have to beat it on average by a margin equal to the parimutuel operator's take. In less liquid markets the unknown odds are more of a problem. That's not to say it profits can't be made, just that it's harder imho. With fixed pricing, even though the numbers don't 'add up to one' there either, you can lock in a positive expectation long before price consensus is reached.
    - SubiculumCode 9y ago
      I can see what you are saying. I would say however that most $$ players in the stock market have analytic teams, etc. If instead, a substantial portion of the players in the stock market placed their bets on randomly chosen stocks, the aggregate would be much less efficient and that could be exploited. I've sat and watched people betting on horses for a long time. The majority choose based on the name or color of the horse (sentimentalist), the going favorite (risk averse), the longest odd (big paydayists). Many others play on weaker signals (owner, jockey). A few bet on the advice of experts in the daily form, and these probably do make the market more efficient. In aggregate, from my own experience at Golden Gate Fields where the take-out is 14%, my average ROI was around -6 to -10%. This suggests that I was beating the market, but the takeout was killing me. So I've imagined that in a decentralized paramutual pool with minuscule or zero takeout, and given a common population of betters, I'd make a steady profit. I should add that another advantage of paramutual over bookmaker odds is the pool maintainers do not care if you are a winner or a loser, and won't freeze your accounts on you.
      - Whiteskin_Kanye 9y ago
        It's closer to 22.5% in total. [1] But it also depends on specifics like race, location, type of bet [2]. Looks like a conventional win, place, or show bet has the least taken out of it [1] http://www.calfairs.net/files/publications/14.pdf http://www.calfairs.net/files/publications/14.pdf -- check slide 5 [2] https://www.scribd.com/document/84887435/CA-Authority-of-Racing-Fairs-Ten-year-Satellite-Report-2000-2009-Final-03-11-11-Compressed-Version https://www.scribd.com/document/84887435/CA-Authority-of-Rac... -- An Example for Northern CA breeds on page 10
        SubiculumCode 9y ago
        I always focused on Win Place or Show betting becsuse if the lower take.
    - pault 9y ago
      Do you think there's an opportunity to run a "free" service with no take, but selling services to large/automated clients and/or selling data?
      - au_gambler 9y ago
        There are very high regulatory costs if you're going to run a book/tote and pay out people's bets. But yes, your data could be worth more than your bookmaking margins. If it's worth buying, it's worth using yourself. I like the idea of a private prediction market, something between kaggle and that investment fund that uses homomorphic encryption, the name escapes me. 'Invest' on betting markets, return a share of profits to contributors.
        pault 9y ago
        Sports betting and/or prediction markets are such an obvious application of cryptocurrencies/smart contracts that I'm kind of shocked it isn't already a huge part of the darknet (or maybe it is and I just don't know about it). It doesn't even have to be good, as long as it's anonymous, decentralized, and eliminates counter-party risk. Something like that could be adopted at a glacial pace and still be unstoppable in the long term.
        SubiculumCode 9y ago
        I thought about as soon as I heard of the technologies. There is the one part, validating results of sports events to initiate payouts, the setting up of new events, that would seem to make it more difficult without some sort of scraping, or intervening party.

In paramutuel betting the prices are not fixed, so you cannot leverage differences between the odds on offer and your estimate of the prospect's chances. The final odds you receive are equal to the total stakes placed on that prospect divided by (sum of all stakes less the operator's take). You can't formulate an optimal staking plan with unknown odds, and you're forced to compete on win rates rather than price ineffeciencies.

SubiculumCode 9y ago
I don't think your reasoning is correct. A bookmaker setting the odds presumably would hire the most accurate handicapper analytics team to set the odds appropriately, then take their cut. In paramutual betting, you need only be better than the average bet..and there are a lot of stupid betters. You know the odds pretty well by posttime.
- au_gambler 9y ago
  My reasoning is that the 'invisible hand' of many less informed bettors leads to market efficiency in aggregate, particularly in highly liquid markets. Greater liquidity in parimutuel markets makes for odds that are less of a moving target, but it leaves fewer mispriced prospects to capitalise on. So not only do you have to beat a fairly efficient market, but you have to beat it on average by a margin equal to the parimutuel operator's take. In less liquid markets the unknown odds are more of a problem. That's not to say it profits can't be made, just that it's harder imho. With fixed pricing, even though the numbers don't 'add up to one' there either, you can lock in a positive expectation long before price consensus is reached.
  - SubiculumCode 9y ago
    I can see what you are saying. I would say however that most $$ players in the stock market have analytic teams, etc. If instead, a substantial portion of the players in the stock market placed their bets on randomly chosen stocks, the aggregate would be much less efficient and that could be exploited. I've sat and watched people betting on horses for a long time. The majority choose based on the name or color of the horse (sentimentalist), the going favorite (risk averse), the longest odd (big paydayists). Many others play on weaker signals (owner, jockey). A few bet on the advice of experts in the daily form, and these probably do make the market more efficient. In aggregate, from my own experience at Golden Gate Fields where the take-out is 14%, my average ROI was around -6 to -10%. This suggests that I was beating the market, but the takeout was killing me. So I've imagined that in a decentralized paramutual pool with minuscule or zero takeout, and given a common population of betters, I'd make a steady profit. I should add that another advantage of paramutual over bookmaker odds is the pool maintainers do not care if you are a winner or a loser, and won't freeze your accounts on you.
    - Whiteskin_Kanye 9y ago
      It's closer to 22.5% in total. [1] But it also depends on specifics like race, location, type of bet [2]. Looks like a conventional win, place, or show bet has the least taken out of it [1] http://www.calfairs.net/files/publications/14.pdf http://www.calfairs.net/files/publications/14.pdf -- check slide 5 [2] https://www.scribd.com/document/84887435/CA-Authority-of-Racing-Fairs-Ten-year-Satellite-Report-2000-2009-Final-03-11-11-Compressed-Version https://www.scribd.com/document/84887435/CA-Authority-of-Rac... -- An Example for Northern CA breeds on page 10
      - SubiculumCode 9y ago
        I always focused on Win Place or Show betting becsuse if the lower take.
  - pault 9y ago
    Do you think there's an opportunity to run a "free" service with no take, but selling services to large/automated clients and/or selling data?
    - au_gambler 9y ago
      There are very high regulatory costs if you're going to run a book/tote and pay out people's bets. But yes, your data could be worth more than your bookmaking margins. If it's worth buying, it's worth using yourself. I like the idea of a private prediction market, something between kaggle and that investment fund that uses homomorphic encryption, the name escapes me. 'Invest' on betting markets, return a share of profits to contributors.
      - pault 9y ago
        Sports betting and/or prediction markets are such an obvious application of cryptocurrencies/smart contracts that I'm kind of shocked it isn't already a huge part of the darknet (or maybe it is and I just don't know about it). It doesn't even have to be good, as long as it's anonymous, decentralized, and eliminates counter-party risk. Something like that could be adopted at a glacial pace and still be unstoppable in the long term.
        SubiculumCode 9y ago
        I thought about as soon as I heard of the technologies. There is the one part, validating results of sports events to initiate payouts, the setting up of new events, that would seem to make it more difficult without some sort of scraping, or intervening party.