If you’ve ever been lured to try a spin at a casino, you’ll understand how bookmakers and casinos play on you. The best example of this is roulette which has 36 red and black numbers plus the green numbers 0 and (in the U.S.) 00. There are 38 options in all. If you bet on black or red, the odds of choosing right are 18/38. Likewise, an appropriate payout for a single stake is $2.111. The house, however, pays only $2 and keeps the difference. That way it is guaranteed that it will earn a profit.
Similar biases are evident when betting on bookmakers’ odds on horse races, soccer, and every other sporting event. Bookmakers always make sure odds are in their favor. However, determining these odds is harder than those for roulette since the calculations are more complicated.
And that raises a tantalizing possibility. Can we develop a better way to calculate the odds, and consequently outdo the betting houses?
Today, we are able to find an answer through the efforts of Lisandro Kunitz at the University of Tokyo and a group of colleagues, who have found a method to consistently make money from the online betting market for soccer.
But their work is accompanied by an important limitation. Kaunitz and co. say that as soon as the bookmakers became aware of the positive result, they stopped researchers from betting further.
Gamblers have played around with schemes to beat the odds, but they’re uncommon. It’s because bookmakers have to work hard to find out the most accurate odds. They usually employ statisticians in teams to analyze the historical records of a particular sport such as soccer, and then create sophisticated models to determine the right odds for each game.
Kaunitz and co. say that, so far as they are aware, no one has been able beat this system by developing more advanced mathematical models.
Yet, despite this method of operation however, there’s a weakness in the way bookmakers function. It has to do with the way they place bets in order to guard against the risk of huge payouts.
For example, when two teams play a game of soccer, bookmakers decide the odds for each team to record winning, losing, or draw. There are times when large numbers of gamblers could bet on a specific result for reasons independent of the odds. The team may be more popular than anticipated, for example. In such a case, the bookmaker is set for a big payout in the event that outcome occurs.
Bookmakers are able to make bets more secure by offering better odds on the other outcome. This way, they are able to attract bets that compensate at least a portion of possible losses.
Kaunitz and co. say that this technique also opens up the possibility for anyone to detect it. The trick that the researchers have perfected is an approach that consistently identifies chances favoring the punter over than the bookmaker.
Their method is straightforward. They begin by assuming that bookmakers themselves are adept at establishing odds and the prices they offer accurately reflect the true odds of winning, losing, or loss, plus the margin they own.
In that case the best way to measure these probabilities is a simple average of the odds given by all bookies–a sort of wisdom of the crowd. This is the result of the average odds that Kaunitz and co say is a remarkably accurate representation of the actual odds.
Then it is a simple procedure to review all of the odds being offered from 유로88 and find out the outliers. Kaunitz and his team then figure to determine how good the outlying odds are. If they are good enough, then the bet should be worth it, at the very least in the long term.
This is exactly what Kaunitz and co . have done. They built a Web crawler to collect odds offered by betting firms on soccer matches across the globe. They calculated the average odds and uncovered any outliers and then determined whether betting on them would be advantageous or not.
Before committing any real cash, the researchers tried the idea on 10 years of historical data about the closing odds and outcomes of 479,440 soccer matches between 2005 and the year 2015. This simulation paid out 44 % of the times and produced a return of 3.5 percent over the course of 10 years. “For an imaginary stake of $50 per bet, that’s an equivalent profit of $98,865 for 56,435 bets,” they say.
The most important thing to consider is whether this could have been pure chance. Could they have simply been lucky? The team also examined their results in comparison to 22,000 simulations in which they put bets in random on the same games. In this case, the bets returned 39 percent of the times, yielding a rate of -3.2 percent that is roughly a losses of $93,000.
This allowed the team to estimate the chance that their first result was not a coincidence. “The chance of getting the amount of $98,865 from 56,435 bets utilizing an arbitrary bet strategy is less that 1 in a million,” they assert.
That was a good thing, because it gave Kaunitz and co good reason to think their method could be successful in real life, but there was an issue. The average punter is not able to bet on the closing odds that can differ significantly from the odds offered before a game.
So Kaunitz and co . decided to recreate this. “We decided to conduct an more realistic simulation, by placing bets with odds ranging from 1 to 5 minutes prior to the start of every game,” they say.
The way odds vary in the days leading up to games isn’t publicly available, so the team created an automated system that gathered these odds from betting websites around the globe from September 2015 to the end of February 2016. Then , they tested their algorithm in this data set.
The results were better. Their bets returned 47.6 per cent of the time. They also earned an 9.9 percentage return. “If every bet made was $50, our method would have produced $34,932 profit over 6,994 bets” they write.
It is interesting to note that a random bet strategy using the same data yielded a return of 0.2 percent and an $825 profit. That could be the result of the intense competition between betting sites that offer better odds to attract gamblers in a kind loss-leader policy.
Then, they tried the approach using a strategy called “paper trading,” that is, they place bets that are fictitious using real-time data rather than historical data. This is important since it allows them to determine whether the quoted odds are available through an online bookmaker.
In the end, they realized that about 30 percent of times that odds were changed by the time they decided to look it up online. In these instances, they discarded the bet.
But the strategy was profitable. Three months after trading on paper their bets yielded a profit of 5.5 percent, earning $1,128.50 on 407 bets of $50.
“At this point we decided to make bets using cash,” say Kaunitz as well.
Then they repeated the strategy for five months using similar methods, but with the difference that a human operator would actually place a bet of $50 after having a look at the odds. In that time the bets returned 47.2 percent of the time. In addition, they made $957.50 over 265 bets. This is a remarkable return in the amount of 8.5 percent.
If you’re looking for a clue, the number of bets placed was significantly less than during the period of paper trading. “The reason is because we didn’t have a dedicated person betting on every opportunity available all day long and , as a result, we missed a lot of bets that were offered,” they say.
However, the lesser number of bets wasn’t a problem. “Our paper-based trading and actual betting activities confirmed the efficiency of the strategy,” say Kaunitz and colleagues.
It’s an innovative approach with an interesting result. Kaunitz and co . discovered an Achilles’s heel in the betting industry , and exploited it to earn their own money.
Their story is not without a sting. “Although we complied with the rules of the betting industry but a few months later, we began to place bets with actual money bookmakers began to drastically limit their accounts” they say.
The bookies often limited the stakes they would place bets on or suggested that they conduct a “manual examination” of the bet prior accepting it. If that was the case the team was unable to place their bets.
If the bookies were choosing the bets that they were putting in question randomly this shouldn’t have had any effect on the success of the strategy. But Kaunitz and co say it’s unlikely and the actions of the bookmakers could have had a significant impact on them. “Under these circumstances , we would not pursue the betting strategies we have adopted,” they say.
Kaunitz and co are clearly upset: “The sports betting industry is free to advertise and provide odds to their clients, but those clients will lose, and should they be successful they may be banned in their betting.”
The team points out the fact that this type of activity could be considered to be illegal. “Advertising products or services with the intention to not sell them in the manner promoted, and/or advertising goods or services with no intent to meet a reasonable demand but with the intention of induce the customer to purchase another product (a practice that is often referred as ‘bait’ or ‘bait and switch’ marketing), is considered false advertising and carries pecuniary sanctions within the U.K., Australia, and in the United States of America,” The team claims.
The government is also urged to effectively regulate the gambling industry , and to stop this kind of practice from happening again.
How well this approach will work is unclear. However, their findings are intriguing nonetheless.
Copyright Reseau Actu.