Why Do Winners Win?

 

To be profitable at betting on sport you need to have the odds in your favor when you bet, getting consistently on the right side of statistical probability.

Bookmakers have this probability on their side most of the time. They hold the upper hand because of the over-round they build into their prices, plus the expertise of their odds setters.

But individual sports bettors can get the odds in their favor if they are able to identify the small number of prices which represent “value.” This is where the price is greater than the true probability; there’s an inefficiency in the market, the bookie has made a rick.

Finding Value

How to spot these value bets? Doing the analysis yourself takes some expertise in understanding odds, modeling prices and reading betting markets. A bit of knowledge of the sport can help, although not as much as most people think. Profitable betting is more to do with knowing about numbers than knowing about sport. This is sometimes referred to as the “green lumber fallacy.”

Most punters don’t have the skills, time or inclination to do the analysis that is required to consistently identify value. So using the advice of an expert tipster is a popular option. There is an apparently limitless supply of tipsters and services who advertise ‘hot tips,’ ‘bookie bashing strategies,’ and variations on the promise to supply clients with great betting riches.

And yet…year after year bookmakers post enormous profits.

The Fantasy World of “Professional” Tipsters

How can this be? If all of these expert tipsters are able to beat the bookies so easily, how come the bookies aren’t all skint? Why does every punter not just pay an expert “professional” tipster the modest monthly fee in return for his value tips, and keep backing them until he becomes stinking rich? The answer is that the harsh reality of making decent money from bookmakers is somewhat divorced from the simple process presented by many tipsters.

It is in the tipster’s commercial interests to make potential customers believe in a fantasy story, where winning is as simple as just following their tips. Bookmakers are delighted for punters to believe this too.

This fantasy world doesn’t exist though—which is a shame, because if it did, none of us would ever need to work again. And come to think of it, why are the tipsters bothering to sell their tips? Why don’t they just back the tips themselves and make a great living as a professional gambler?

Dart  Throwers

There are two fundamental issues

1. Most tipsters don’t have an edge
2. Bookmakers aren’t stupid

To make consistent long term profits as a gambler you need to find value bets. To find value bets there needs to be an ‘edge’; some reason why the odds you are betting at are greater than the true chance.

Most tipsters can’t find this edge. They just guess. They are dart-throwers. They cover their eyes and throw their darts at the board. Occasionally they hit the bull’s-eye. When this happens they climb up onto the roof and start shouting about how great they are.

Of course every guesser will get a fair share of short-term success. But at the end of a long period like a year, somebody who is guessing is not going to be showing a profit. It doesn’t matter how informed or ‘expert’ the guesses are, because the edge in gambling is found in the numbers, not in knowledge of the sport. What matters is the price that you get, not what you back.

The key to a tipster’s business model is that new people pay for his tips. It doesn’t actually matter if he has an edge that delivers a long term profit. So long as he keeps being able to convince enough people to pay, then he has a business. Like crystal ball readers, or clairvoyants.

The Truth About Sports Gambling

Professional gambling is not about looking into the future and trying to guess what is going to happen. It has nothing to do with making “predictions.” This is the biggest and most fundamental mistake in logic that losing gamblers make.

It is actually about embracing randomness and mathematical probability. Acknowledging that anything that can possibly happen, may happen. Profitable gamblers work out a good estimate of how likely a specific thing is to happen. And then only bet on it to happen if there is a betting price that represents an implied probability less than this estimate.

This is the only way to do it. Don’t listen if anybody tries to tell you otherwise.

Of course there a million-and-one ways of working out a good estimate of how likely things are to happen. This pricing process can be based on “gut feel” at one extreme (though this a very rare gift for a person to possess) or the application of advanced quantitative analytical modeling at the other.

Knowledge of a sport can be useful, especially if you get access to knowledge that nobody else has (though only a tiny number actually regularly get genuinely valuable “inside information”). You can build models, and compile ratings. Learn to read patterns in the market of different bookmaker prices. You can cheat to manipulate results or prices. It doesn’t matter what method you use, only that your estimates of probability are ultimately good enough to give you an edge on the market, so that you can find value bets.

Most tipsters can’t do this, because all they do is guess that a price is value. They don’t have an edge. They just throw darts.

The Illusion of Paper profits

But like fairground mystics, many tipsters employ a variety of tricks to make their loss-making guessing look like profitable forecasting. The most common is to use variations on the Survivor Bias scam. This involves presenting only a favorable snapshot of actual results. For example basing “profit” figures on an arbitrary small sample of results (normally one that just happened to start after a big win). Or a service with a stable of tipsters only shows the results of the tipsters who happen to have been successful recently, hiding from view all the others who have been coughing up big losses.

There are, however, a fair number of tipsters (approximately 5% of them) who are actually capable of doing the analysis that gives them a long-term edge, so that they can consistently find value. These tipsters can generate a “paper profit,” which is to say that if you do an analysis of the profit/loss on their tips based on prices that are displayed by bookmakers they will show a surplus.

But these “profits” are merely an illusion unless you can actually get the bets on at the value price.

And this is heart of the second issue. While bookmakers are by no means infallible and will make plenty of small mistakes (and occasional big mistakes) with their prices, they are not stupid. Bookmakers know that the only danger to their long-term profitability is from disciplined value-seeking customers who only bet when the odds are favorable to them, not the bookmaker.

So European bookmakers have a battery of defensive measures that they employ in order to neutralize the threat from these dangerous customers.

How Bookmakers Defend Themselves

Bookmakers are under no obligation to accept any bet. European firms regularly restrict to very small stakes or outright close customers’ accounts. If a bookmaker thinks that you are dangerous they WILL restrict or close your account. They employ traders and risk-managers whose job it is to do this.

The biggest give-away is to have large stake bets on the same selections, at the same price, as a number of other large staking customers. As soon as a trader sees this pattern, their automatic thought will be that these bets are likely to have come from a single source. Either a single bettor is controlling a number of accounts, or a shop ‘putting on’ troupe in order to get a large total stake on. Or these are individual customers all backing something put up by a tipster.

It is the trader’s job to figure it out. If he thinks the bets are all coming from a tipster who is a harmless guesser representing no danger then he will leave the accounts alone. But if he thinks the bets are all coming from one person he’ll close the accounts (or warn the shop managers to stop accepting bets from those individuals). It is only dangerous customers who go to the trouble to run multiple accounts. The trader can use IP address checks to see if bets actually came from the same location. And check social media profiles and Google Earth to check out the names and addresses supplied on accounts.

If the trader thinks that these bets are from different customers all backing tips from a tipster who actually knows how to find value, he will likely restrict all the accounts to very small maximum stake sizes on sport. He’s less likely to outright bar/close these accounts, because these punters might still give them profits by playing games, casino or poker on websites (or put money in machines in the shops). But their ability to carry on backing value tips on sport will last next to no time as soon as it is apparent they are subscribers to a quality tipping service.

Although betting exchanges won’t close or restrict accounts, if a number of tipster clients are all chasing the same top price on a value tip with decent stake sizes, that price will be gone in the blink of an eye.

Asian Markets Are Different

The only markets on which there is enough liquidity to accommodate a number of decent staking tipster clients without smashing up the price are the ‘Asian Football Lines’ with the likes of Pinnacle, SBO and IBC. These firms, especially on these markets, have evolved a different low margin but high turnover business model, and a much less defensive trading culture. Brokerage services can be used to get on.

But the trade-off for having big liquidity available on these markets is that the markets are very efficient. So for any individual, finding an edge is seriously tough. And even in liquid markets there is only so much money that can be got on at the top price before it gets cut.

So, Can You Make A Profit By Using A Tipster?

This is the reality of the landscape for bettors thinking about using tipsters. Most tipsters will only give them guesses which do not represent value. For those tipsters capable of finding value, their clients will find it very difficult to get decent bets on at the prices if the tipster is giving the same tip to a number of them, and/or backing them himself. Bookmakers are vigilant in identifying dangerous customers, and protect themselves against them by closing and restricting their betting channels.

So is it possible to use a tipster to make a profit from betting on sport?

Yes, it is possible. But only if (a) the tipster is genuinely good at finding value, and (b) you get his tips on an exclusive basis. Nothing else is going to work.

You need to find a tipster who has genuine methods that can consistently unearth value. And then you need to get his tips with exclusivity so that you can get on at the prices, and keep your betting channels open.