As we noted in an earlier chapter, the market-maker will usually know the latest team news, commentators’ analysis and historical trends for a match-up, particularly for a live match. But while computers may give a figure from the data, it is the more subjective information that can make the difference between a profit and a loss for the companies. How will a team feel psychologically if they are already relegated? Is there an on-going row between a star player and a coach? Is playing at home worth more than the bare figures suggest? This is the kind of material which requires a judgement on its importance, which computers cannot assimilate, but which the market trader lives on.
It is also the kind of information that explains the small differences in quotes from the four firms—and which can give punters an advantage.
One of my favourite methods of beating the market is making sure I am with the firm whose judgement I value the most. The events to target often arise in relatively low-key sports and the system requires consistent research of the four firms’ performance during a season. But when you spot a trend that one firm is getting on the right side of winning teams more consistently than its rivals, you can be on to a decent payday.
Let’s give a simplified example of how the research could work. Say you have noted that IG is consistently quoting the lowest prices for supremacy on American Football favourites who are playing away from home. They are week-in, week- out either the lowest by themselves, or joint lowest on supremacy where the favourites are on the road and favoured by more than seven points. You may find that IG’s initial quote is being bought up by punters expecting a blow-out victory, but results show that these teams are consistently struggling to cover the spread. You’ve found your advantage—now watch their quotes in future.
The other advantage of this type of research is that when you discover a trader who reads one market outstandingly well, they often tend to excel in other markets in the same sport. So, to continue our American Football example, maybe IG are quoting a particular team notably higher than the three other firms on their Superbowl championship index. It does not mean they will win it, but it is worth close investigation.
Throughout the book I will highlight a few of the market- makers to watch in specific sports, but one word of caution. The system works, but needs to be updated continuously. Market-makers change firms and jobs; they get other responsibilities, which mean they cannot devote as much time to their research as they have previously; their own calculations and systems may not work as well from one season to another. Because the other firms are loathe to give up any advantage,
you may also find that in time the gap between the correct lone trader and the other firms closes as they come into line with his quote.
I am a firm believer that this system can work, but it would seem to be most profitable in what might be dubbed ‘secondary’ sports where, because there is less information and live coverage available, judgement and opinions of the traders become more important.
A variation on this theme that is always worth looking out for is when one of the firms launches a new market. Spread betting firms are always looking for new ways to attract business and the novelty of a new market always appeals to some gamblers. The firms, however, never give anything away willingly. If a market makes it to the public, it will have been tested, researched and put through spreadsheet programmes to the nth degree before it goes live. But the firms are also very competitive and when a new market is launched by one firm and starts to attract business, their rivals are quick to copy it. This is where opportunities can arise. The other market- makers may be able to copy the basics of the market, but the odds are that they do not understand it as well as the people who thought it up in the first place. Look out for games and events where they quote differently to the original firm in the market. If one is wrong, the chances are it is the copycat market- makers.
‘The originators of a market nearly always research it properly,’ says Kevin Pullein. ‘They know the dynamics of the market and what the prices should be. It is when all the other firms follow suit and do not understand it as well that it can get interesting.’
Inevitably, there are occasions when market-makers go out on a limb on a market and quote a price out of line with their rivals, which is in fact just plain wrong. On occasions this is obvious. If one of the firms is hugely out of line with all its
other rivals and all the fixed-odds experts, more often than not, they have made a mistake. So if on a quote for total points in a rugby match, one firm are quoting ten points higher than everyone else, the likelihood is that they have miscalculated or seriously underestimated a particular factor. In reality, getting on these rogue prices can be very difficult because market- makers can see as well as the punter where they are out of line and move the price rapidly to compensate.
As we will see in our chapter on football, however, there is a school of theory that suggests market-makers who are only slightly out of line with the industry average on a price are worth taking on.
Professor Leighton Vaughan Williams from the Betting Unit at Nottingham Trent University has highlighted the phenomenon of quasi-arbitrages or quarbs, where punters can take advantage of an out-of-line quote to make a profit in the long run. The details, which were based on research into spread quotes and make-ups in the bookings market, we will save until later. Suffice to say, there is no cut-and-dried answer as to whether betting with or against rogue traders is the answer. It depends on the situation and the information available. But the less information is generally available and the harder it is to discover, the more chance there is for an individual market- maker to have ‘privileged’ information to himself.