The Betting Industry_ Who Makes - Simon Kostrava.pdf

The Betting Industry: Who Makes the Most Money and How Author: Simon Kostrava Published in 2016 Published by Simon Kostrava All rights reserved Cover Photo: Simon Kostrava All rights reserved Printed by CreateSpace.com Available from Amazon.com and other retail outlets  The Betting Industry:...

The Betting Industry: Who Makes the Most Money and How Author: Simon Kostrava Published in 2016 Published by Simon Kostrava All rights reserved Cover Photo: Simon Kostrava All rights reserved Printed by CreateSpace.com Available from Amazon.com and other retail outlets  The Betting Industry: Who Makes the Most Money and How? By Simon Kostrava A comprehensive look at the betting industry. Can betting generate a sustainable profit in the long term for bettors? How can betting be profitable and how do bookmakers earn their profits? Contents 1. Author’s note 2. Foreword 3. Some useful terms 4. Spread the odds and therein lies the profit for bookmakers 5. How to find the best bookmaker 6. The evolution of the betting industry 7. Bookmakers versus betting exchanges 8. Bookmakers’ promotions 9. Arbitrage 10. The psychology of the bettor 11. The most common mistakes of the unsuccessful bettor 12. Manipulation and sure bets 13. Long-term profitability 14. Becoming a bookmaker 15. Poor betting companies 16. Who earns the most in the betting industry? 17. Conclusion About the author Other books by Simon Kostrava 1. Author’s note I used to bet and still place the occasional bet on a football or a hockey match. I definitely want to win, but I do not expect to bet on sports full time and earn living from betting. I do it just to have a little more fun. Generally, I think betting is an almost impossible activity for 99% of people. In this book, you will find plenty of reasons why. But, if you want to try and become a member of the 1% group, that is up to you. As such, you also can find a lot of information about things that you should be aware of. My choice is different. Sport is fun even, when you do not bet. 2. Foreword You definitely knew it. You’ve been watching a football game and, from the first minute, you had that feeling that the Manchester team would definitely win. Three goals and ninety minutes into the match, you are satisfied. Not just because your team won 3-0, but because the feeling you had from the start makes you smile. After you calm down, you start to think about how easy it is to guess the winner of a football match. You like the game, you follow it very closely, you know almost everything about all the teams in the league, and you devote so much time to it that your family complains. At that point, you reach the conclusion that you could profit from your favorite hobby. You can watch football every day as you turn your hobby into a regular income, and your family will stop complaining. If you replace football and Manchester with any other possible sport and club, you will find millions of people who think the same as you. Earning money in return for guessing the outcome of any sports game is easy. But it is not. Look at the hundreds of betting companies that earn a lot of money every day and pay hefty dividends to owners every year. If sports betting is a zero-sum game, why are there so many happy and profitable bettors? I saw a lot of bettors. I bet a lot in past. I tried a lot of different betting systems. I followed a lot of insiders who pretended to know more than others. I researched financial statements of many betting companies. I even tried to be a bookkeeper for a while. Here are my findings about the betting industry: what you should be aware of, how to pick a bookmaker, what and whom to follow, the gaps in bookmakers’ strategies and the common mistakes that bettors make. And finally: is it possible to be profitable through betting over a long period of time? 3. Some useful terms Firstly, we have to look at some of the terms we will use in this book: Bookmakers = betting companies Multiple = when you include different betting events on one betting slip When looking at the bookmaker’s list of odds, you have to know which system of showing odds is used. Usually, in Continental Europe, Australia, New Zealand and Canada, bookmakers show decimal odds, while, in the UK and Ireland, as well as for horse racing bookmakers, fractional odds are preferred. In the USA, bookmakers in Vegas tend to use figures odds or money lines. Examples of different kinds of odds: Probability of Decimal odds a win for Player Player Player Player B A B A Player A – 50% 50% 2.00 2.00 Player B Player A – 80% 20% 1.25 5.00 Player B Country of Continental use Europe, Australia, New Zealand, Canada Fractional Money lines odds Player Player Player Player B A B A Player A – 1:1 1:1 +/-100 +/-100 Player B Player A – 1:4 4:1 -400 +400 Player B Country of UK, Ireland, USA use horse racing everywhere In this book, our preference is for using decimal odds; however, the text can be applied in reference to other kinds of odds and the meaning will stay the same. 4. Spread the odds and therein lies the profit for bookmakers The first and foremost point about betting is probability, followed by the rates or lines that bookmakers show. When speaking or writing about probability, a lot of a people tend to stop listening or reading. But, do not be afraid, you do not need a PhD in statistics or mathematics to understand the core of betting companies’ profitability and your chances to earn money through betting. For ease, we will start with an example from tennis before moving onto other sports. In tennis, when watching two players in a singles match playing each other, you definitely know that there are only two possible outcomes: one of the players will win. If they are at the same playing level and you consider the probability of Player A winning to be 50%, then the probability of winning for Player B must also be 50%. The sum of probabilities has to be 100%, as any other outcome is not possible. Either Player A or Player B will definitely win (I accept that one of the players could always retire during the match, but then you will not know the winner of the game and most bookmakers will return your stake). A fair line from a bookmaker will be: Probability of a Decimal odds win for Player Player Player Player A B A B Player A 50% 50% 2.00 2.00 – Player B How do we calculate odds from probability? Decimal odds for Player A = sum of probabilities ÷ probability of a win for Player A = 100% ÷ 50% = 2.00 Decimal odds for Player A = sum of probabilities ÷ probability of a win for Player B = 100% ÷ 50% = 2.00 How can you return from odds to probability? Probability of win for player A = sum of probabilities ÷ decimal odds for player A = 100% ÷ 2.00 = 50% Now you find out one important thing. You will never find odds that give you a 100% probability regarding the outcome in any betting outlet. Well, there is the margin that bookmakers have in order to earn money on bettors. Bookmakers always play it safe with a small or big margin for themselves. How big the margin is depends mainly on the competition they face. So, if your Player A and Player B each have a 50% probability of a win, you usually find odds at the level of 1.80 – 1.80, or 1.90 – 1.90 at better bookmaker outlets. If you recalculate it back to the probability level, then each player has a 52.63% probability of a win (for a 1.90 – 1.90 odds line). In total, this gives you a 105.20% probability of a win for one of them, which is nonsense. There is no chance that the total probability can be over 100%. That 5.20% is the margin bookmakers have to their advantage. How does it work in reality? How do bookmakers earn money? Take the example in which the same amount of money was staked on both players. People who bet on the winner will get their stakes back plus 90% extra for a win. People who bet on the loser will lose all their stake. And therein is the profit for the bookmaker. Let us have a look at a bookmaker’s balance: Player A Money – Player Money Final staked on B paid profit/loss Odds respective Result 2-0 back to balance for player by Player A bettors bookmaker bettors won - EUR + EUR 1,900 Player A 1.90 - EUR 900 1,000 (1,000 x 1.90) + EUR + EUR Player B 1.90 0 1,000 1,000 + EUR Total 100 According to the figures above, from a turnover of EUR 2,000, the bookmaker realized a net profit of EUR 100, which is 5% of the turnover. Not bad. If bookmaker offered fairer odds of 2.0 – 2.0, which would mirror actual probabilities, then he would not have realized any profit. Now comes the question as to what happens if the same amount is not staked on each player. Bookmakers usually move odds accordingly; they decrease them when a lot of money is staked on a player, or increase them if the opposite happens. They still run their book risk-free and try to keep it in balance. Of course, it is not always possible, but if you offer a lot of betting opportunities and you have a lot of bettors, then you do not need to be in balance for every single match. You will keep a balance and profit on all matches taken together. Probabilities do not lie and, if you keep a portfolio of betting matches wide enough and for long enough time, you will have a margin in your pocket. That is the reason why so many bookmakers these days come with so many advertisements. To be profitable as a bookmaker means you need enough bettors and a wide range of betting selections. Note: our example regarding how to calculate odds can be also used for a three-way match. Let us now move from tennis to football, when draws can also happen. Probability of a win Decimal odds for Team Draw Team Team Draw Team A B A B Team 50% 30% 20% 2.00 3.33 5,00 A – Team B Decimal odds for Team A = sum of probabilities ÷ probability of a win for Team A = 100% ÷ 50% = 2.00 Decimal odds for a draw = sum of probabilities ÷ probability of a draw = 100% ÷ 30% = 3.33 Decimal odds for Team B = sum of probabilities ÷ probability of a win for Team B = 100% ÷ 20% = 5.00 The profit/loss profile for the bookmaker: Team A – Money Money Final Team B staked on paid profit/loss Result 2-0 Odds respective back to balance for Team A team by bettors bookmaker won bettors - EUR + EUR 1,800 Team A 1.80 - EUR 800 1,000 (1,000 x 1.80) + EUR Draw 3.33 0 + EUR 600 600 + EUR Team B 5.00 0 + EUR 300 300 Total 106% Total + EUR 100 probability 5. How to find the best bookmaker If you type “bookmaker” or “betting” into Google, you will get thousands of results. In small countries in Europe, you have tens of bookmaking companies. In bigger countries, they are hundreds of them, not counting multinational companies operating from Cyprus, Malta, Gibraltar or the Isle of Man. Choosing just one is hard. Here are few rules that you should follow. First and foremost, make sure the betting company is real. You should check whether they have a license to provide gambling services, whether gambling in your country is legal and whether you can also bet in betting outlets that do not have their license in your country. In the USA, gambling in most of the states is prohibited and you have to travel to Las Vegas, Nevada, to place your bet, while, in the UK or Continental Europe, gambling is more liberalized. However, even in the latter countries, there are some restrictions. Usually, particular countries want to know who is providing betting services and demand the appropriate share of taxes from these providers’ income. That is the reason why you are usually not able to use the service of any company. It is a must to check whether your chosen bookmaker has a license for your country. Second, you need to seek out testimonials. Nobody wants to send money to a betting outlet only to find out that it is impossible to get the winnings into your account. References, gossips, reviews and people’s opinions on respective betting companies are all over the Internet. Do not be lazy – do your research. It is important to familiarize yourself with the terms and conditions that bookmakers have for depositing and withdrawing money and you should not underestimate the effect these can have on your betting career. For example, does the bookmaker only accepts cards or are direct bank transfers into your account accepted. More importantly, how long will it take the bookmaker to return your money? If the bookmaker needs some additional proof of identity when you ask for a drawdown, is there have some kind of threshold or minimum that you could take back home. Do they charge you an additional fee for different methods of depositing or withdrawing money? Usually, credit cards have an add-on, which can be the equivalent of up to 5% of the transaction sum. Also, some banks, in a move to be more socially responsible, have started to charge you a fee when you are using their banking accounts for funding accounts at betting shops. After you have done all the research as recommended above, you can now explore some of the well-known and respected brands in the betting industry, followed by questions about odds. In Chapter 4 we showed you how to calculate odds and margins for bookmakers. This is important when choosing the best bookmaker. If you want to have a fair chance of winning in the long term, you must have statistics and probability on your side. So you should choose the bookmaker with the lowest possible margin. You will not find any offering a 0% margin on odds. This is because bookmakers do not take risks, nor do they want to play against you or rely on luck. The margin is a good thing when you want to earn money. You should try to find a bookmaker with a small possible margin (1 to 5%) or you go to betting exchange where odds show margins in tenths of a percentage (0.1 to 0.8%). Betting exchanges also have their nuances (see Chapter 7). Some bookmakers also have a so-called manipulation fee. This fee is mainly used in physical outlets, with betting companies making the excuse that it helps them to run and cover a wide network of offices all over a particular country, even in small villages in the middle of nowhere. These days, as most people are betting via the Internet and with smaller fixed costs, bookmakers who run physical outlets are stepping back from the additional fees they used to ask for. Besides odds, you should also check the range of events that bookmakers are offering on their books for the purposes of betting. Football and tennis are covered by every bookmaker. If you are interested in horse racing, golf or cycling, you should carefully choose an outlet that offers this fuller range of sports. You should also consider how far in advance a bookmaker shows his odds for respective stages in a competition. It could be advantageous to see odds, not just for the current round in a football league, but also for the next round. But let us repeat the two most important things. The first concerns the quality of odds in terms of the average margin that your bookmaker has. The second concerns the quality of service in terms of the ability to withdraw your money. 6. The evolution of the betting industry Let us not bother with China and Europe during medieval times, when some people definitely bet on the outcome of a duel between knights. Let us look instead at the present state of the betting industry and how it has changed in the last few years due to the evolution of the Internet. Historically, betting companies operated via two basic channels. The first was a physical one. For example, in the UK, there were small shops in almost every village where you could go and physically invest your money in your preferred team’s outcome. In Continental Europe, betting was way more institutionalized, as the betting industry was under the direct control of the respective state. Usually, state lottery companies also had small sporting stakes books. This way of taking bets was rather costly for bookmakers, but there was no other way in which they could operate. The second way was to take bets was by phone. It needed only one call center and a good system of confirming client identities with passwords and a credit balance. Customers had to deposit money first before they were able to bet via a phone call. Good customers with a robust betting history and a keener history of paying their debts also enjoyed certain levels of credit. Phone betting was quite important for people who disliked visiting betting shops, either because they could be seen by others, they disliked the smell inside or their stakes were too high, meaning that it was difficult for them to bring large amounts of cash to a physical shop. With the evolution of the Internet and its increasing accessibility to the public at large, Internet betting is clearly the primary channel for this activity these days. Internet betting has absolutely replaced phone betting, as almost everybody with a smartphone prefers to use an app or a website instead of a conventional phone call. Internet betting, as an easy and customized way in which to accept stakes, is fast and reliable, which explains why phone betting has almost disappeared. Physical outlets still exist and probably will last for few more years, but turnover has quickly moved away from them toward the Internet. Physical betting shops are still important in countries where the Internet is not so widespread, as well to people who prefer personal social contact or seniors who will never use the Internet for sending money. Physical shops also have meaning when it comes to single events with a high turnover of visitors, for example, horse racing festivals in the UK. Even then, you will still see many people typing into their phones instead of visiting a bookmaker’s tent and physically placing a bet. Physical outlets have also moved away from individual shops to spaces where people tend to watch important matches in crowds, such as pubs or bars. Evolution has also happened in this respect, as you do not need to place a bet with a shop assistant or with a waiter; instead, you just use an automated betting machine on site. For bookmakers, Internet betting is less costly than running physical outlets. What they save on physical shops in terms of rents, staff and money distribution, however, they spend on marketing. With strong competition, it is much harder to attract enough customers with reasonable prices on the Internet. If you check the prices on Google AdWords (a Google system for placing ads on the Internet) using words such as “bet” or “betting”, you will see extraordinarily high numbers. Internet betting gives bettors the chance to be better prepared as they can find copious statistics and information about upcoming games online. The availability of different betting companies is also one click away, which helps bettors to access the best possible odds. The days when nobody visited more than two different betting companies on the high street to compare odds are definitely a thing of the past. Today, competition is strong, which definitely helps customers. Another advantage for bettors is that they do not need to walk through the streets with significant amounts of cash in their pocket. With Internet betting, all money transfers are made electronically, which is much more convenient and theft-proof (provided you do not think about hackers, of course). However, Internet betting also has a few major disadvantages. The biggest is accessibility. Previously, you had to wake up in the morning and go to a physical shop to place your bets for that day. Then you waited for the results and wins. The next day, you went again to pick up your winnings and place more bets. Not many bettors were willing to walk to the betting shop more than once a day. With Internet betting, you can bet and do not need to wait another day to make another bet. You just see the results and place your bets again and again and again. You have access to your bookmaker 24 hours a day, seven days a week. No closure, no waiting. Just a few clicks and you can bet. If you are too impatient, you can bet on live games with in-play odds. The world of betting is as close as possible to you. What seems to be an advantage for you in the beginning can quickly turn into a disadvantage with a catastrophic outcome. Betting can be addictive and have a devastating impact on your financial and mental stability. Bear this in your mind every time you think about or place a bet. Another impact of the Internet on the betting industry is that only the strong players can survive. High competition and expensive marketing do not allow for mistakes. Smaller players with a small turnover will not be able to compete anymore. We have seen a lot of mergers and acquisitions in recent years, which continue today. For example, Ladbrokes bought Betdaq, Party Poker merged with Bwin, and Betfair merged with Paddy Power. In the near future, there will be just a few big betting companies operating worldwide. We will be closer to an oligopoly than ever before. The same is also happening between odds and technology providers, which may lead to the unification of odds among the strong players. Differences in the margins of big players will be smaller than now, while the strength of the Internet, which offers customers competitive behavior from market players, will disappear. 7. Bookmakers versus betting exchanges As we mentioned in Chapter 4, the smallest margins and therefore the best odds can be found on betting exchanges. Currently, the two biggest in Europe are Betfair and Betdaq. However, the term “best odds” is simply a relative one; you have to look deeper if you want to know whether a betting exchange is the right place for your stakes. Betting exchanges started around 2000. Betfair was originally founded by former financial market traders. Their aim was to connect with bettors, offering them better rates and allowing them open and closed positions. The exchange not only offers you the chance to bet on a particular outcome, but also to bet against the outcome, which is known as “lay betting”. As the name suggests, a betting exchange works like a typical stock exchange. As a participant, you have the chance not only to bet on an outcome, but also show your own odds. Either the odds at which you want to bet on a particular outcome or the odds that you show to others when you are ready to take their bets. In other words, you become a market maker or a bookmaker yourself by betting that a certain outcome will not happen. The main advantage of betting exchanges is that they offer the best possible odds. The greater number of people participating, the better odds you will see. Sometimes, you will see odds that are really close to 100% probability, while a margin of 0.05% is not unusual with regard to high-profile sporting events, such as Premier League or Championship football matches. Conversely, less popular sporting events, such as local ice hockey league matches or handball competitions, will not attract as many interested bettors. Therefore, odds are, in most cases, worse than those found in an old-school betting company. Fast moving odds are another consequence of having so many individual participants. Typical betting outlets will not change the odds too frequently, while their moves will be smaller. Usually, they try to keep odds steady for as long as possible, provided they do not see some breaking news or a really large amount of money being staked on an outcome. I always wonder whether companies believe they are right, no matter what the general public think, because of their formal rules or the stubbornness of people working in them. On betting exchanges, you will see wild swings with regard to odds, depending on the current mood and the amount staked. Certain news can have a deep and wide impact, with people reacting more quickly without thinking. That is because there is a psychology of bettors, which plays a much bigger role and has much bigger consequences. You will also be unable to find odds for events that will take place at a much later date. People on exchanges tend to bet on actual events. They want to win and profit now, then move onto the next event. So, if you want to bet on something that will take place tomorrow, you will often find very wide odds with a big margin, if you find odds at all. Generally, if you are not a big player, just an occasional bettor, the exchange is not for you. You will be distracted with odds moving wildly and offering a smaller range of possibilities. One important fact that people forget about betting companies is that the odds you see are not what you receive exactly. Betting exchanges also need to make some profit and there are two basic ways in which they do this. One is to operate in a similar way to an old-school classic bookmaker and try to attract participants on an exchange with fixed odds and a wider range of betting opportunities, as well as showing odds well in advance. The second type of earning catalyst is a fee. The betting exchange takes a small percentage of your winnings every time. Fee ranges from 1 to 7%, depending on the client and his turnover. The higher the turnover, the lower the fee that the exchange charges you with. Moreover, this fee erases any advantage of much better odds. Not surprisingly, this fee is similar to a margin that a classic betting company has with regard to odds. So, if you are a bettor who bets mainly on live events, does not mind closing your position beforehand or in-play, and tends to bet in ways similar to trading on the financial markets and stock exchanges, then betting exchanges are for you. But, if you bet in advance and stick to your predictions, as well as preferring to make multiple choices on your betting slip, then classic betting companies are for you. 8. Bookmakers’ promotions Almost all bookmakers are running their businesses in a highly competitive environment. As their profits directly depend on turnover, they need to attract new players every day. The greater the number of newcomers registering on their websites, the bigger the chance there is for bookmakers to make additional profits. And here comes the main promotion tool that betting companies use. Free money for you. Almost every single betting company offers sweeteners to potential clients. Let us have a look at a few of them and explain why “free” does not mean “absolutely free” in the world of betting. Free bet – we will refund the first bet you make if you lose it This is an easy one. When you open an account and make your first deposit, the first bet you make is risk-free. In the case of a loss, it will be refunded back to you. It all looks fine at first sight, but there is some trickery involved. If you accept this kind of bonus, it does not mean that you will get free money in your account. As always, the bookmaker wants your money. So your deposit has to come first; only then will the betting company refund your first lost bet. The amount you can bet using this risk-free offer is limited. What is more important, as well as usually written in fine print, is that you cannot withdraw what has been refunded to you following your lost bet when you feel like it. There are some conditions linked to the refund. You are obliged to re-bet the same amount as the refund a few days before it is free to withdraw. What is meant by a “few times” depends on the bookmaker concerned, although it is typically between three and six times. Bonus to deposit – we will match your first deposit This is the promotion I like the most. Sometimes, it is also offered to existing clients, not just newcomers. The betting company gives you an amount of free money fully or partially equal to your deposit. How nice, you double your investment. However, as with every other promotion, it is not so easy to claim that money back. It is the same as the “free” bet. You are obliged to make some turnover with the “free” money before you are able to withdraw any. Restrictions are not only concerned with how many times you can bet with this money, but also the kinds of bets. Usually, you have to make bets with odds above a certain threshold (1.50 or 2.00). So your ability to keep them and not lose is worse than it seems. Special odds – skyrocket higher to 3.00 if the favorite wins This promotion is not so common, but sometimes bookmakers, mainly in the UK, use them. They pick a game where they expect a big turnover and offer really high odds on the favorite. However, you have to fulfill a few conditions to make use of these odds. As in other promotions, you have to make some turnover within a limited period of time to be able to withdraw any money you win. Sometimes, you have to combine these promoted special odds with at least three other matches offering certain minimum odds. As stated above, all promotions have their “if”. Bookmakers are not charities, nor do they want to send money to their customers. They have one main goal: to gain new customers and allow them to play with as large amounts as possible in as short a time as possible. They are not interested in occasional players who come and bet on one match, then never return for months. They need players who will bet regularly (every day or a few times a week). The psychology of such players is absolutely different, about which we will talk later (see Chapter 10). In the economy, experts claim that “there is no such thing as a free lunch”. We can say the same about the betting industry: “there is no such thing as a free bet”. Even if it seems at first sight that you are getting free money, the reality is different. “Free” is just a synonym for “join us and stay”. If you recalculate all the conditions set out in promotions into hard probability numbers, you will see that your chance of taking home some of the promotional money is very low. However, if you want to be a successful bettor, promotions can help you in a big way. We explained above that it is not about receiving free money. But, for a professional bettor, it is about balancing your cash flow or improving your chances of long-term profitability. If you have a plan to bet on certain short-term (e.g., the Euro tournament in football) or long-term (e.g., the Stanley Cup in hockey) competitions and expect to bet more times and with more money, then a promotion is for you. You know that you fulfill all the conditions for a promotion and you will be able to make a withdrawal as a result. In turn, you get an extra buffer for your staking plan. For example, if a bookmaker wants to match your initial deposit, you have an extra buffer of 100%. If you prepare your plan well, you should at least lose no more than the buffer. Details about what should be in your staking plan and using promotions will be described in more detail in the following chapters. For now, you have at least got some idea as to why promotions may be useful to you. 9. Arbitrage Arbitrage on financial markets means that you buy and sell the same asset at the same time for different prices. You sell at a higher price than you buy. This results in risk-free profit because you face no risk of prices changing over time. Arbitrage is possible when you find out there are two market players quoting different prices. Regarding the betting industry, arbitrage means that you come across two bookmakers who view the probability of a win in a particular match differently. Generally, this does not happen very often. Sometimes, it happens in a very close tennis match or in other sports where a draw cannot happen (e.g., badminton and volleyball). You should then be able to find two bookmakers who expect different match results. However, the difference in odds will be very small, while most bookmakers will have a limit on the maximum stake. Of course, you should also have open accounts with a lot of bookmakers and be prepared to invest a substantial amount of money. Currently, with a lot of bookmakers’ websites offering aggregate odds, it is much harder to find arbitrage opportunities. Not only bettors, but also bookmakers keep an eye on their competitors and adjust their odds accordingly. No one wants to be caught without their pants on. Smaller booking outlets usually wait for bigger competitors to show their odds before their time comes. Another important factor that impacts odds is globalization. Some bookmakers simply buy services from other bigger bookmakers. If a certain big bookmaker chooses not to enter a particular market due to legislation or other reasons, he can still be involved in terms of offering odds. For a local bookmaker, it may be too expensive to cover all possible competitions in all possible sports. It is easier for a local bookmaker to buy odds from others and specialize instead on local sports leagues, on which he will have the edge. Inter-border cooperation between betting companies is increasing nowadays, while it is possible in near future that we will only see a few major bookmakers dominate the market. Others who are strong at marketing will simply buy all the necessary data, odds included, from them. The tendency towards the unification of odds throughout the betting industry is strong and inevitable. Given the above-mentioned reasons, there is just one advantage to arbitrage. Human error. Sometimes, it can happen that someone will write a bad rate in a book. If you are lucky and fast enough, you can take advantage of such a scenario. Conversely, due to aggregation websites, it is very probable that someone will be faster than you. Meanwhile, bookmakers, who see a big inflow on one particular side in one particular match, will not hesitate to stop taking bets. Sometimes, you can also see bookmakers canceling winning bets in case of mispricing. The betting industry then starts to resemble trading on the financial markets, where off-market pricing can be canceled. This means that human error is not reduced, but it can be reversed thanks to terms and conditions offered by every bookmaker. And these kinds of terms slowly became the market standard. So, I strongly advise you to read all the terms and conditions of your chosen betting company in advance to avoid any costly mistake or disappointment. Although you do not have as many choices as betting companies because, in general, they do not want professional players placing big bets on single events. They want critical mass. Many small players with small stakes and with small losses. However, in an aggregate, they can experience safe business with acceptable risk levels. As in every other business, in the betting industry, bookmakers have a golden rule about not relying on one customer. They do not want to have one big client, but thousands of small clients. From a risk point of view, that is the best possible strategy. I can summarize the above in two sentences. If you find arbitrage, seize this once-in-a-lifetime opportunity to the full amount. However, do not be surprised if your bets are canceled. 10. The psychology of the bettor Probably the most important part of the betting game is your mental state, aka the psychology of the bettor. We know all about the goal of the bookmaker. As in every other business, the bookmaker wants to make a profit with the smallest possible risk. This is because the booking industry is working in a field where the outcome of events is unknown. So, bear this in mind every time you are betting. The bookmaker is not there to let you win and make you rich. Every action and every promotion by the bookmaker are all because he wants a bigger profit and less risk. Free bets are not offered because the bookmaker wants you to be rich; the only thing bookmaker wants is your money as therein lies his profit. Now that we know what the bookmaker wants, we can turn our attention to you, the bettor. What is the driver that makes you visit a betting shop or log onto a betting website? Generally, there are two basic drivers. One is to have fun, the second is to earn money. Both of these drivers are used by bookmakers when attracting newcomers. Generally, there are two types of advertising. One is about fun, that is, to have fun watching a sports match and have even more fun by betting on that match. In the process, you will be really attracted by the game. Every bettor tries it at least once. Remember those times when you were bored and watching a not very important match between two teams you either disliked or were indifferent towards. If you want to be excited by such a match, there is no better way than betting on it. Whether you bet on a winner, or the number of goals or cards in that match, your feelings and attention will dramatically change. You will follow the match more closely, you will take sides, you will feel you are taking part in that match. There is no better way to be drawn into the game. And if you win your bet at the end, then the probability you will repeat it during one of the boring afternoons is pretty high. There lies the motivation for bookmakers to point out the fun you can have when offering you a free bet. They need you to register and have fun. They want you to think that Sunday afternoons can be fun, not boring, as they were before you started to bet. The second motivation regarding bettors is profit. They want you to win, they want you to have more money and they want you to change the life you have. But this is where bookmakers start to differentiate. If you are strict, have a strategy and a strong will, and keep to the rules you write for yourself, it will be hard for any bookmaker to earn a lot of money from you. But, if you are in despair and you need a win to change your life, then bookmakers will focus on you. If you are not thinking rationally because you are under stress, if you do not have your own strict strategy that you keep to, then, sooner or later (depending on the amount you put in), you will probably end up without your money. We will now devote our time to people who usually lose their money on bets. We will describe the typical mistakes they make and the patterns they usually follow. The successful ones are covered in Chapter 13, which looks at the rules and advice you need to follow to be a long-term winner. However, to be a winner means that you must avoid the mistakes of losers. So it is very important that you finish this chapter if you want to know what you should avoid. The usual pattern of a recreational or occasional bettor is as follow. You bet for fun and you want to win a little bit. You bet until you start winning and have the time to do it. Once you start losing money, if your life is in balance, you will probably stop betting regularly. When you only bet occasionally, you will probably not carry out intense research into the match you are betting on. You want to have a bit of fun, so you watch the match, have a feeling about the result and bet. Your chance of winning is not slim; statistically, it is 50%. If you win, you will go on betting. When the odds are against you, do not forget that there is margin there, meaning that, in the long term, you will lose money. Probably not a big amount, just a small one, but it will still be a loss. And, to repeat: bookmakers want customers who will spend often and lose a lot of small amounts. There is the reason why bookmakers target your desire to have fun and give you the feeling that you are earning something extra. This is where all the free bets and deposits come in. They want bettors to have the feeling that they are winning, even when they are actually losing. As a matter of fact, betting companies know that only a small number of people will draw down their winnings immediately after they win. Usually, people leave their money on their account, with their winnings increasing their thirst for another win. That is the reason why you cannot withdraw your “we match your deposit” money immediately after you receive it. Bookmakers usually have statistical models and exact numbers to help them know how long it takes for a newcomer to lose his deposit. Hence the condition, “you have to bet at least five times with the free deposit amount in the following months”. They know that the probability to win is continually very low and they also put the bettor under time-related stress, so they are forced to bet. He will also bet on events he would not normally bet on if the clock wasn’t ticking. If a bookmaker adds the condition of a threshold regarding minimum odds, here is your chance for fair play. The higher the odds, the smaller the probability of your win. If you recalculate all the conditions set out in any promotion to hard probability numbers, you will see that your chance of going home with some money is pretty small. You have to know that anything a bookmaker does is done under two assumptions. The first is that, if you are winning, you will continue to bet in order to exploit your luck and increase your winnings. The second is that, if you start losing, you will likely cover your losses with future wins. You will continue in the hope that, once you win, you can make up for everything you lost before. And now we come to the basic mistake of bettors. If I am losing, that is just bad luck, but it has to change eventually. That is not true; it is not bad luck, it is your bad decisions about the odds and probabilities against you. In the long term, if you were to bet on every single event offered by the bookmaker, then the margin regarding the odds will ensure that you lose. That magical 4 to 7% that bookmakers have in their odds as a margin will decide. However, the average bettor will never realize that he just bets, while blaming his loss on that one goal or that one bad decision of the referee. Then, at the point where he suddenly wins, he feels that the tide is turning and now it’s his time. He increases his bets; indeed, he starts to choose more and more bets. And, from a statistical point of view, it is just a matter of time before he loses all his former winnings. Even if statistics can lie, probability never will. You can have luck once, but you cannot have luck forever. Then comes the magic of probability, where you do not have a chance against the odds of bookmakers where a small margin is involved. I know that, psychologically, it is very hard to stop. That is the reason why the number of people addicted to gambling continues to rise. It all starts with boredom and finishes with financial catastrophe. 11. The most common mistakes of the unsuccessful bettor We have prepared a list of some of the traits that you will find in every unsuccessful bettor. The unsuccessful bettor does not need to have all these traits. Sometimes just one is enough to make a bettor unsuccessful. The more traits he has, the faster he loses his money. Betting without doing proper research on the sporting event he is betting on To know who plays whom in what competition is not enough. Even if you know their rankings in the league table, this is still not sufficient. You should know everything that is public, as well as information that may be secret. You should know about probable lineups, public and hidden injuries, head-to-head statistics from the past and possible scenarios of managers. All in all, the more you know, the better chance you have. Following too many betting events You cannot be an expert on tennis, football, hockey and volleyball. Your capacity to follow every sport is limited. If you follow a lot of different sports and teams, you will only know a little about everything. But, to be successful, you need to know all there is to know about one single thing. Multiple bets The more bets you have on a single betting slip means you will receive higher total odds at the end. It looks so nice to earn a million from one single ticket. However, your life is not a fairy tale. With every added bet on a multiple ticket, your chance of winning dramatically decreases. Again, try to calculate the hard probability on a betting slip where you have 16 events with total odds of 333.00. Your probability of winning is a tiny 0.3%. Trying to recover your loss immediately This is a mistake that bookmakers like the most. If you are losing, do not try to bet more. With every other bet, you are not improving your chances to win. The rule that a win has to follow a loss does not exist. Even after five, six or even 10 losses, your chances that another bet will be a winner is the same. The probability of a win never depends on the number of losses you experienced before. If you are losing, it is because you did not do enough research, not because of your bad luck. Winnings left on your betting account If you win, take your money out of the betting account. There is no reason to leave any money on your betting account if you are not betting again right away. Nowadays, you can recharge your account in a second (or a minute), so if you want to bet in future, then you can make a deposit into your account in one or two clicks. If you leave your money on your betting account, it is more probable that you will use it for more bets than you would usually make. The probability that you will lose all your winnings is higher, as you will have fewer obstacles in your way. It is in your interest to put as many barriers as possible in front of you before placing any bets. Give yourself enough time for research and approve your betting decisions through some kind of internal process, not just in the space of a seconds when you get some crazy idea. Betting on every single event that you watch on TV You might have much more fun, but you will lose a lot more money. There is no point watching every single football game over the weekend. You should carefully choose what to watch and decide whether the game offers enough fun on its own. Nobody earns millions by watching TV and betting on every single match he sees. Money is not won on the popular games that everybody watches. Did you recognize yourself in any of the above? If you did, then it is more than probable that you are one of the useful customers to betting companies. In the long term, your chance of being profitable on betting is very slim. Your only chance is luck. And simply relying on luck when it comes to money is not the best entry point for whatever field you choose in your life. You need hard skills, mental toughness and a strong will in every field, betting included. If you want to know what a successful bettor should do, then check out Chapter 13 on long-term profitability. 12. Manipulation and sure bets Before I turn to the successful bettor and his must-have skills, let me mention the things you will definitely meet on your road towards betting. There are plenty of web pages, Facebook accounts and email services offering winning bets in advance for a certain fee. Once you start browsing on betting sites, looking for a bookmaker, general information about betting or betting recommendations, your timeline on Facebook will be full of promoted links about these kinds of services. The business model behind these service providers is as follow. They attract as many customers as possible who will pay a monthly or yearly fee. After payment, customers will receive regular emails with bets in advance. The way in which they attract customers is very easy. They will show you statistics from the past about winning bets they made or furnish you with references from satisfied customers. My problem with past winnings is that you can hardly believe them. Of course, there are winning bets, but you will never know whether they really chose that pick before or after the particular match was played. However, reliability is not reflected in the marketing message they send out to possible customers. They want to attract you with the promise of high wins, which will come easily and very often, of course. You never see any “sure bet” provider conceding past losses. They will show you one or two betting slips where they lost; however, among a copious amount of green winning tickets, you will barely notice them. Only one question remains regarding satisfied customers. Are they friends of a service provider or are they totally made-up? When speaking about financial markets and hedge funds, they usually disclose their financial results to the regulator on a yearly basis, but typically there is no star with only winning years. In that part of the betting industry where dark scams occur, you will only see the winners. Short term or long term, it does not matter; they will show you the results you are looking for. I have always had a problem with these kind of services. I simply do not understand how anybody can subscribe to them, especially when you hardly get an invoice from them (not speaking from a legal point of view). You usually pay them by sending cash in the mail or via PayPal or any other service where you can hardly check the identity of the provider. (Please do not use your debit or credit card when you decide to buy such a service because that would be a double mistake). Why am I so opposed to such services? Imagine that you have that skill to be profitable at betting in the long term. Why would you provide that betting formula to others? Even for a fee? The best way to make use of your skill is to bet yourself. If you provide your picks to others, bookmakers will see an inflow on particular picks, after which they will decrease the odds and your winnings will likely be much lower than you expected. And, as the difference between long-term winning and losing is very small, the odds you get are of great importance. There is no point revealing to the market what you are playing, only to end up watching falling odds. Then there is the question of cash flow. Imagine that you have a winning bet, but you do not have enough money to make a substantial stake. Again, there is no point in selling the pick that you believe in so strongly. It is always more advisable to bet alone with a smaller stake or lend money from someone close. Of course, you should only make the bet if you are absolutely sure. Otherwise, you can sell it on the market and cash in on the fee, not caring whether it was a winning or a losing bet. And that is my main point. There is no sense in selling your picks if they are really winners, from which you will profit in the long term. So never pay anyone for a sure bet because it makes no sense. Conversely, you can sometimes find useful picks for free. There are plenty of sites where people publish their tickets in advance. There are also plenty of sites where you can read written analyses with reasons as to why certain picks were made. Furthermore, you can check the history of all participants involved, which means that you can see who the winner is and who is not. These sites can be really useful. First of all, using them does not cost you any money. Secondly, you can find a lot of information that you perhaps you hadn’t noticed before. Or you may be warned about events that you did not know about, which can be very helpful when betting. As we will discuss later on, collecting information and carrying out further research on collected data are very important if you want to become a profitable bettor. The more information you get, the bigger the chance you will have to succeed. That is the reason why you should follow betting recommendations from the free sites. Maybe 95% of the information you will find will be useless, but the difference lies in that 5%, which can bring you the wins you need to become profitable. The problem with collecting information is always that you can spend an infinite amount of time on it and you might still miss something. So it is always good to rely on trustworthy sources. If you see that someone who publishes analysis is winning regularly, then that’s your man. Follow him and read his analysis. But do not follow him blindly; always reach your own conclusions, using all the information you can find. And, definitely, do not pay for any service offering sure bets. In general, sure bets cannot possibly exist. Do not forget that you are betting on a sport where everything is possible. The underdog can beat the favorite, and you can guarantee that this will happen when you put a large amount on the favorite. Sometimes, the term “sure bet” is used when a bettor thinks the probability of a win for his chosen pick is much higher than what the bookmaker thinks. For example, you might see odds for a football match and, before the match, you receive information that half of one of the teams has contracted a stomach virus and is in hospital. Is this a sure bet? No, because there may be enough substitutes who will get the chance to show their best performance in a desire to get a place in a future starting lineup. That said, this information can give you the edge on the bookmaker if you act quickly. If odds are unchanged, you will probably bet on a healthy team, as the probability of it winning is much higher than before the information about the health problems of opposition appeared. While you do not know for sure that your bet will win, you can be sure that the probability of a win is higher than the bookmaker sees it. Social networks are very useful for collecting information. Facebook and Twitter give you access to significant amount of information about everything related to your team. But you have to know which source is reliable and which is not. Only reliable information can give you the edge on the bookmaker. Again, there is no point paying for information because anybody who has decisive inside information can make use of it in a betting outlet all by himself. Of course, if he doesn’t believe the information, he will sell it on the market as information leading to a sure bet. The only example of a sure bet is when a sporting event is manipulated by the participants themselves. In other words, where matches are thrown because either a player or a referee has an interest in a certain result. The desired outcome does not necessarily concern the overall result of a game; it can be related to the number of yellow cards, the number of goals, the first corner, the first card and so on. Whatever is on a bookmaker’s list can be subject to manipulation by a player or a referee. That is the only sure bet because the result is not an unsure outcome for the people involved. The second sure thing is that you will never know about it beforehand. For manipulators, it is extremely important to keep everything about throwing a game secret; otherwise, it could lead to a loss and even prosecution followed by a lengthy stay in jail. This kind of manipulation is unfair and against the public interest. Bookmakers lose money and sport loses fans. The only people who benefit are the ones who manipulated the match. Tackling such fraudulent actions is hard, but cooperation between bookmakers and sporting associations is increasing. Bookmakers and sporting associations use monitoring systems, which follow the odds and the flow of money on particular odds. If the money flow is above average and we see a sudden drop in odds, bookmakers and associations will be alerted. Bookmakers usually stop accepting odds and try to void any outstanding bets. Meanwhile, sporting associations will contact the police and together will try to find out the people behind this manipulation. Unfortunately, sentences for manipulators come a long time ago after the manipulation has happened. And not every manipulation is prosecuted and revealed. So, from time to time, you can be a victim of such a manipulation and lose your bet without knowing the real reasons why. The second unfortunate thing is that, given the significant number of sporting events you can bet on, the possibility for manipulation is much higher than before. You can now bet on lesser-known leagues, which are of no significant interest to people, such as the Slovak Hockey Ball League or the Second Swedish Junior Football League. With so many possible events, the ones with the smallest audiences are the easiest to manipulate. If manipulators manage not to attract attention by staking in big amounts, there is an almost zero chance of noticing manipulation. The only break for investigators in such cases occurs when greed takes over and manipulators start to stake bigger and bigger sums in order to earn more and more. Sports in which the result depends on a small number of players are also suitable for manipulators. Tennis has always been attractive to every fraudster in sport. One influenced player is enough to obtain the required results. Manipulation is a disease for sports and subsequently for betting. Be aware that you can come up against these unfair ways of earning money when trying to enrich yourself via betting. 13. Long-term profitability Now comes the hard part. I personally do not believe that it is possible to be profitable in the long term on betting. I think that, given the margin that bookmakers have, your starting position is bad and you will not have a chance to turn it around. Probabilities do not lie. However, you can be successful in the short term. And provided you are strict with yourself and able to move away from betting after a successful period, you might have some chance. But then comes the question as to whether we are talking about long-term profitability. Let me offer you some advice and ideas about how to have a chance to be profitable. It does not mean that, by following all this advice, you will be profitable. But at least your chances will be better. Budget First of all, you have to set your budget. A lot of people start calculating how much they need to invest to earn a nice amount of money when they bet on average odds. For example, they want to make USD 10,000 in one month, so they prefer odds around 2.0 and start with USD 1,000. But this approach is totally wrong. As betting is always about losing, you have to know how much money you are prepared and can afford to lose. Peter Lynch, a well-known equity investor and a manager with the Fidelity Magellan Fund, when it comes to equity investing, always says: “You should first make sure you have a mortgage-free house, a car, savings for your retirement, savings to cover your children’s studies and financial reserves. And if, after all this, you have some spare money, then you can invest in stocks.” The same can be applied to betting. You still should bear in mind that you can lose everything you bet on. So only play with money you can lose and will never miss in the future. The money you invest when betting should be a very small share of your overall net worth. I know that everybody wants to get rich quickly. However, things can work out in the opposite direction: you can be poor and go bust very quickly. And that is not the position you want to be in. So, just use a modest amount to start with as you begin your betting career. And if you spent all your preset budget, that’s the time to leave betting behind forever. There is no better evidence of the futility of betting, as a way to earn a living, than when you lose your budget. The most common mistake made by bettors is to add money to their betting account in the hope that they will definitely win from now on. It does not work that way; however, they do not look for another way because they believe in luck and start to become addicted. But you should be in no doubt that you cannot rely on luck alone if you want to be successful. Rules After you know how much you can afford and want to lose, you can move onto another step. You should set some rules under which you will make bets. I even recommend writing them down, as only keeping them in your mind is not enough. I know that is really old- school advice, but I have a clear reason for it. It really helps to have your rules written down, so that you can check every one of them when making a bet. Just having them in your mind makes them very flexible. But, if you have to check all your rules on paper, then it is much harder to bypass them. Money management The first rule you set should be about your budget. You have decided to spend a certain amount and now it is time to write down what that is, just to be sure you will not exceed it. Then, you should set rules about financial management. You should decide what will be your average stake in terms of money. Deciding whether your base is to be EUR 5, EUR 50 or EUR 100 will depend on the total size of your budget. You might decide that your average stake is to be 1% or 10% of your budget, or that you would like to have 10 bets on 100 bets on your budget. Then you should decide what action you will take according to your internal probability of the win. If your expectation for a positive outcome is strong, you might bet double your average stake; if your expectation for a positive outcome is weak, then you might bet half of your average stake. Furthermore, you should add your internal rating to every considered stake that you want to place. The decision tree should look like this: Amount of My My internal rating stake internal description [Budget = rating 100 units] 1 unit 5 I am betting on a surprise outcome 3 units 4 I believe mildly in the positive outcome of my bet 5 units 3 Average stake 7 units 2 I believe in the positive outcome of my bet 10 units 1 I believe strongly in the positive outcome of my bet You could also set approximate odds that you will accept. This means that, if you expect your successful rate to be a little over 50%, you will need an average odds of 2.00 to be profitable. Your decision tree will then look as follows; Amount My My internal Average of stake internal rating accepted [Budget rating description odds  = 100 units] 1 unit 5 I am betting Higher than on a 3.00 surprise outcome 3 units 4 I believe Between mildly in the 2.00 and positive 3.00 outcome of my bet 5 units 3 Average Between stake 1.75 and 2.25 7 units 2 I believe in Between the positive 1.50 and outcome of 2.00 my bet 10 units 1 I believe Between strongly in 1.35 and the positive 1.75 outcome of my bet You see that the interval in odds overlaps for different stakes and internal probabilities. It gives you more flexibility in betting and lets you decide how much money you will stake on each occasion according to the odds and probability. Maybe you think that flexibility is against everything I wrote about concerning strict rules. But, sometimes, you will come across situations where not everything is clearly set out, which means that you will need to create some space in which to move around. Overlapping odds lets you create necessary space; however, it does not offer you so much freedom that you abandon everything and lose everything on a single bet. Subject of bets After you have set up your basic money management system, you should choose the subject of your bets. Bookmakers give you an opportunity to bet on almost anything. From events for major sports, such as football and tennis, to minor sports, such as badminton, as well as non-sports events, such as politics or song contests. Maybe you are the man who watches almost every sport. Believe me, you will not be able to place winning bets for every sport. As you will find out below, research and information collection are very important if you want to be a successful bettor, but it is impossible to have good information on everything. You should therefore choose to bet in an arena about which you are the most informed. The usual choice is football, but then I strongly recommend decreasing the number of leagues you follow closely. If you choose tennis, then be prepared to narrow your choice to either men’s tennis or women’s tennis, not both, or simply follow the ATP Challenger Tour closely. In my opinion, it is always better to choose something that is not so popular. If I were a fan of football, I would not focus on the Premier League, even if I were a big fan of it. It is much better to focus on England’s League One or some Central European league. Bear in mind that it is always better to be able to research information in the local language or find a reliable source in English about that particular league, if appropriate. If you choose something that is in everybody’s focus, then you will hardly find any information that others do not know, meaning that you will not have any edge on others. And, not surprisingly, you will hardly find a match where you will see the probability of an outcome that is much different than that of bookmakers. You have to always bear in mind that bookmakers know the value of information and will obtain as much of it as possible. For them, however, it is much harder to find information about a lowly league in Slovenian than about the English Premier League or the Spanish La Liga. Generally, your chances are much better when you bet and become an expert on some minor sport. And your work will even easier if you choose an individual sport instead of a team sport. It is easier to search and collect information about an individual person than about 11 players in a football lineup. I know people who bet, for example on events that do not happen very often. For example, national elections, which take place every four years. As bookmakers do not have so many historical data as they do for football, having to consult polls whose reliability cannot always be trusted, here is an opportunity to have the edge on them. It may be enough that you travel a lot and can read people’s moods and opinions. One of the best approaches is to choose a tournament that takes place less regularly than a typical league tournament. Take, for example, the Euro football tournament. Again, there are not so many historical data on international matches as there are for club league matches. You can carry out in-depth research about participating teams in this tournament. And, what I like most is the fact that it is all over in a month. This means you can set a budget for the tournament, develop a clear strategy for betting and, after a month, walk away with your profit or loss, with being tempted to bet more. As I said in the beginning, I am not sure whether long-term profitability is possible, while I see better prospects in short-term opportunities. The Euro tournament is an example of such an opportunity. Do not bet on a long-lasting league; instead, focus on short tournaments, carry out in-depth research and spend your money wisely. Here is a brief summary about how to choose an ideal subject for bets: Preferred Not preferred Non-sporting events (politics) Lasting for a shorter Lasting all period of time season Minor sports (squash, Major sports badminton, volleyball) (football, tennis, basketball) Minor leagues (Second Major leagues Slovenian League, (Premier English League One) League, La Liga) League from a country whose language I have a command of Individual sports (tennis, Team sport badminton) (football) What is also important is to schedule events throughout the season. To have two special events you want to bet on at the same time can cause a lot of problems. One of them involves money management, as you will need to either double your budget or bet with only half of it in such a scenario. The second and more important thing is that you will have less time for research on particular events. So, it is always good to make plans for a subject that you want to bet on in advance. It helps you to avoid a collision between the events you want to bet on and your family holiday, for example. Research Every single thing I mention in this chapter is important. But research has a special place. You can skip this part, but, if you do, your success will be hostage to pure luck. And that is not the way that successful betting professionals going about things. You can try to exclude luck from your business. But, to make that happen, you have to be excellent at collecting and evaluating information. You have to try to get your hands on every single possible piece of information about the players in the teams, the referees, the weather and the state of the pitch. There is no such thing as irrelevant information; everything related to your chosen event is relevant. The more information you get, the better the decision you will make. With the Internet, it is not so difficult to be effective at collecting information. You can read almost any newspaper in any language (thanks to Google Translate). While newspapers provide the basics, you should definitely seek out relevant people interested in your chosen subject. If possible, find them on Twitter and follow them, find them on Facebook and follow them, find the pages where they publish their opinions and comments and follow them. At the beginning, you probably will follow a lot of a people, but, as time goes by, you will know which source is reliable and which source is less reliable. Make evaluations of their opinions and comments from the past and rate them accordingly, so that you know where to find relevant advice and where you can simply find gossip. As we discussed in Chapter 12, concerning manipulation and sure bets, there are people who provide tips and analysis for a fee. Forget about them, but do seek out social media networks where bettors publish their bets and analysis for free. Select the successful ones and read their analysis. Try to gather as much information as possible. With the Internet, your only limit is the time and effort that you are willing to dedicate. After you have gained enough information, you then need to evaluate it. You also have to take into account past performances and historical data. The result of your work should be identifying the probability of outcomes for your chosen event. If it is different from that of bookmakers, there lies your chance to make a winning bet. Use of bookmaker promotions In Chapter 8, we discussed different promotions offered by betting companies. So we already know that there is no free money for you; you have to earn it. Usually, you need to stake the money a few times at some level of odds before you are free to withdraw it. When you have a plan to bet on a particular tournament, promotions can easily improve your chances of success. Imagine you want to bet on Euro 2016. You have set aside a budget of EUR 1,000 and you know there are 51 matches spread out over one month. Your bookmaker will give you a nice offer: “We will match 50% of your initial deposit on condition that you bet with it at least 10 times.” Let me look at the opportunities you have. Your initial budget will be EUR 1,500 instead of EUR 1,000 and you can increase your average stake by 50%. With a full schedule of 51 matches, the probability that you will make more than 50 bets is high. As such, your chance to bet 10 times the money you get from the bookmaker is pretty high. The promotion from the bookmaker is nice sweetener that will help cover your possible losses. Even if you don’t profit from your bets and you keep your profit/loss at zero, you can then withdraw your initial deposit with a nice 50% promotional bonus. So, even though your betting pattern was so-so, you still have a 50% profit thanks to the bookmaker’s promotion. Such promotions can be the difference between success and failure. So, do not be afraid to take up a promotion from your bookmaker, but make a calculation beforehand. In the same way a businessman puts together his business plan, you should do the same before staking on any event. Promotions can provide a solid addition to your cash flow and even help make you a huge profit from your betting. Some specialized professionals try to use several bookmakers for the same event, hoping that they will receive a promotion from each of them. Doing so requires mathematical skill and detailed evidence in order to ensure that the conditions of every promotion with different betting accounts are met. Ultimately, it can nicely refresh your profit/loss balance. Avoiding multiples Being a betting professional means that you strongly avoid multiples. The term “multiples” means that you place several events on a single betting slip. The probability of guessing correctly on several events is much lower than guessing on just one. The probability decreases geometrically with every added event on the betting slip. Probability Type of bet Odds of win Single bet 2.00 50% Multiple bet 2.00 x 2.00 = 25% (2 events) 4.00 Multiple bet 2.00 x 2.00 x 2.00 12.50% (3 events) = 8.00 Multiple bet 2.00 x 2.00 x 2.00 6.25% (4 events) x 2.00 = 16.00 2.00 x 2.00 x 2.00 Multiple bet x 2.00 x 2.00 = 3.125% (5 events) 32.00 2.00 x 2.00 x 2.00 x 2.00 x 2.00 x Multiple bet 2.00 x 2.00 x 2.00 0.097% (10 events) x 2.00 x 2.00 = 1,024.00 We endlessly repeat that betting is a business of probability for everyone. To this extent, it makes no sense to lower the probability of your win. Multiples are not for professional bettors. Multiples are for people who just want to have fun and see the highest possible number in row stating “total potential win” (emphasis on the word “potential”). Teams’ blacklist If you are interested in sports, which is probable if you are interested in sports betting, you will definitely have your favorite team or player. You follow them very closely, you want to know every single thing about them, including gossip. From a research point of view, there is no subject in sports about which you have better information than your favorite team. The ideal situation for betting, is it not? But there is one particular problem. You approach your favorite team with some bias, you definitely wish them well and hope they will win every single match during a season. You lack much-needed objectivity in the case of your favorite team and your bets will be duly biased all season long. Can you imagine a scenario where you would bet against your team, even if, in every case, all the possible statistics point to a loss? Maybe yes, but you cannot be sure. And you can be sure that, if the probability of a win is at 50%, you will tend to see it at least little bit higher than that. It is understandable, as you are the fan of the team in the first place. So keep that in mind: do not bet on your favorite team! Make a list and write down the names of the teams you really like and support. And never bet on matches they play. It is not professional; it can cost you a lot of a money. Conversely, there is probably a team you particularly despise. Usually, it is a team from the same town and plays in the same competition as your favorite team. You dislike them or even hate them, which is fair as you are a fan of their local rivals. Again, you will not be objective as all you wish for is for that team to lose every single match in the season and then get relegated. Now you also need to add the teams that you hate to the list of teams you will never bet on. Creating a blacklist of teams you will not bet on could save you lot of a money and be decisive in terms of your chances of future success and profitability. And do not forget any name on that blacklist is forbidden forever when it comes to betting. Psychology In Chapter 10, we slightly touched on the psychology of bettors and the importance of healthy thinking. On the road to success in betting, your mental strength is more than important. It can determine the destination. You have to be strong enough to stick to the rules, even when you are losing. You will not double your stakes in a hurry in order to earn back what you lost. You have to know how to handle losses. You have to be aware that you can lose all of your initial investment. And you have to know how to deal with it. Rules are important and you set them because they can have a positive impact on your results. If you do not obey them, due to a sudden impulse, then you will end up with bad results in the long term. The ability to follow your rules, even in bad times, could be highly rewarded. You should not come to a conclusion quickly; your conclusions should be well reasoned. You should be decisive, but not severe. How you handle stress is also of great importance. If you tend to make rash decisions when you are under stress due to loss, then betting is not for you. You have to come to betting in the same way as any other profession. Having a clear mind, not changing preset rules and handling stress are all critical for success in any profession; betting is not an exception. Bookmakers blacklist Bookmakers, in general, do not like professional bettors who are able to profit in the long term. You have to be prepared that, if you bet substantial amounts and profit over a long period of time, your bookmaker will notice it. Firstly, the bookmaker will try to limit the amounts you can bet with. Then you will find out that you are unable to bet as much as you want, which means that your money management system will no longer work. Secondly, you can forget about receiving any promotion from the bookmaker. There will be no free bet or deposit to match your deposit. Bookmakers only offer these kinds of promotion to retail clients from whom they expect a quick turnover and loss. Their systems are robust enough to alert their risk managers about winning clients who used their promotions in the past. The more wins you have, thee more attention you will receive from your bookmaker. In the end, the bookmaker will close your account, void your running bets and ensure that you never ever open an account at his company again. That is the life of the professional bettor. The more wins you have and the longer time you are winning, then the less motivation there is from your bookmaker to retain your business. And, be sure, you will find no mercy in the bookmaker’s terms and conditions. This is a business, not a charity. You have to be prepared for this situation. You have few options in terms of how to handle it. The first is to have open accounts with more than one bookmaker and use them gradually. All betting companies work the same way, with similar systems, which means that, when one bookmaker closes your account, you can count on the others to do the same when you enjoy big and profitable bets at their expense. That is the disadvantage of the Internet; there is no chance to make a bet and stay anonymous. You could always return to the old-fashioned way of betting, walking around physical betting shops and making bets in cash in different locations in smaller amounts. The bigger the amount you bet in a single betting shop, the higher the chance it will be refused. Betting shops also have limits, such that, if you try to bet more, they will contact risk management at headquarters. And risk managers can quickly find out that you are the guy who made a hole in their profit/loss statement and was denied access to their website. It is neither easy, nor convenient, but this is the only way in which to continue as a betting professional. Some bettors have paid to join a syndicate of individuals in different countries or even towns who only work on the orders of the boss. The boss sends out an order about how much to place regarding which result by phone or email, after which everyone in the syndicate starts to move. This is similar to running your own business and just a small step towards becoming a bookmaker all by yourself. 14. Becoming a bookmaker Becoming a bookmaker is a dream for many professional bettors. If you are rich enough, you can afford to request a license, buy a system, hire some people, invest in marketing and have your own betting company. It would not be the cheapest way, as start-up costs can be pretty high as competition is diverse and strong. And, frankly, if you have so much money that you can establish your own company, you probably have better things to do than read this book. With the evolution of betting exchanges, everybody has a chance to be a bookmaker. Even with EUR 2 you can show your odds to other people and accept small bets. A betting exchange works as a place where supply and demand can be connected at a fair market price. The exchange takes a fee from every transaction that is closed on its floor. In betting industry terms, this means that every member (even you) is not only able to place a bet but also offer his own odds to others. This is called “lay betting”. With many participants in an exchange, the market generates a fair or the best price where demand meets supply. The exchange then charge every winner a small fee ranging from 1 to 7% depending on how much bets were placed. What looks like an easy system for when you simply want to have fun starts to become pretty challenging when you try to keep your own book. You know how betting companies work and how they make a profit. (If not, read fourth chapter of this book again!) So your aim is to show odds with a set margin for specific events. You know that you have to be able to do it for a long period of time to earn your margin. And you know that you have to be able to attract customers for your odds. The process of becoming a bookmaker is very similar to the one you undergo when trying to be a professional bettor. Betdaq or Betfair? First, you have to decide which betting exchange you will use. Betdaq or Betfair? Betfair is the market leader, so turnovers are higher but the competition is bigger. Betdaq has a smaller range of sporting events, but it charges smaller fees. Having a generous budget means that you can try both and exploit the advantages they offer you. But be aware that running two books with separate providers will sometimes give you the chance of arbitrage, but this will require a lot more work and effort. Range of events and budget This is the key decision you have to make. The more events you want to cover, the more money you need and the higher probability of profit you will have. Bookmakers’ success lies in providing a really wide range of sporting events that you can bet on, as well as a very high capacity to absorb a lot of bets. Booking companies know that even minor sporting events, which attract a small number of bettors with tiny stakes, count. This is because you are not earning money on one-time big bets, but on a lot of small stakes from many different people regarding many different events. The more events you cover, the greater the risk of your book being split. As an individual, you do not have enough funds to cover everything. So you have to choose which sports and which particular leagues or competitions you will cover. You have to spread your money evenly, as you want to accept more stakes at smaller amounts on more events. You do not want to play with two or three big bets. You need to spread the risk across many events and many bets. How many bets depends on the budget you can afford to lose. You have to be aware that, if you choose a high-profile league, both turnover and competition will be very high. So, in case you calculate odds with a high margin, it can happen that no bettor will use your odds, as he will be able to get more preferable odds from others. If you calculate your odds wrongly, then you will face the risk of losing big amounts. For me, a better way is to choose a small number of competitions with a relatively low profile, but still with some natural interest from bettors; for example, France’s Ligue 1 or Poland’s Ersteklassa. Markets for both are not as overcrowded as they are for Seria A or the Premier League, but they still attract enough interested bettors. How to keep track of bets The more leagues and events you cover will make it harder to keep track of everything. You may find some software on the market that communicates directly via an API with the exchange. This arrangement can help a lot. Covering everything in Excel will take up too much of your time. And time is money. You need time to research, follow the market, and calculate and place odds. Rewriting everything in Excel will kill your work ethic. In my own experience, I know that keeping track of two leagues, where matches are spread evenly across the week rather than on the same days, is very hard. So, do not waste your time: search for software that will save you time and allow you to automatically place odds on an exchange, as well as keep track of yours bets, profits and losses. Calculating odds and threats from competitors Odds are the solid base that should give you the profit you want. You will definitely not forget about margins, while you will calculate odds appropriately. Usually, every bookmaker compares himself with the competition. That is a good start for you too. You have your own probabilities for outcomes but it is very useful to make a comparison with others. Then you will see if you are in line with them, or whether you see it quite differently and can expect a higher turnover on that particular event. It really depends on the situation: do you change your odds according to the rest of market, or do you stick with your previous calculation? If all of your odds are in line with the competition, then your earnings should be at the level of the entire market. And that is not a bad thing. The margin you choose can be very tricky. A high margin means that you will hardly have any turnover from bettors. If your margin is low, then you have to make sure that you will earn something after the fee of exchange is charged. A good tactic is to show odds as soon as possible. In other words, be the first stop for players who want to place a bet in advance for some reason. Then you can have a bigger margin, as the competition for later matches will not be as big as for those starting in a few hours. The risk is that, if you do not have enough odds from competitors, you can easily misprice your odds. So be very careful when calculating odds in advance. It is always a very hard game to calculate the right odds and put them on the market at right time. You risk making mistakes and incurring losses, which means that it is important to have a sufficient budget in place and spread it out across more matches and events. Hold out for the long term Bookmakers are not here just for the weekend when they will make a killing and then go home. Bookmakers have been running their 5% margin for years. Bookmaking is a slow and continual process of earning a small margin from big turnovers. Bear this in mind when you are developing your business case for bookmaking. Your budget should withstand a few weeks or even a month of losses. You need to persist longer than a single Sunday. So do not try to risk all your budget on one league round. Your profit will show over a longer period of time, not immediately, so you have to spread your budget out over a few weekends at least. Sometimes, it happens that you will earn immediately after the first few matches for which you offered odds at the start. Should this be the case, it is important that you do not lose your head, but stick to your strategy. If you earn 30% in the first week, this does not mean that you will be earning 30% throughout your bookmaking career. It simply means that losing weeks are ahead of you. If your calculated margin was 5%, then your profit over the long term will be somewhere around 5% less exchange fees. So, earning 30% at the start means that you will be losing money in the forthcoming weeks. Do not forget about it and do not increase your budget for the weeks ahead. Just let things roll and use any unexpected profit as a financial reserve for the future. 15. Poor betting companies I always smile when I read about a poor betting company that has to pay out due to a customer’s big ticket win. Take Leicester City and their surprising win in the Premier League 2015/2016 season. There were so many articles about people who earned 5,000 times their original stake. In fact, there were more articles about this story than there were people who actually had a winning bet on Leicester City. I praise the marketing managers in betting companies for such a good marketing campaign. Everybody was able to read about ordinary people getting rich, while betting companies became poorer. This will definitely attract a lot of a people towards betting next season. It is worth trying to be rich from a one single bet, making thousands from a single penny. The truth is completely different. For every person betting a penny on Leicester City, there were thousands of people who bet hundreds on Chelsea, Arsenal, Manchester United, Manchester City or Tottenham. And all of them lost. Even if the odds on Leicester City were too high during the season, the payments to winners represented a tiny share of what others staked on the rest of the Premier League pack. In the next chapter, you will see how much bookmakers earned during the 2015 fiscal year (FY). Do not expect that the numbers for 2016 will any different because of Leicester City. I would bet anyone that, overall, betting companies earned a nice amount of money on the 2015/2016 Premier League winners market. Do not forget that, in the short term, bookmakers lose money when the favorites are winning. Every win by an outsider is celebrated in bookmakers’ offices. And Leicester City was an outsider until the last round. Do not believe that any bookmaker is crying about winnings. Of course, they have bad periods when the favorites keep on winning. But, in the long term, bookmakers will win. They will adjust the odds, balance the book and, at the end of the season, reap the profits. Any article about a nice big winning ticket and one happy customer, where the probability of winning was 0.09%, is just pure marketing. There is one winner for every 1,166 losers (calculated with an average margin of 5%). 16. Who earns the most in the betting industry? Now it is time to answer the crucial question. Who, in reality, earns the most in the betting industry? Is it bettors, bookmakers or someone else? What we have definitely proven in previous chapters is that bettors are not the ones who earn the most. By a huge margin, they are losing. Maybe there is one out of a hundred who is able to earn for a period of time, but, in the long term, there are only a few bettors who can claim and prove that they are profitable. Bookmakers are taking your money in the form of revenues and have a margin on odds. The margin is what moves their games from being risky to not so risky. They are not risk-free, but they definitely have statistics and probability on their side. If they have good risk management in place and do not spend much, they will be in profit. For evidence, let us have a look at a few numbers. We crunched the revenues and profits from 2015 for a small sample of companies that offer sports betting (see the table on next page).  Revenues Net profit Company (2015 FY) (2015 FY) GBP GBP William Hill 1,590,000,000 189,900,000 Paddy EUR EUR Power 1,009,000,000 147,290,000 Betfair GBP GBP Unibet 354,100,000 55,700,000 USD USD 888 462,100,000 29,500,000 GBP GBP Ladbrokes 1,200,000,000 5,100,000 SEK SEK Betsson 3,720,000,000 831,740,000 EUR EUR Fortuna 101,900,000* 15,980,000* EUR EUR Bet at Home 100,310,000 30,670,000 32Red EUR 48,660,000 GBP 964,300 * 2014 FY Well, numbers speak for themselves. There was not a single company with a loss in 2015. Even the smallest one was able to earn much more than your yearly wage. And the more customers a betting company has, the bigger turnover it has and the higher probability of making a profit it enjoys. Maybe it is worth thinking for a minute about investing all your money in the stocks of betting companies, instead of betting itself. If you did, then you would bring probability over to your side, such that the probability of long-term profit will be higher than in betting. But investing in stocks and financial markets is a theme in itself, with its own risks. (If you are interested in financial markets, try my first book How to Quickly Lose a Lot, 2016 edition.) Secondly, we have some players who earn from the betting industry too. Not bettors, but sporting clubs, marketing agencies and the media, which earn revenue from every single advertisement that betting companies place. This is the business life of the betting world. We show the odds on your event, you get some money from advertising. The cycle is not that short, while not every sports club receive its share of revenues from betting. But, generally, we can say that sports definitely profit from betting. Just look at a picture of your favorite Premier League team and you can bet that one of their partners will be betting on the company. So, in the end, that’s all good because your betting money will go to your club. Conversely, your club would be happier if you sent them money directly and not via a betting company and advertising agency. A secondary effect can also be seen in the higher audience numbers in stadiums and for TV coverage. Bettors who only bet to have more fun when watching a live match will also watch matches that they would not watch without betting. The higher turnover in terms of stadium and TV audiences brings money to leagues and clubs too. Betting cannot live without sports. And, while sports could exist without betting, clubs would be much poorer. The actual situation is the win-win situation for sports clubs and for betting companies. The only one who can lose is your average bettor. 17. Conclusion Who makes money in the betting industry? Maybe you were in doubt at the start of this book. Now you have probably lost all doubt when answering the question: “Who earns the most in the betting industry?” Betting companies run very profitable businesses for themselves in the same way as other retail-oriented businesses. Do not believe the claims that betting is fun, that you can earn a lot and become a millionaire, thanks to one betting slip. The chance that this will really happen to you is close to zero. The only ones who make profits are betting companies. About the author My name is Simon Kostrava and I have spent almost all my professional life at a dealing desk watching four screens with two eyes. As my professional life represents almost half of my entire life, I am not as young as it seems. I have spoken to a lot of investors, speculators and hedgers. Sometimes, I just listened; other times, I tried my best to help them or advise them. But there is never a better experience than when you invest and lose your own money. With four screens on your desk, you sometimes need to a break from currency graphs and decide to switch to sport. Football, hockey, tennis, golf, horse racing or whatever sport you want to watch to get away from the financial markets. And when you get really into it, you always try to guess the winner of every match you see. One small step beyond and you’re betting on outcomes. Financial trading is the same; you just speculate and try to be profitable. Well, that’s not so easy these days. Markets and sports. That is my life. All rights reserved (2016). Other books by Simon Kostrava Forex: How to Quickly Lose a Lot By Simon Kostrava, published in 2016 Forex Case Studies Market Turbulence in the Past Decade in the Words of Traders By Simon Kostrava, published in 2016 You can follow Simon Kostrava on www.evilforex.com www.twitter.com/evilforex