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Betting Guide – Is It Possible To Be A Profitable Bettor?

Is Betting Profitable?

Becoming a profitable bettor is a very difficult task. The market is efficient and information advantages erode rapidly, not unlike the stock market. Is it possible to become a profitable bettor? What should bettors learn from under-performing hedge fund managers? Read this Betting Guide to find out.

What is the efficient market hypothesis?

The efficient market hypothesis (EMH) is an economic theory asserting that the information within a market is fully reflected by asset prices. This ensures that creating abnormal profits consistently through skill, otherwise known as beating the market, is impossible.

A lesson from the stock market

When talking about market efficiency the stock market is perhaps the most relevant place to look. The efficient market hypothesis has been much discussed and studied and there is evidence that is relevant to betting.

However, unlike long term stock trading, sports betting is a negative-sum game. That is to say that the total of the gains minus losses in the market is negative due to the bookmaker’s margin. To even maintain the status quo (breakeven) a bettor must take from another participant.

This is very different from general stock market investing where it is possible for all to win (and the market has historically risen).

However there are actors within the stock market which behave not too dissimilarly to bettors, namely active investors.

Hedge fund managers in particular attempt to provide value to their clients by beating the market. The fees paid to such managers act almost like a bookmaker’s margin. Investors are forgoing standard returns and paying fees to see abnormal profits.

However, in a benchmark study economists French and Farma found that only the top two to three percent of hedge fund managers had demonstrated enough skill to even cover their costs when compared to general market growth. The rest could not even do that.

As Farma says “we don’t understand the negative-sum nature of active investing. Whatever you win, I lose. Whatever I win, you lose, and we both paid to play that game”.

With the constraint of working against margins (in this case their own fees) the number of hedge fund managers that actually beat the market due to skill was minimal and diminished over longer time periods. These are people paid for their investment expertise.

The Warren Buffet problem: Profiting in an efficient market

So the evidence suggests that in a truly efficient market, beating the odds is impossible. However, one high profile investor bucks the trend: Warren Buffet.

Since 1965, the S&P 500 has delivered annualized returns averaging 9.7% (including dividends). Over the same length of time Buffet’s Berkshire Hathaway has generated an average stock price gain of 20.8% per year, or slightly more than double that of the S&P 500.

So if the stock market is really efficient, how is it that Buffet has managed to return better than double market growth year after year?

One answer is that he has simply been incredibly lucky. There may be a chance that Buffet’s position as a mythical investor is just an extreme example of survivorship bias.

Whilst it seems unlikely, an investor could match Buffet’s returns (thinknewfound find a 0.07% probability a random investor could achieve a result as good as Buffet’s or better) it’s possible.

However, here we are interested primarily in Buffet’s ability to beat the market at all, which given his track record and the low probability an individual investor could match his returns it’s highly likely he can.

Is the betting market efficient?

Pinnacle’s closing line odds are efficient but it can be argued that odds take a “random walk” towards the efficiency of the closing line.

Promisingly for bettors most interpretations of EMH do not claim that stock prices are correct at all times, only that prices are correct on average. The fact that sports betting hedge funds exist demonstrates that there are inefficiencies to be exploited in the betting market.

Unlike their stockbroking counterparts, if these firms are not performing they will actually be losing their (very wealthy) clients’ money rather than coasting on “profits” driven by a growing stock market.

In order to turn a profit these funds are likely to be beating the closing line consistently, suggesting there is room for an edge to be found between opening and closing prices.

Is there hope for the average bettor? Finding an edge

In order to profit in a market as efficient as sports betting, a bettor likely needs to be in possession of superior information compared the rest of the market or have a better interpretation of widely available information.

The problem for a smaller bettor is that when betting on a highly liquid game they are up against the parties with a wealth of information. The market is often shaped by those who know the most through reverse line movement, making things difficult for the average bettor.

However, this does not mean the average bettor should be put off from attempting to create his own long term profitable edge. Warren Buffett himself claims to have benefited from competing against “opponents who have been taught that thinking is a waste of energy”. There are opportunities for those who seek them out.

Not only are you able to find great resources at Bet Chimps that will help you identify the value in a market, but, we also offer a subscription service where you can learn directly from our experts how to do this yourself! Not only that, our experts will also show you what they are betting on, and you can follow them.

Read our other betting guide article jam packed with more useful information, and check out our packages at the tail of the article.

Example of a potentially profitable bet: Mo Salah and expected goals

Below is an example of my actual reasoning behind placing a number of outright bets on Liverpool new signing Mohamed Salah ahead of the 2017/18 season.

Salah arrived in England without much fanfare, having not exactly set the world alight in a brief spell at Chelsea.

Perhaps this was why some bookmakers were willing to offer 13.00 on him to score 15 premier league goals in a season, matching the number he scored in an AFCON interrupted year at Roma, whilst Pinnacle were offering 51.00 on him to top score in the Premier League

This was a possible opportunity for bettors who knew how to use widely available information to their advantage.

Expected goals were less prominently used at the time and provided a really handy metric for determining whether betting on the Egyptian offered value. They provide a larger sample size to work with than actual goals scored and raw data is less prone to the lazy judgement bestowed on Salah after his earlier Premier League struggles at Chelsea.

After an impressive 16/17 season, especially when considering Salah previously demonstrated finishing skill that shows there was around an 80% likelihood he was an above average finisher. He has outscored expected goals in every full season he has played.

These raw stats show that as part of Roma’s team Salah was very likely to score more than 15 goals as long as he played around 30 full 90 minute games.

Based on his stats in Serie A this bet offered huge value. This would have to translate to the Premier League though so it was important to look at his new role within the Liverpool side.

At Roma Salah nominally played on the right wing but in reality often took up more of a striker’s position on the right hand size of the penalty area. The Roma team was primarily focused around getting chances to Serie A top goal scorer Edin Dzeko.

The Bosnian offered some assist potential (0.16 expected assists per 90) but was primarily a goal threat (0.96 xg/90, 5.25 shots per 90).

As a result Salah became a great assist provider for Dzeko. Salah created 22 chances for Džeko in 2016/17 of which seven became assists; only Ousmane Dembélé to Pierre-Emerick Aubameyang was a more lucrative connection with ten.

As well as offering goalscoring threat, Salah would often sacrifice his own shooting opportunities to provide for the Bosnian striker.

In contrast, at Liverpool Salah would be playing with the more creative Roberto Firmino (0.23 expected assists per 90 and 2.92 shots per 90 in 2016/17).

Preseason was a good indicator of what this would mean for the Egyptian. His role was similar to the one he had at Roma but with more emphasis on finding the back of the net, with Firmino more involved in general build up play. He was the most advanced Liverpool player, entrusted with finishing off opportunities that he may otherwise have passed on to Dzeko.

The problem with finding an edge

Information gets distributed quickly. Finding a player as unfancied as Salah with the same underlying metrics would undoubtedly be a harder task now.

Equally, it’s actually a big advantage not to be playing with large sums of money on these kinds of bets. They are attractive because low liquidity means inefficiency, however as bankrolls grow the relative returns diminish (especially as you will be limited by some bookmakers)

The other problem is the scarcity of these types of bets. Whilst Salah may have been mispriced he could easily have picked up an injury or been outscored by someone else having a great season. It’s not a repeatable bet, so the advantage can’t even out over time as it could with a successful model which works on an individual game basis.

Conclusion

Whilst Pinnacle’s closing line odds are efficient for high volume events, there will always be opportunities for enterprising bettors with the skill and determination to find and exploit inefficiencies in the market. Taking advantage of such opportunities can become problematic, however this is not a bad problem to have.

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Gambling is for 18+ only. If you think you have a gambling addiction, please, contact the gambling hotline on 1800 858 858

Sign Up to Bet Chimps for our Sport and Racing all inclusive memberships!

Don’t forget to subscribe to our Newsletter!

This is not a bookmaking and wagering site, no bets are received. We only provide a tipping service. By becoming a subscriber to our tips, you acknowledge and agree that you will only place bets with licensed betting service providers. For help call 1800 858 858 or your local State gambling helpline, Gamblers Help, Mission Australia or visit www.gamblinghelponline.org.au.

Betting Guide: The Heuristics of Gambling

A lot of gamblers trust gut instinct to bet without realising that relying on ready made rules of thumb – known in psychology as heuristics which you will learn more about in this Betting Guide – can lead to poor decision making. Find out what the most common heuristics are and how to avoid them?

There is a very good reason we rely on heuristics – evolution. Our distant ancestors when faced with complex life-threatening problems didn’t have time to weigh up the situation, so developed quick-fire methods. Those that worked were passed down through generations, and we are still relying on them, often when we shouldn’t.

Introducing The Common Heuristics

Anchoring

Anchoring affects people’s ability to estimate the most probable number of items of a particular kind or the most probable value along a sequence.

Example: A group is asked to guess the percentage of African countries in the United Nations. Before answering they witness a random process to produce a number (the anchor), and are asked whether the percentage of African Nations is above or below that anchor. They then make their actual estimate of African countries in the United Nations. The estimates given will track the anchor, even though the participants know it is random.

Without realising it, the individuals are anchoring their estimate to a totally arbitrary point. The reason for this is thought to be because the anchor is taken as a working hypothesis, a starting point from which the individual is reluctant to move too far away from.

This phenomenon is widely exploited in marketing and is very relevant to betting. Bettors should beware anchors in bet wording, and realise how
handicaps, and spread values will influence your judgements, without you even realising.

Availability Bias

Availability bias manifests in people’s tendency to attach greater significance to events that leave the strongest impression, or are easier to recall.

Examples of this include the way people over-estimate the risk associated with dramatic and traumatic events such as a terrorist attack or earthquakes. The sale of earthquake insurance goes up immediately after earthquakes though the risk is greatly diminished, while people are prepared to pay a higher premium to insure against death from an act of terrorism than insurance against death of any kind (which would obviously include terrorism).

From a betting perspective be wary of assigning excessive significance to more recent or memorable results

From a betting perspective be wary of assigning excessive significance to more recent or memorable results. Ask yourself whether you find it easier to recall a 0-0 draw or a high-scoring game.

It’s likely to be the latter, but it doesn’t mean it is more probable. In soccer bettors tend to over-estimate the frequency of events like red-cards and corners, because they are important and easily recalled. This impacts perceived probability and betting behaviour.

It is linked to a common phenomenon of bettors favouring the Over in Totals markets, or buying on a Spread, as availability bias leads them to wrongly conclude the event concerned is more likely than in reality.

Diversification

This heuristic describes how people tend to demonstrate greater diversity when confronted with simultaneous rather than sequential choices.

Example: When asked to choose five chocolates from a selection box, with an equal number of varieties, individuals make more diverse selections than when they make five sequential choices.

With relation to betting, punters tend to invest more when the opportunity appears to be more diversified. A good example would be backing the drawand the away team based on the perception of a more diversified bet, as opposed to simply laying the home team. There isn’t, however a logical reason why you should bet more, unless the Expected Value is greater.

Escalation of Commitment or Sunk Cost

This heuristic describes how people feel compelled to justify a commitment by increasing the cumulative investment despite the potential cost going forward outweighing the potential benefit.

This is commonly described as ‘throwing good money after bad’. An example would be to sit through a film that you are not enjoying just because you have already invested time and money in watching it, and therefore determined to justify that investment.

From a betting perspective this can be seen when punters persist with a bet that has a high probability of incurring a large cost rather than taking a certain immediate, but smaller loss. People in these situations tend to display an irrational determination to justify their original decision, instead of ‘cutting their losses’.

Representativeness, or the Gamblers Fallacy

People tend to believe short sequences of random events are representative of longer ones, ignoring the fact that these events are statistically independent.

Example: The gambler’s fallacy is also known as the Monte Carlo Fallacy because in 1913 Black come up 26 times in a row on a roulette table at the Monte Carlo casino. After the fifteenth Black bettors were piling onto Red, assuming the chances of yet another Black number were becoming astronomical, thereby illustrating an irrational belief that one spin somehow influences the next.

The gambler’s fallacy is closely related to the Hot Hand Fallacy, which is the belief in streaks of good/bad luck. Where someone experience what seems like an atypical sequence of events, they infer some special significance i.e. I am on a hot streak, or my luck is out.

It has come to be known as the Hot Hand Fallacy after a study in the 1980’s suggested a basketball player who successfully makes a shot is no more likely to be successful the next time they throw just because of their initial success.

This is particularly relevant in betting for random games of chance such as roulette, lotteries and dice games.

Humans aren’t machines, we try to be rational, but our instincts often get in the way. This can be costly for gamblers, so as much as possible ignore what your gut is saying unless its time for lunch.

Remember to follow Bet Chimps on social media below!
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Gambling is for 18+ only. If you think you have a gambling addiction, please, contact the gambling hotline on 1800 858 858

Sign Up to Bet Chimps for our Sport and Racing all inclusive memberships!

Don’t forget to subscribe to our Newsletter!

This is not a bookmaking and wagering site, no bets are received. We only provide a tipping service. By becoming a subscriber to our tips, you acknowledge and agree that you will only place bets with licensed betting service providers. For help call 1800 858 858 or your local State gambling helpline, Gamblers Help, Mission Australia or visit www.gamblinghelponline.org.au.

Bet Chimps Punters Guide – Geelong

Newcastle jockey Robert Thorton - by Citrus Zest via Wikimedia

By Citrus Zest [Creative Commons], via Wikimedia Commons

Today marks the return of the long awaited – Bet Chimps Punters Guide and the first race meeting in its crosshairs, is Monday’s Geelong meeting. With an eye watering, ten race card. Without further ado – let’s get stuck into this Punters Guide!

Race 1 – B365 Geelong Maiden Plate 1100m

A very interesting opening race here with a handful of starters. Track is expected to still be a bit firm for the first one, but, will deteriorate as the day wears on with expected rain in the forecast. More Sundays is a definite chance here, bloodlines are strong, being from More Joyous. Another one to look out for is the half sister to Oaks winner De Little Engine in De Little Sister. De Little Sister drops in class and is running off a spell, will be one to watch. Biggest roughie for the race is certainly Si Senor, who has three trials under the belt and can test these. One knock against it being that its best trial was a second where it looked a little flat.

Top Pick – De Little Sister
Next Best – More Sundays
Longshot – Si Senor

Recommended Bet

Race 2 – B365 Geelong Cup 24th October Maiden 1700m

Star Creation is the horse you want to back based off last run. Finishing second impressively and maps well for this race. Only knock would be that the track will be a bit heavier now and, a horse running from the back, that lacks a powerful gait, may find it difficult. Star Lucas for Jordan Childs here is the next best, will look to roll forward from a wide gate and push on strongly there after. Very well suited. Outside value in this one goes to Koonibba, which represents great value for a horse dropping significantly in grade while also getting the chance to get up front early, but, will need to avoid getting caught wide.

Top Pick – Star Creation
Next Best – Star Lucas
Longshot – Koonibba

Recommended Bet

Race 3 – B365 Maiden Plate 1700m

Competitive race here, but, the nod will go to the Kavanagh trained, Blinky O’Reilly. Solid when second on previous effort and gets the extra step it was looking for. Joe Bowditch will need to take a step up here in order to beat the next best. Come On Carl was competitive last start when finishing a close second also, field was slightly less competitive and will need a stronger finish in order to break its maiden here, will go close. Best outside value here is Aedesia. Declan Bates back in the saddle after a flashy second last start, will look to improve as a duo here and could have a bold run.

Top Pick – Blinky O’Reilly
Next Best – Come On Carl
Longshot – Aedesia

Recommended Bet

Race 4 – Viatek Maiden Plate 1300m

A day for maidens so far, but, the Weir trained and Yendall ridden Extra Brut will be too strong here. Has looked good in training and is bred right for the trip, Weir has his go to man in the saddle here and has every box ticked for this one. Seewhatshebrings is the next best here, the other shorty at the time of writing is a definite contender here. Not much has been said about this horse – use the market as a guide. Beau Mertens and Raiding Party are the best long shot here, and will definitely have a chance here off a good start. Will need cover and some luck here.

Top Pick – Extra Brut
Next Best – Seewhatshebrings
Longshot – Raiding Party

Recommended Bet

Race 5 – Roderick Insurance Brokers Maiden 1300m

Civil Guard was impressive last start when first up after five months, finished second after slowing on the straight. Good form line and rates well here with Luke Nolen in the saddle. Could take the next step after spell. The Founder is the next best here, drawn well and also rates nicely off last start third. Distance is where it needs to be and could surprise here. Longshot of the race will be Sonaisali, who is a good performer and will like the company in this race. Ready to break its maiden here, but, will need some luck to do it.

Top Pick – Civil Guard
Next Best – The Founder
Longshot – Sonaisali

Recommended Bet

Race 6 – Shojun Concrete BM58 Handicap 2200m

Ca Plane will team up with Michael Poy in this one, and could prove the one to beat. Impressive in jump trial and two starts back finished second over this distance and could be ready to take that next step. Good stayer and can beat this field. Next best here is another Weir trained runner in By Design. By Design is yet to show its best in recent jump outs, but, gets its chance here against a field that it can beat. Drawn well and could be ready to strike. Longshot chance here is the High Chaparel runner, and another one from the Weir stable – L’Amour De Ma Vie, to be ridden by Jacob Rule. Strong win three runs back, but, has yet to look comfortably at this trip – if it can be kept calm through the race, it has every chance to win.

Top Pick – Ca Plane
Next Best – By Design
Longshot – L’Amour De Ma Vie

Recommended Bet

Race 7 – J.T Dixon BM64 Handicap 1100m

Zamperini is the most consistent here, and, gets Jake Noonan in the saddle who is coming off a good showing at Wangarratta over the weekend. Zamperini has been there abouts in its last three starts for three placings and will be ready to go better here. Pure Emotion with Liam Riordan in the saddle is the next best here. Shown that it is a capable runner and is on the up here, expect a bold showing. The one with the most value in this race is He’s A Natural with Luke Nolen riding. Drawn well, carrying a little more weight than you would like, but, has the running style that will compensate for this. Can run a big race here.

Top Pick – Zamperini
Next Best – Pure Emotion
Longshot – He’s A Natural

Recommended Bet

Race 8 – Prestige Jayco BM58 Handicap 1700m

One of Luke Nolen’s top rides for the day here in Cash For Diamonds will be the one to beat. A back marker that has a very good late turn of foot and will be right there at the post. Drawn well and won’t need to do too much work early. Will need some luck late to get a lane, if it can – will be hard to beat. Second Thought may be running a little heavy here, but, Michael Poy has a strong chance to get the job done here. Impressive type of runner that can run in different spots in the field and still produce. Winner against this class previously and could very well be again. Best value in this race is Prince Of Arran, placed at the trip previously and is on the improve. Worth watching.

Top Pick – Cash For Diamond’s
Next Best – Second Thought
Longshot – Prince Of Arran

Recommended Bet

Race 9 – Elephant & Castle Hotel BM70 1400m

Expecting that the track will be heavier this time of the day – King Mombassa firms up here as the one you want to be on. Has won on heavy and soft tracks, as well as being a proven winner. The Weir/Yendall combination is always hard to keep at bay and it will prove no different here. She’s Beneficial is the next best here. John Allen gets the ride, but will need to overcome a wide gate. The horse has struggled at this range – but will improve prospects as the track gets softer. Aerospeed here has a lot of value at the time of writing, and based off last start win – will be right in the thick of things at the end of this one, rates highly.

Top Pick – King Mombassa
Next Best – She’s Beneficial
Longshot – Aerospeed

Recommended Bet

Race 10 – B365 BM58 Handicap 1400m

Clean Acheeva rates as one of the top chances in this one, winner at the trip previously and looks well prepared to repeat that feat again. Drawn a tricky barrier, but, will counter that by looking to ride midfield and getting across quickly. Petronas is one to lookout for as well, struggles at this distance, but, Yendall will be able to bring the best out of the horse which only improves its rating here. Value horse here is in Combative, currently available at double digit odds, gets the consistent Linda Meech in the saddle and has won at this trip previously. Expected to run gamely here.

Top Pick – Clean Acheeva
Next Best – Petronas
Longshot – Combative

Recommended Bet

Quaddie for the Racecard
Race 7 – 2/8/13
Race 8 – 2/4/16
Race 9 – 6/8/15
Race 10 – 9/12/13
$50 gets 62% with Crownbet

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Gambling is for 18+ only. If you think you have a gambling addiction, please, contact the gambling hotline on 1800 858 858

***all listed odds are subject to change, as races are commenced after the writing of this article.