
Beating the bookies with their own numbers - mjortberg521
https://arxiv.org/abs/1710.02824
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Nomentatus
I take it bookmakers don't just balance bets and take a slice, because it's
more profitable to "bucket shop" (an old stock market crime term) and in
effect, bet a little of their own money against their customers if they think
the customers are wrong, using better models/predictive systems than their
customers have to know when to do this. But the bookies don't take (so far,
anyway!) reversion to the mean into account; therefore they don't partially
discount their most extreme (compared to consensus) predictions, or not
sufficiently. To profit from this error on their part you can find those edge
cases and bet against the most extreme of the house's secret bets - which
aren't really secret 'cause they skew they odds given (skew vs the odds
created by bets actually received. But since the authors don't know those
bets, they must be using consensus odds as a proxy, or comparing other betting
services' odds.) Still thinking 'bout this though.

