

Automating Betfair - a blog about Gambling and Technology - dood
http://automatingbetfair.blogspot.com/

======
skolor
To make sure I understand this, BetFair is a simple betting platform. People
make bets, and other people take those bets. What he proposes to do is play
both sides of an event, and hope that some takes both of them. That way,
regardless of the outcome, he turns a small profit.If I understand this right,
he's basically just doing arbitrage on the betting market.

~~~
dood
He explores various strategies for using Betfair other than arbitrage,
outlined here [[http://automatingbetfair.blogspot.com/2010/02/four-
trading-s...](http://automatingbetfair.blogspot.com/2010/02/four-trading-
strategies.html)]

He also notes that simple arbitrage opportunities have long been exhausted
[[http://automatingbetfair.blogspot.com/2010/02/betfair-
bots-a...](http://automatingbetfair.blogspot.com/2010/02/betfair-bots-and-
opportunity-out-there.html)]

------
joshu
Pretty interesting reading (my group at MS did automated market making.)

Did this make anyone else cringe?

> In addition: an SQLite database, sitting in a Dropbox directory, can be used
> by different instances and computers in different locations, running atop
> different platforms.

~~~
d4ft
Ha. The disaster alarms were ringing loudly in my head. Josh- I assume MS
means Morgan Stanley, not Microsoft. If so, do you think all the sorts of
problems we see financial organizations taking advantage of could be applied
to gambling markets. That is, does Miller's contention that finance would not
exist without transaction costs apply equally to gambling? If so, is gambling
just another form of an options market? And finally, should gambling be
treated like any other market with buy and sell prices (like commodities or
bonds)?

~~~
joshu
So, I haven't thought about your premise at all. So this is off the cuff.

I think that gambling about real-world events (election outcomes etc) can be a
kind of futures market and are a valid kind of market. I'd want to be able to
hedge against elections and so on.

Manufactured events (horse racing?) and raw probability (die rolls) are
probably not valid markets, IMO.

Personally, I think that the problems we see because of financial
organizations misbehaving are due to regulatory issues rather than structural
issues.

~~~
d4ft
Oh, I definitely wasn't passing judgment on financial firms. By "problems", I
meant reducing transaction costs by bundling and/or securitizing. I was more
referring to the general problem being that capital markets are not perfect
(in the economic sense).

The real question is how one would actually perform a hedge in a gambling
market. I guess, what it comes down to, is 1) are there hedging opportunities
and 2) if not, why not?

------
dedward
Arbitrage opportunities exist in most markets, and while they may be seen as a
drain on the system - ultimately they have the net effect of keeping markets
sensible.

THere's no free ride.... if people are making a killing on some arbitrage gap
(whether on the global economic markets, or betfair, or multiple offshore
gambling sites) - the market will eventually correct for it as the arbitrage
activity becomes part of the market.

There's no free ride.

