Scott Longley – Taking on the traders with tech

Scott Longley – Clear & Concise Media

The battle between bookmaker and punters is a confrontation which has been at the heart of sports-betting from its very beginnings. But what is new is the technology that is being brought to bear both by the bookies and increasingly, on the other side of the trade, on the part of the punters.

It is an arms race that could have profound effects on the future of the sector.

________________

It was the development of algorithms by sports-trading desks that truly kickstarted the tech evolution, an introduction that significantly disrupted the space. The modern online and mobile sportsbooks that we know today wouldn’t exist without this application of basic machine-learning.

Yet, this is obviously only one side of the trade and as much as in the past there would be punters who would set out to beat the bookies using only their skill, judgment and a pencil, now they are employing the same technology as the bookies themselves in order to take on the books.

Such is the theory. “For as long as sports-betting has existed, the punter has been trying to gain an advantage over the bookmaker, through better information, more knowledge and now better algorithms,” says Mark Israney, a partner at sports-betting consultancy Propus Partners. “For mass-market customers, this has largely been aspirational, but for some individuals and syndicates, this has been highly lucrative.”

Punters now find themselves in a position to potentially compete, particularly if they employ the right technology. One such organisation is Mercurius, a sports-trading start-up which recently raised a second tranche of money to develop its own AI-based trading systems which, allied to the exchanges at Betfair, they believe can give their clients an edge.

“The market is changing because it is more algo-driven,” says Fabrizio Machella, chief executive at the Milan-based firm. “The ultimate behaviour of the market is already being disrupted. There is less manual work and more bots already running all the time.”

A similarly disrupted market is the financial world where the analysts are employing data-mining techniques to find an edge, sifting through non-traditional information such as satellite imagery and credit card data, or using artificial intelligence techniques such as machine-learning and natural-language processing to glean fresh insights from traditional sources such as economic data and earnings-call transcripts. “If all you’re doing is traditional fundamental analysis, it’s not enough anymore,” Joyce Chang, chair of research at JPMorgan told the Financial Times.

Machella says the company got its inspiration from the world of hedge funds and the prop trading desks of the largest financial institutions. “The playground is the same and we started playing with the concepts and came up with football trading strategies.”

Beat the book

Mercurius is far from being the first business to look at deploying their own technology to beat the algos being used by the bookmakers. The likes of Star Lizard and SmartOdds, both respectively either owned or controlled by professional gamblers Tony Bloom and Matthew Benham, for instance, have long equipped their own trading teams with technology to spot trading opportunities.

Via the further advances in tech, and particularly the explosion in computing power represented by the further implementation of cloud technologies, it means that more offerings are appearing that are offering such disruption-led bookie-bashing to more punters than ever before.

“There is much more sports data becoming available and the technology means that more power can be applied to it,” says Machella.

Mercurius is not only analysing prices; the team have also built programmes which look at the underlying sport and using the findings to help inform its value betting proposition. “We analyse every touch of the ball, every passage of play,” Machella adds. “We have that information. We can use this objective information to define if a price – or the odds – are interesting or not.”

Such developments won’t necessarily worry the bookmakers in the short term because, as Israney points out, when it comes to the average punter the margins are working in their favour. “A two or three percent house edge gives the punter a wall that they have to climb before they can break even,” he says. It means the bookmakers, on the whole, can afford to be slightly less accurate than the other side of the trade because of this “layer of protection,” as Israney puts it.

But for Mercurius, working as they do on the exchanges, it is a different game. “We haven’t chosen the easiest way to do stuff but we believe in the long-term it is more consistent,” says Machella. “The market is going to change. There is much more sports data becoming available and the technology means that more power can be applied to it.”

Check Also

Betting on Sports Europe - Digital

Betting on Sports Europe – Digital to provide 2020’s best learning opportunity for industry executives

This week’s Betting on Sports Europe – Digital conference and expo is set to be …

Dwyer and Attenborough warn of Tabcorp’s civic duties as company transitions to a new era

Tabcorp Holdings Group CEO David Attenborough and Executive Chair Paula Dwyer have issued their final …

BGC slams ‘unfair and unnecessary’ betting shop closures

The Betting and Gaming Council (BGC) has urged the Business Secretary Alok Sharma to block …