Feb

10

Gambler: Secrets from a Life at Risk, by Billy Walters. A spectacle of compulsive gambling in every field by a very flawed individual with a template of ever changing factors that influence football betting.

Andrew Moe agrees:

Would also recommend Gambler, by Walters - in particular for the two chapters where he details his method of handicapping NFL games. He uses a variety of factors to build his own line and compares that to the public line. The bigger the difference, the bigger the bet. Lots of quantitative factors, for example being the home team on a Thursday night game is worth 0.4 spread points. If home and away have different playing surfaces (grass/turf), it's worth 0.2 spread points. A great team coming off a bye and away is worth 1.6 points - if they are home off a bye, it's worth 1.4 pts.

Big Al writes:

I have read various pieces re online sports betting recently. I also have been listening to season 4 of Michael Lewis's podcast, Against the Rules, which is all about sports betting.

The podcast reinforces points made by others, the main one being that Draft Kings and Fan Duel weed out the winners and allow only losers to make bets. Pros try to find ways around this, but amateurs are just suckers. Also, thanks to software, the system is largely automatic.

When I compare this to markets, I think of market makers on one side, and retail traders on the other, along with the whole ecology of touts that try to get retail's attention and make you think you should be buying this or selling that.

One specific bit from the Lewis podcast I thought was interesting: A pro was talking about prop bets on individual player performance and he said that people like to see things happen as opposed to not happen, so usually betting the under is advantageous because the over is over bet.

Asindu Drileba comments:

I think the days of the bookies are numbered. I am confident the future of sports betting rests in prediction markets like Khalshi, Poly Market, Smarkets etc. The odds will be better, will change in real time, and best of all, there will be no need to kick out winners. It will be like the futures market.

Only two reasons why bookies still exist: 1. The infrastructure for these "Event Derivatives" has not yet been built. 2. Regulatory hurdles.

Big Al offers:

A very interesting deep read:

Why prediction markets aren’t popular, by Nick Whitaker & J. Zachary Mazlish:

Rather than regulation, our explanation for the absence of widespread prediction markets is a straightforward demand-side story: there is little natural demand for prediction market contracts, as we observe in practice. We think that you can classify people who trade on markets into three groups, but each is largely uninterested in prediction markets.

Savers: who enter markets to build wealth. Prediction markets are not a natural savings device. They don’t attract money from pensions, 401(k)s, bank deposits, or brokerage accounts.

Gamblers: who enter markets for thrills. Prediction markets are not a natural gambling device, due to various factors including their long time horizons and often esoteric topics. They rarely attract sports bettors, day traders, or r/WallStreetBets users.

Sharps: who enter markets to profit from superior analysis. Without savers or gamblers, sharps who might enter the market to profit off superior analysis are not interested in participating. They also largely don’t need prediction markets to hedge their other positions.

Update: Asindu Drileba remains confident:

I see the article was written in May 2024. Towards the US presidential election, close to $2B in real money was placed on Polymarket. Polymarket is extremely difficult to use (you need to buy the right crypto, install the proper wallet, just to get it working). Last year Americans spent $100+ Billion on sports betting.

Sports betting books can simply be restructured to work by having their odds computed by a prediction market and not bookies. It would also be the best way to buy insurance. On say hurricanes, earthquakes, fires. I see a lot of catastrophe insurance gravitating towards prediction markets.

If someone asked me. "What trillion dollar business is no one building?" I would respond, "A well done prediction market." Trust me, the demand is there.

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