After having written two articles about probably the most widely used strategies for making a profit in the betting markets – Sports Arbitrage and Value Betting – I would like to turn to a third one, namely, Sports Trading. Now, it might not be fully correct to refer to Sports Trading as a strategy distinct from the other two. While Sports Arbitrage and Value Betting are fundamentally different, Sports Trading must not be used in isolation, but could be turned into a tool to improve the returns one gets with implementing the one or the other strategy.
Sports Trading is a betting activity taking place on betting exchanges as opposed to bookmakers. Examples for an exchange are, most notably, Betfair, but also Betdaq, Matchbook, Smarkets. Betting exchanges might look similar to bookies to the untrained eye but in fact there is a significant difference between the two. In a betting exchange a bettor takes a position against another bettor as opposed to a bookie, where the odds are determined by the bookmaker. You can think of betting exchanges more as free markets for odds, where the exchange, to a certain extent, does not care how a game is going to end as it earns its revenue not by an overround but by a commission on the bettor’s profit.
The above is just an idealized example to help you understand the difference in the business models between a bookie and an exchange. In fact, bookies often copy the odds of the exchanges in the liquid markets and exchanges often take a position in the betting markets via a trader to offer some action to their customers in the more illiquid markets. Regardless, the different business models lead to some important practical implications for the bettor, namely:
- The prices on exchanges are usually more efficient than the ones on the average bookmaker
- Exchanges, unlike most bookies, don’t chase arbers
- Exchanges attract on average more professional players while bookies are mostly a playground for the “recreational player” (as they tend to call the losing bettor)
- Depending on the exchange, larger turnover usually results in reduced commission for the bettor (trader)
How to approach Sports Trading
How can one make money from betting exchanges? Well, you have to make a guess regarding the direction of movement of the odds, open a position and if you are right you can close your position at a profit at a later moment. When this later moment is going to be depends entirely on you and your strategy. Some traders hold their positions open only for mere seconds as through experience then can more often than not foresee in which direction the odds will move next. Others would stay put until the beginning of the event, as it is a widely held view that for most events the closing odds reflect most adequately the real probabilities. But that surely does not mean that one cannot make money entering at this point too – after all trading is more of an art then a science and there are people around there that have mastered this art quite well.
The real beauty of Sports Trading is that here you have the only strategy where you can get your profits at any time, including before a sports event has even started (ok, excluding bookie cash out options, but they are normally offered at a significant disadvantage for the bettor, usually around 10% lower than the current odds). In other words, if you can find value in the market, in theory you should be able to collect your profit right at the beginning of the event, not caring at all how it is going to end. This is significant advantage to employing a pure Value Betting strategy that typically comes together with large up- and downswings in your bank (and respectively, your mood), as apart from fundamental factors luck is always playing a huge role in every sports event.
So this was the basic introduction to Sports Trading. In future articles I will go over how can you learn to be a successful trader, some useful and widely used trading tools and how you can combine this with another strategies to boost your returns. Thank you for reading and if you want to share a thought or ask a question, feel free to do so in the comments below.