This post originally appeared at www.daily25.com and has been reposted here with the permission of Steve from the Daily25 blog. It is written by Matthew Trenhaile, who has worked as an odds compiler for many years and is now out on his own taking on the bookies. You can follow Matthew on twitter @CrazedAlchemist and he also has his own blog.
Over to Matthew.
In the following article, I will be looking into the subject of profiling. I will discuss and analyse the process and how it has changed over time, rather than just looking at the business and morale perspective of it. In my fourth article I will look at account restrictions, as I wish to explore and explain all relevant elements of the case.
In this article, I will also be taking a closer look at how tipsters work, in addition to taking a closer look at how they influence the trading decisions at bookmakers and their management of risk. Bookies will a lot of the times profile tipsters to some degree, rather than profiling the actual clients themselves.
Profiling in The Old Days
Bookies are known to have profiled bettors on a consistent basis throughout the years, be sure of that. For example, when betting at the racetrack, bookies had the option of rejecting your bets, change the place terms, only allow stakes that they were comfortable with, or even lay off bets to another bookmaker to have the liability change hands. There were definitely differences between tracks and areas, as they would demand different behaviours from bookies. This did not change the fact that they might have forced you to play at worsened odds, as they wished for you to change bookmakers. The knowledge of each bookmaker and their ability to identify the profitable bettors were extremely important back then, just as the situation is today. In the old days, they had to recognise people that were playing on behalf of profitable bettors.
There is a chance that it was easier to place a great bet of a decent size, due to the approach of some bookies. Bookmakers used this information to create their own books the way that they wanted to. This was at the cost of the liability of the accepted bet, but also to over hedge the bet with another bookie at the same track, before they understood that someone placed a smart bet and that this could destroy their odds.
This way, it was sensible to earn smart money in manageable stakes early, rather than to get picked off in the future, when the opportunity to hedge the bets where a lot lower. At a certain point, this attitude changed and was abolished at European and American bookmakers, with the exception of a few that still remained in the Asian markets. If anything, as the number of bets have risen in the whole world, the hunger for early smart money in Asia has increased, as the fight to become the smartest and quickest has become something of extraordinary importance. So what happened to the rest of them?
Profiling with The Rise of Online Betting
Bookies in Europe and in America understood that when the online betting-markets were on the way up, there was a great amount of money to be made. However, when there is an unsatisfied need in a market, a lot of competition will arrive, and quickly. As the world of online poker had a dramatic increase, the market saw a betting boom. “Everyone” made a lot of money, and as a result there was a possibility of making money off Sharp betting and bonus-bagging, or even Arbitrage betting for a while. This was, of course, before anyone noticed and closed their accounts. Unfortunately, when the market stabilised itself and in addition was struck by the collapse of the US poker market, the job for bookies became a lot harder.
Customer acquisition-cost became a lot higher, due to the increased number of competitors, all trying to get a hold of the current pool of clients. This was increasingly important, due to the decrease in poker revenues. At this point, the bookmakers had to lower their restrictions and limitations to make sure that they kept customers. Profiling was now driven by odds compilers, who were able to see bets laid, due to the vast improvements in technology at the time.
I cannot speak on behalf of other compilers, but there were situations where the relationship between I and the bettor became personal, and I would pressure for a limitation or restriction of an account. This situation also happened in the opposite direction, as sharp clients betted once the market was settled, and in a moderate stake on a decent market.
Sometimes I would like the relationship between myself and the clients that played smartly, as long as they stayed “honest”.
As far as the online industry goes, the increase in Arbitrage Betting and the exploitation of bonuses took its toll on the bookmakers. This saw an extreme increase in how many clients were turned away from betting, just as much as how many they managed to get in. To the bookmakers it was all about becoming, and staying successful.
Risk Management Departments
To some bookies, it came as a huge surprise when they realised just how many of their bettors were making money from their sites or exploiting their bonus offers. This realisation only came around after they started to analyse their figures. This effectively meant that the common odds compiler did not have the time or the ability to do all of the profiling. Therefore, risk departments appeared at every major bookmaker.
A risk department is a team of people, who are rewarded if they manage to keep out the players that manage to turn a profit at their sites, meaning that the bookmakers lose money. As risk departments are paid after how many bettors they manage to keep out, there will always be people that look to exploit this, and take it too far.
Risk managers in the United Kingdom used to have the greatest tool available for them. This was because Betfair was available to them, and was advantageous because odds compilers weren’t able to beat Betfair at all markets every time, and therefore they knew that bettors that played at higher odds than at Betfair, would have to be sharp bettors. This assumption continued and escalated, to the point where there was a consensus that compilers couldn’t beat Betfair on any market.
The high focus with Arbitrage Betting in the United Kingdom betting industry was mainly aimed at backing the bet at the bookie, while at the same time, laying the bet at the Betting Exchanges. This was in place of placing three separate bets at the different bookies, for a guaranteed return. It is necessary to point out that there is still some risk involved.
People that work with odds compiling do not like traders that focus on Arbitrage, but will in some situations tolerate a sharp trader. This is due to the work ethic of certain sharp bettors, as they have to put in the time necessary to be able to calculate the results of matches and events. An Arbitrage bettor only has to worry about placing a bet after receiving a notification on a site, and cash in on the opportunity. In many compilers` eyes this eliminates the competition between opinions and knowledge, and therefore, they are less respected among odds compilers. Some compilers will tell you that the work is mentally and physically stressing, and takes a toll on them.
Arbitrage Betting actually did a lot of positives for the risk departments, as they informed them about how the markets work, in addition to have them realise that the Pandora’s box was opened by sites that compared odds. It was also useful to understand that copying an already established sets of odds in the market was efficient, and it was also a factor in being able to decrease Arbitrage betting opportunities and certain types of sharp betting.
The situation in the present is that there are entire teams and departments that are concerned with surveillance and monitoring bettors on a constant basis. This is because the bookmakers want every client to be a part of paying for the excessive budgets in marketing and advertisement, in addition to affiliates. If the bettor doesn’t generate a profit of some sorts to the bookie, it is more than likely that the bookmaker will take action, and either limit or eject the account. By now, it has become clear that is very difficult and complicated to beat a widespread arbitrage across all the markets, without changing the prices, and therefore these accounts get flagged.
If you don’t change the prices along with the market, there is a clear chance that when you have the best price at any outcome, there will be an Arbitrage opportunity with another bettor in a place somewhere else. In this situation you will end up having the best price, even if it was unintentionally. This is if you don’t change your prices, including when you haven’t struck a bet yet.
The bookmakers have completely gotten rid of the thought of potentially losing money on a client of theirs, even if it was to make money on other clients. When we look at it like that, they have rejected the thought and concept of making a book. In reality, it would be very difficult to make a balanced book without the assistance of the Pinnacle Model, due to the high number of bookmakers one can bet with. The bets that are most often struck on a market are Arbitrage openings, and on some occasions Tipster selections.
Books that end up lopsided are a reality that is hard to avoid for most bookies, because of the fact that square money has a tendency to bet exclusively one way, in addition to betting at a different time compared to the sharp bettors. In some cases, however, they tend to bet the same way as the sharps, only at a changed price and at a new time. The latter of these bets are the best bets to take, even though they will be a part of creating a one-sided book. It is important that, when you have to cheer on a particular outcome, you make sure that it is one that the worst bettors have placed money on.
What Do They Look for When Profiling?
It is important to note that risk departments aren’t exactly the same at all bookmakers, but there are a few things they look for in general, that apply to most of them;
· Is the account profitable? As crazy as this might seem, this is the reality of the situation. If your account is profitable, you will get noticed. It is impossible to hide from this fact.
· Is the account considered to be sensitive to prices, and has the account placed a bet through a medium that is considered to be price sensitive? This might, for example, be a site that compares prices. Sharp bettors are considered to be price sensitive, and as a result they are not wanted.
· When was the bet placed? If it was placed earlier than a day before the match or event will signal that something might be “wrong”, and raise attention to your account.
· Is the price to be considered an Arbitrage price?
· Did the price decrease greatly following the placement of the bet? The closing price is a lot more accurate than what the opening price is.
· Did the bettor only place one bet, or did the bettor place a series of bets? This point might be debatable, but the common bookies like to see you place more than one bet at a time. This is because they want you to want as much action as possible, and for them to be able to profit at a maximum from you.
· Have you made withdrawals rather than deposits? Bookies do not like to lose money.
· Did you use an E-wallet when you had plenty of options that are more directly connected with the bookmaker available? This could be recognised as betting sharply, as you give the impression of wanting to move your money in fast fashion. This could also be mistaken as money laundering, which might lead to having your account flagged, regardless if you are or not.
· If you haven’t used the casino, you should consider doing it.
· Bookmakers don’t like bettors that place bets at niche markets, and don’t play the events that they highlight themselves.
· Bookies also don’t like high stakes, as they make more money when people bet “for fun”. This is usually synonymous with placing low stakes.
· Consider using the mobile platform that the bookie suggests. If not, be wary when changing IP Address.
· Bookmakers actually raise their eyebrows when a woman places a bet, as they are not thought to be the “conventional” client. If they do, the bookmaker might suspect that they are going to exploit Arbitrage opportunities, or are a bowler account.
· Do your bets match your demographic? Bookmakers are more thorough in gathering of background information nowadays. In the old days, the bookmaker might only want rich clients, but in the present they even accept students.
· Do you allow their cookies on the site?
· Have you placed bets at the same time as other bettors? Or have you placed bets at the same time as Arbitrage Bettors or Tipsters?
· Never bet on a match that is fixed, or that might be considered to be fixed. This will flag you, whether it was intentional or unintentional.
· Never establish yourself in the industry of tipsters, don’t associate yourself with the industry, don’t be friends or follow people in social media that are associated with betting.
There are probably other factors that play their part as well, but the list above works like a pointer, and if you follow these tips, your accounts might be safe. If you end up being limited or cancelled, ask yourself if you followed the list.
In the closing paragraphs, I will discuss the subject of Tipsters. Most of the time, bookmakers aren’t concerned with Tipsters (when considering the sharp betting perspective). Most bookmakers have a very high number of clients that follow the tips of Tipsters blindly, and therefore they don’t instantly inspire fear. Again, Steve has expressed his thoughts on Tipsters, as they are in now way a guarantee of a profit. Tipsters contribute to creating markets that are heavily weighted on one of the sides, which is unfavourable in the smaller and most liquid markets. Tipsters might also create overlaps with the points in the list above.
In general, a Tipster will try to tip at the best price and a long time before the event starts. Often, Tipsters are the reasons for why prices collapse. If some of their subscribers place high stakes at the exchanges, they might make other bettors look like Arbers (Arbitrage Bettors). This collapse could trigger those who bet on prices that are currently dropping, to push the market even lower, leaving the bookie with a negative and horrible result. This result would be difficult to turn into something positive, as they weren’t quick enough when changing the price. This is why bookmakers follow Tipsters closely.
I, myself, have signed up for trials at Tipster services, to see and to understand the angle that Tipsters were taking, and if I had overlooked anything. Generally, compilers respect Tipsters that appear to be compiling their own price further, before they eventually tip a selection. A compiler that knew what he/she was doing, would always use the Tipsters to learn, if they had a great merit and history. Compilers will quickly dismiss Tipsters that don’t have any results that are verified, that don’t seem to have a clear strategy, and the ones with inflated ROIs beyond what they deem to be likely.
Said in other words, we as compilers, were trying to do the same as the punters are doing in high volumes nowadays, in addition to seeing who we should take seriously.
Websites that were related to betting, with useful stats and calculations of models were of high interest for us. Most of them were checked, but as it turned out, we were already sitting on the information from the past.