Punt.com - A Blog About Gambling by a Professional Gambler.

Bet Angel for Betdaq

2008-10-18T13:34:26+01:00

A short post here to let my readers know that you can now register (do this first) to download the BetAngel Professional trading application to use on Betdaq, and it's free! Anyone who has previously thought twice about subscribing now has no excuses not to give it a try. In case you had forgotten, commission is set at 2% on Betdaq and there's no penalty for winning.

Now if someone could knock up a spreadsheet (or separate application) to copy bets across the platforms instantly, and make this available to all, we can then begin making serious strides towards having choice between a real exchange (Betdaq), and it's greedier, premium charging, skim matching rival.

Betfair's Tax on Winners.

2008-09-23T10:16:54+01:00

Unless you've had your head in sand for the last couple of weeks, you'll be aware that Betfair announced that from yesterday, they would begin to levy a new charge on "successful" accounts. This new "Premium Charge" will, according to their statements, affect 0.5% of the userbase. For your reference, here are those details I'm sure you are overly-familiar with by now, even if you are presently unaffected, pay attention, because you might be in the future,

"Customers will only be considered for the Premium Charge if, over the previous 60 weeks, they satisfy the following criteria:

Account is in profit;
Total charges paid (commission generated, Transaction, Data Request and Premium Charges) are less than 20% of gross profits; and
Bet in more than 250 markets.

There are two further conditions that are also calculated:

Any single win that constitutes more than 50% of gross profits over the previous 60 weeks will be excluded from the calculation; and
Each customer will have a 60 week allowance of £1,000 against the Premium Charge i.e. the customer will not pay the first £1,000 of charges.

Each week the customers who meet all the conditions set out above will be charged the lesser of:

The difference between 20% of the previous week’s gross profits and the total charges paid during the week; and
The difference between 20% of the previous 60 weeks’ gross profits and the total charges paid during that period.

Our pricing strategy is changing as from the 22nd of September. The first Premium Charges will be collected the following week - week commencing 29th September."

A further detail neglected in much of the forum discussion is that on the date of the 29th September, all accounts that have a profit and have traded 250 markets in the last 60 weeks are assumed to have been operating at a level equal to paying 20% of gross profits to Betfair. If in the first week, the commission you generate falls short of 20% of gross profits, then this will be taxed the following week. Apparently this doesn't constitute 'back-dating' in the PR world.

Another under publicised fact about this charge is that the 20% figure is now the MINIMUM you will pay Betfair in commission on gross profit. That's right, it's now not about trying to find ways to get under 20%, but how to make sure you are paying the minimum 20% rather than more!

Betfair are very keen to point out that not many people are affected by this on a weekly basis. All this means is that if you are not charged, you are already paying above the 20% mark.. Do you feel better about things now you know this?

I've taken quite some time to put this post together, there's been a lot of messages asking if I'm affected, where's my blog post on it, what's going on?? I had to give time for the dust to settle on this one, it's such a serious topic and a complex one too that it took me a while to calm down enough to begin to understand it.

Yes, I am affected by it. Due to the up and down nature of how I've been betting and slowly altering strategies, it is difficult to tell just how much this would affect me. (If you think you might be affected, ask Betfair for a spreadsheet breakdown of your last 60 weeks.) On current form I believe this will cost me up to 6 figures per year (my last 5 weeks would have cost me an extra £29k !).

This is a good example of where this calculation falls down and is far too unspecific in who it targets. Lets get into Betfair's reasoning behind the charge and then some definitions that should show why it is so unspecifically greedy.

On Betfair we have a variety of winners, those that win consistently, those that work out a profit on balance. Over time, winners remove the excess profits they make and carry on using the site. This money taken out, is never recycled on the site for other people to win, so it leaks away into winners' bank accounts and must be replaced somehow. This, according to Betfair, costs a lot of money in advertising to attract the required new blood, more in fact, than the amount they are gaining from these winning accounts in commission.

I don't think this can be argued against, this money does get extracted at a fast rate by some users. In my conversations with other winners we have often wondered where the money actually comes from. Betfair believe it is their costly advertising that does the leg work in attracting this money, this must be true to some extent. There's been much conjecture over time about whether it is winners or losers that are the life blood of the exchange, this move settles the argument conclusively in favour of losers.

But what of these costs? As a chargee, my first (over?) reaction is to tell them to stop spending so much. Surely this is not just about advertising, it's overheads and it's spending. The company has expanded at an incredible rate, 1200+ employees, a very nice HQ, innovative technological investments... and also numerous additional mini-sites that few surely find useful. They have their fingers in many pies. "Pies" which are increasingly focused on extracting money directly from customers, rather than through commission on their exchange, sounds a bit like a bookies doesn't it? See the newly unveiled Betfair Arcade for example - this is a shameful expansion into online FOBTs (Fixed Odds Betting Terminals), designed to take money from the less clued up gambler and those with problems, completely and utterly against the ideals of a betting exchange.

This sort of activity I guess is predictable. As a company grows, the original ethos is lost as costs grow and profits become the sole focus, as do employee bonuses.. There is an undoubtedly faceless feel to Betfair these days, buried deep in their midst (bloated underbelly?) are boards, think tanks and departments focused on how to get more money from the people using their site. As a business, you can't argue with their aim to make money, as long as it is done fairly.

"Fair" is something this new charge is NOT. It affects everyone, including those that have been told they would not have been charged in the last 60 weeks. I think it may be helpful here to define 3 key types of Betfair player,

The botter, these people program software to bet on their behalf automatically, through the day, on various markets. Because of the automated nature of their betting, they can do so with sufficient speed and efficiency to vastly reduce the chances of not winning. Dependent on strategy, some bots will win on virtually every market they play.
The trader, we'll classify these as humans who like to buy and sell (back and lay) more than once (usually in-running), similar to how you might on a stock exchange. As a result they often end markets with p/l's showing a win on both players or often a loss on both players. There are more varieties of styles within this classification than the others, some traders will take more risk than others - holding positions for longer, basing their actions on the event they are trading. Other traders will scalp, take much smaller risks, get in and out very fast and base decisions upon the market alone - arguably they are more consistent winners.
The punter, he's an old fashioned gambler who bases his decisions on value or opinion before the event begins and runs it to conclusion.

All of these players are hit by the new charge. But how can this be right? Clearly some people can afford this new charge more than others. "Afford" in this case is related to risk, value and the regularity of that user's profits.

Users who rarely lose, with winning books on any outcome can afford to pay more than others. (I'm not in favour of this charge, but I'm being realisitc.) Particularly botters, who use automated software and spend little time themselves actually placing the bets. If you switch on a program and sit back while the funds come in, then personally I think 20% is probably cheap, considering previously you were paying 2% and no tax. There is very little risk in what these users do, and "risk" I believe is the valuable commodity Betfair want to encourage with this charge. See the Betfair forum for evidence of one or two botters not bothered by the increased payment.

The next group with lowered risk are the traders. A highly contentious group, with a myriad of styles and levels of risk. Much of the debate when this charge was announced was centered around this group of users and what their worth to the site is. In fact this has always been passionately argued over, even before this charge, I could perhaps write a book on the subject.

It's the variety of trading techniques which make this group difficult to charge accurately or gauge worth to the site. Few people trade the same, and few trade consistently. Some take risks and build large positions, others are buying and selling very quickly. It seems unfeasible to charge everyone the same, when some win very often, and others provide as much risk as any gambler does. The most important distinction here is that these are human, manual traders, placing bets. Humans make mistakes, errors of judgement or plain accidents, no one can win 100% of the time and this must be taken into consideration. It is impossible to see how this group could be charged as much as an automated program.

The unfairness of the charge is most easily demonstrated by looking at the plight of our gamblers. If it was unfair to treat all traders the same, it is even more so to expose out-n-out gamblers to the chance of being charged. The vast majority of people that simply punt, will already be paying above the 20% almost all the time. This is fine, the edge that they seek in their bets will have been preserved (dependant on their handicapping skills).

But what happens when there is a week where every bet wins? This is quite possible, infact it's probably a certainty to happen one week - given enough weeks. The commission generated on gross profits they paid during this week dropped to their commission rate divided by 2, and their profits for the week took the average commission on gross profits over the previous 60 weeks well below 20% (quite a mouth-full). They will now be charged the difference.

The edge on all of these bets has been decimated! A year's hard work of edge preservation has been destroyed in (what used to be called) a lucky week. There is no way these people should be charged.

"Commission generated = (Commission + Implied Commission) ÷ 2" is the calculation used to reach the figure that will need to be made up to 20%. "Implied Commission" is the commission that would have been paid on a losing bet (by the person / people who won). This I believe is an average figure taken from the rest of the market participant's commission rates. According to Betfair this is usually between 2.5% and 3%, but we have no way of knowing the precise figure at the end of a market.

Dividing by 2 really can mess you over though. In the case of our punter who has a lucky week (with no implied commission), his commission generated is half the amount of commission he's already paid. I had one such week displayed on my spreadsheet, my commission generated was actually 1.4% of my gross profits!

This whole thing is calculated terribly and over simplistically. There are running jokes about the ridiculous small print on Betfair, but this is not a calculation they should have attempted to simplify. What is needed is a actuarial style calculation based on what we can each "afford" to pay. And this will vary as our method of betting changes, few people bet the same all the time. This can't be worked out over the course of one week either, I suggest at least a month.

All of this discussion is nullified now we are into the charging period. The charge appears to be going ahead, despite being ill conceived, rushed into effect and without preparation of the reporting features we are entitled to have, so we can see how much we are being charged. To some, it seemed heavy odds against getting this far, now we are here, it looks as if there is no going back.

Talking of odds, this is a huge gamble by Betfair. A punt of crazy proportions, perhaps their whole business... certainly their exchange image, by the way, this bet has already been settled and paid out - they lost!

For their sakes I hope they have done their own calculations right. This is effectively "all in" by Betfair, gambling that masses won't leave and liquidity will be intact. As a customer, it shows incredible arrogance. They are abusing their dominant status in the Betting Exchange market. They claim there is no such market, instead aligning themselves with the much larger Betting Market as a whole. Convenient, but not their real competition.

A betting exchange is something vastly different to what bookies offer, populated by punters of a different mentality those on the street. Their direct competition is other exchanges, not bookmakers. Exchanges thrive on liquidity, without it - no punters, and with no punters - no liquidity. That is a strangle hold over their competition and they know it. The newly published Betfair Arcade and comparisons with mainstream bookies demonstrates Betfair's intended direction perfectly.

Can they get away with it? Will liquidity cross the chicken and egg style divide and disappear to other sites? It's tough to know, but the signs are that there is massive discontent among a very large portion of the users who feel abused by this charge. Most of these people are traders (and many punters too), who defend their right to buy and sell passionately. This is, and always was, one of the beauties of the betting exchange concept. Many in this group can afford the charge, but most can't. They are winning and losing types, they do provide meaningful liquidity and I believe it's a mistake to risk losing a proportion of this group.

Their closest rival is Betdaq. Previously the liquidity there was a mere 5% or less of Betfair's, but it is improving, and quickly. Rumours were that 800 new accounts opened the day after the charge was announced.

Their commission structure remains similar to the way Betfair used to operate, and if you open a new account now, citing the charge at Betfair, you'll be given the 2% rate until the new year. This is a good effort from Betdaq, but they'll need to show a lot more effort, and quickly for things to tip.

There is momentum for change at the moment, but with every passing day it dissipates. Luckily there are some key events ahead which might provide much larger tipping points. The first of these is when the charge is first levied next week. Expect the amounts to be published on the Betfair forum, along with much annoyance.

The second of these and potentially the largest, is the launch of 3rd party trading applications pointing at Betdaq.

The problem with gaining liquidity and market share for a small exchange has always been the effort required of it's users to post bets with the prospect of not getting matched all day. But if this never occurs, the liquidity will never grow. It costs time and effort to achieve, and gamblers are not known for their patience. The launch of one click ladder interfaces for Betdaq will remove the cost in time and effort required to do this.

I fully expect this to provide an massive boost to in running sports on Betdaq. It will be easy to open up applications accessing both Betfair and Betdaq and bet into both at the same time. Before long, we will have a choice. The BetAngel team are working on their application as we speak.

Indeed it becomes very apparent that it's this 'liquidity divide' that Betfair believes provides the protection for their gamble. If the divide is made easy to cross, then they are vulnerable to a fair marketplace and market forces. In a fair market, I very much doubt one company charging 20% against their nearest competitor charging 2% would survive such market forces.

Will I continue to use Betfair? In the immediate future yes, and probably longer term too, but if there is a switch, then less so. I don't think it's wise to overreact and leave immediately (we know what happens to over-reactions). I can afford this charge, I don't enjoy the prospect of paying 2-4 times as much money to Betfair, but I will still survive after it.

Saying this, I am not doing much betting at the moment, I'm working on my strategy and figuring out what is the best course of action to minimise this payment. I do take issue when a company arrogantly uses it's position to charge it's customers, the introduction of the Arcade has also left a nasty taste, so I'm loathe to add liquidity to the exchange if I can help it.

It has been suggested that we arbitrage our way out of the charge, not only by other users, but by Betfair themselves! They were banking on that happening in my opinion, perhaps they might even have expected a rise in liquidity. Either way, I find the prospect of arbitrage simply to nullify the charge's effects more than a little self defeating. You provide more liquidity and you pay the commission they were going to take anyway, I won't be doing this if I can help it.

My aim is to help provide more liquidity elsewhere, and to wait for the new BetAngel product for Betdaq to arrive before beginning to bet into both exchanges again. I'm sure there will be some teething problems at Betdaq. With the added activity, their site may well suffer to begin with, I think it's wise to expect this. Betfair has also suffered downtime in the past, we all got up and carried on, the same will apply.

I think it's in everyone's interests that we have a fair marketplace with decent competition and choice. If we can achieve this through providing liquidity elsewhere at the same time as Betfair then we will eventually have that choice, the easier this is made, the better for all of us using the exchanges. We have to work together to make things change for the better, simply allowing such market dominance and arrogance to go unaswered is not the way forward.

There may be lessons to be learnt here by all the exchanges however, and that is, the issue facing Betfair's costs could eventually affect them all. The money lost does have to come from somewhere, perhaps the other exchanges may be wiser examining the way their commission structures work ahead of time. Losers and risk takers it would appear, need much more reward for their efforts.

Future blindness, Historical narratives.

2008-08-04T15:46:11+01:00

I've been thinking about making this post for some time now, I've been very interested in recent months in the subject of how poorly we humans are at figuring out the consequences of our actions. Particularly actions that we've made before, and continue to make, often with similar results.

These results can be negative or positive, and there can be more than one consequence. For example, you forget to put the rubbish out on a Wednesday evening, not only do they not pick it up on Thursday morning, but Mrs. Punt is less than impressed! Perhaps a better example; you didn't get out of that trade when sentiment turned, now you feel stuck on an outcome which is drifting in price and appealing more to your value hunting, punter mentality, rather than the trader's mentality you entered the trade with (more on this example later).

The title of this post might be better phrased as, learning from your mistakes. But I'm not sure it's quite that simple. We certainly don't appear to learn as efficiently as we should, so I'm more interested in why, what's stopping us, and how can we make our best efforts to avoid errors or allow for consequences.

Those of you who have read The Black Swan, will recognise the phrases I have used in my title. He talks a lot about our in ability to think forward, we are "future blind". I refer you to the Black Swan Glossary, "Future blindness: our natural inability to take into account the properties of the future –like autism which prevents one from taking into account the existence of the minds of others."

Not only this, it is apparent that we are excellent at adding narratives to the decisions we made in the past. We try to give reasons why we did certain things, or didn't spot things or certain things happened... We suffer from the narative fallacy, "our need to fit a story or pattern to a series of connected or disconnected facts," how can we do this when we weren't even attempting to think ahead?

We wander through life making decisions, on the spot. Faced with a set of variables, we take a certain direction, we don't generally think of the set of variables this new direction will offer up, and importantly - how likely some of these 'variables' are to crop up and further affect the time line. Variables can appear in infinite guises, mental, physical, internal, external, out of your control and (if you are lucky) under your control. In life the distribution of these consequences is random and extreme. In sports trading - we have a random, extreme sport, and a slightly more mediocre and predictable marketplace to provide an interesting 2 fold puzzle.

Lets make this simple, if you are a trader, your job is to manage exposure to these variables and consequences (and associated probabilities) as best you can. Why? Because it is these that decide where you get in and where you get out of your trade. If you don't make an attempt to quantify consequences, then you are not attempting to figure out your risk and reward, and the probabilities contained within.

I'm not saying you can be precise with your measurement of these consequences, no one knows the true 'value' of things, particularly in the more extreme random part of the equation - the sport you are trading and the participants in the marketplace. The important thing to take away from this is 'the attempt'. Merely trying to look for outcomes, both of your own actions and the action taking place in the sport (and their probability) is good enough to provide a framework of learning and future decision making. Without this, you are confined to providing a best fit narrative, after the event... essentially, you are making up history! (One has to wonder just how much "history" is actually made up, out of a need to add a narrative to fit what was a random situation.)

And how easy it is to start narrating.. Hindsight is a wonderful thing! When we know what happened, it is almost always easier to see this outcome as obvious and of a much higher probability than it actually had at the time. I refer you to Taleb's reverse engineering problem, "It is easier to predict how an ice cube would melt into a puddle than, looking at a puddle, to guess the shape of the ice cube that may have caused it. This makes narrative disciplines and accounts (such as histories) suspicious."

Let's go back to our examples above. I was going to leave out Mrs. Punt, but then I thought it's quite a good example of how random things can be. Here is a real life situation with an infinite number of positions and outcomes - an ice cube that could quite literally be any shape. What caused me to not put the rubbish ('trash' for our American visitors) out? What distracted me? What mood was Mrs. Punt in when she came home, what caused that? How likely was it that she would be in a good mood and not care (much) about the rubbish? If we didn't realise how random life was, one thing we did know about was the randomness of female emotions! Perhaps we should swiftly move on to our trading example..

Here we have a classic example of not attempting to think ahead. I've hinted above that it's important to think of outcomes internally and externally. Resulting actions of consequences occur on two levels, what happens in the World, and how we react, it's important to try to weigh up the probabilities of both and how they relate to one another, not straight forward, but very worthwhile.

In our example, what was the probability of our trader changing his mindset to fit the situation? To figure this out you need to know what situations cause the change, which of these can be altered by a change of strategy and which are vulnerable to the randomness of the market and the event it's based on.

Obviously there are questions about why they felt the need to change... we'll not concern ourselves with those. The bigger picture here, is that an attempt by the trader to put a probability on this happening - by assessing the situation constantly, is what will help prevent it occuring, by allowing them to manage their position well enough to minimise it's chance, presuming that they actually find this course of action to be negative...

Which of course, it is. Changing the term (time scale) of your strategy mid-trade can very occasionally be suitable, but the rest of the time it is back-fitting at it's worst. You are providing a new narrative to what is occuring to suit some poor trading decisions. Which is why your assessment of the situation needs to be constant.

Paul Tudor Jones in his interview in the Market Wizards book said that it didn't matter what price he was long or short from, all that mattered was what the risk / reward was right now, and whether that meant he should be a bull or a bear. If it agreed with his position then he held it, if not then he closed or went the other way.

A recap.. How can we do our best to avoid future blindness, and our tendency to add narratives,

Assess the situation on a constant basis, question various scenarios and their probabilities and always keep in mind that the scale of these can vary to an extreme and unpredictable degree. Nothing is impossible, and many things you think are very low probability are very capable of happening.
Assessments of event probabilities have a second layer of effect on the market, assess the way the market could react to these and use this to form an idea of risk and reward. The market is what allows you in and out of trades.
Remain skeptical about stuff that happened in the past, don't automatically assign a narrative that suits how your trading turned out... once upon a time, this was randomly decided.
Don't add your own narrative to current events either, this will skew your assessments (avoid matches you think are fixed for example!).
Keep a record of your attempts at guessing the risk and rewards for various scenarios. You will only ever see one side of this guess resolved, the other side forms the risk or reward, and is of equal importance for your profitability.
Constant reassessment takes a lot of mental energy, but gets easier with practice... it can become a habit / instinctual.
Next time you are making a fast decision, base it on a honed assessment of what might happen and the risk/reward. If you have time, stop and consider the results of what you are doing, because it's apparent not many of us do this often enough!
An important part of not making the same mistake again is looking for it ahead of time, the same goes for any new mistake.

I went through a long period in the last year of not getting anywhere. When I did my analysis 3/4 months ago, it became very obvious I had simply been repeating the same strategic mistakes over and over again in cycles. To put a stop to them, you have to first notice them and figure out why you made them, then begin to think ahead. I realised that I was making the same errors simply because I wasn't watching out for them ahead of time, before long I would find myself in the same corner again, going through the same costly consequence. I also found I was adding a narrative on the match I was trading rather than looking at what I was doing personally, as well as how the market had been moving.

Hopefully now you will keep a watch out for the mistakes that I made in your own situations. Keep your eyes peeled, and get 'back to the future'.. That is essentially what we are trading - 'the future', the future movements of markets and their related probabilities.

Wimbledon 2008 roundup!

2008-07-06T23:32:17+01:00

Having just been treated by Rafael Nadal and Roger Federer to one of the most emotional and entertaining finals we're ever likely to see, I thought it might be a suitable time to give a punt.com round up of opinion (maybe some aftertiming too) from this year's Wimbledon.

Todays match was quite simply emotionally draining to watch, let alone trade. I feel sorry there has to be a loser, clearly Roger was gutted at the end, and no doubt many are circling him posing questions about his status in the game. He's still ranked number one, but Rafa's lead at the top of this years 'race', just got wider, it's a matter of time now till we crown a new World number 1.

I think all year there have been signs that Roger's mental strength under pressure from Nadal and sometimes Dokovic was on the wane. He's been tightening up when it matters the most. It's been all about pressure, we've all got our breaking point, even Nadal choked on two match points earlier.

It's been a slow death by pressure for Roger, he's put up a valiant fight, but he needs a release. Strangely, I feel losing today will probably help him to loosen the baggage. How much baggage needs releasing? I think there's still more to come, perhaps he won't win a grand slam this year, I feel sure he needs to lose (and will) the number one spot, before he can feel free. We all know the different pressures related to being the front runner, to be on top ready to be shot down for so long shows how great he really is.

Nadal got tight today! There were nerves everywhere on center court. He didn't play his best tennis, there were moments where even he wasn't hitting freely, his shots were dropping short, too much spin (when under pressure, go back to what you do best...). What a great kid though, you could tell he was knotted up at the end, and how much Wimbledon meant to him. Pure class, both of them and a great champ.

All of this said, it was a match statisticians wouldn't have made sense of. Nadal two sets up, yet the stats suggested Roger played the better tennis, he was ahead on points, winning more points on serve than Nadal. The big points are the ones that decide things, and this is where Rafa took a grip. At one stage I think Roger was 1/8 break points, Rafa, 3/4.

After the rain break, there was something different in the air however, more penetration on Roger's shots, less so on Rafa's, a genuine feel that the real grass court king had shown up... this, is how to play tennis on the green stuff, suddenly from thinking Roger had little chance, he looked in control (of his nerves more than anything).

My wallet would have been much fatter had Nadal taken this in 3. Due to the liquidity (a Betfair record volume of £49m was matched on this final!), I was able to comfortably swing a big bat at things without much risk. I felt ok about the prospect of losing (or winning) bigger due to the large size of trades, I had prepared mentally for it before I began... the plan, simply stick to what I normally do, but with bigger trade sizes.

I had the memorable position after set one of +£67k Nadal and -£50k Fed! To describe how I traded would take way to long however, and although this position was worth a lot, I ended up not winning as much by the end, having been chopped around so much, no one in their right mind could have 'picked' a winner in that final set. The back and forth nature of my trading resulted in a personal record turnover (£1.5m) too, along with the pain of my betting applications & Betfair website screeching to a near halt under the weight of number of trades to keep track of. The last set was virtually untradeable on the match odds market for me, I had to switch to tournament winner.

If I'm honest I'm still a bit of an emotional wreck after that match, I don't know what to do with myself. There's always this feeling the week after Wimbledon of aimlessness for me. I've immersed myself so much in the two weeks, that resurfacing takes some getting used to...what do I normally do on a Monday? I have no idea.

There's plenty of tournaments this week, but I'm not sure I'll get too involved, there will be some massive downsizing of trades to get used to again.

So what of the rest of the tournament... Personally I had a great one, apart from a silly encounter with the Fed v Ancic match, which I won't go into, suffice to say I layed a vast sum of Fed at shorts looking for a hold or two...cue Ancic broken in the first game. Easy to get over though, since it's just one market and something a bit out of the ordinary strategy wise.

Well done Venus Williams, beating sister Serena can never be easy, but for her it was an exercise in consistency. She was the steadier of the two, Serena more aggressive but at times all over the place. I'm happy for Venus though, she seems a nice girl and gracious in victory and defeat.

Andy Murray had a great performance against Gasquet, but showed the distance he needs to go to beat Nadal. He's surely not far behind in rankings terms now, but a considerable distance away from competing with him on a tennis court. Too strong, too fast, too powerful.

Safin was a bit of a turnup for the books, but then he's always a dangerous floater, if he has a week where he doesn't hit 25 shots a match long of the baseline, this is what happens. Surprising really considering the ball stays low on the grass.

Ivanovic looked a shadow of her French Open self, as if some imposter had been on court for the last 12 months, this was the 2006 version of Ana Ivanovic, shots hit hard for the sake of hard, sometimes a gentle reminder about a net and some white lines is a good idea.

Zheng Jie and Tamarine Tanasugarn did great representing the smaller girls! Two, smaller, feminine versions of Pong the computer game. They demonstrated the success you can have if you make like a wall and get everything back, let the opponent kill themselves off... I'm surprised this doesn't happen more often really, especially with the women.

I'm gonna leave it at that for now, a great championships. I hope the British press let young Laura Robson get on with things quietly for a while too. Only 14 and having the weight of a nation's expectations on her shoulders, she has a good 2 years to go before she can even begin to make real strides in the main draw. Here's hoping she can continue to progress. I won't know what to do with myself tomorrow, if only Wimbledon was on every week.

Gambling profit and loss, the numbers that matter.

2008-06-29T12:41:32+01:00

Lately I've been looking to do more analysis of my results. I think I've admitted in the past, that this hasn't been a strong point of mine. In the middle of April I decided to ask Betfair for a spreadsheet of all the tennis matches I had traded since the start of 2007, so that I could catch up. Since then, I have kept my own sheets with every match in it, the volumes I traded, average odds and match stats too. In that time, I've traded 200 matches, and the analysis of this is becoming very worthwhile, with some pleasing and not so pleasing results.

So what are the numbers that matter? And why?

You want to work out the average of your wins and losses. The mean of all your results. Clearly this is showing you what a match is worth on average, the sum of all your work is in this number, the bigger the better.

Next is your average win, and your average loss. When you win, how much on average is that? And the same for when you lose. Now compare these two numbers, are your wins on average bigger than your losses? If you lose on average more than you win then it's clearly going to be quite a battle, I know this from experience!

Now work out the percentage of markets you win on. The size doesn't matter, just look at where you won and lost and work out a %. This number, combined with the ave. win and ave. loss determines how well you are doing, and will describe to some degree how well your strategy is working, and maybe what type of strategy you are using.

For example, you might be someone who scalps a lot of trades or backs short prices where your win % is very high, but your average loss is much bigger than your average win. Or perhaps you don't win often, but when you do, the payoff is much bigger than the loss.

You have to juggle these numbers and get them in the right ratio in order to win with your strategy. If you are a trader, it describes something of the balancing act you are trying to perform. (Ideally, this analysis would be made on individual trades and not overall market results... if you keep detailed enough records to do such analysis, then that is excellent, I don't, yet...it gets complicated with uneven matched amounts etc) Though it's not an exact representation, your win % effectively shows how often you are right, but you will need to run your winners longer and cut your losses quicker than than this %.

For example, if you make 5% on an ave. win, or lose 5% on an ave. loss, then the % of times you are 'right' needs to be over 50% to make a profit.

My own figures show I lose slightly more on average than I win, but crucially, the % of markets I win on is 60%, so I'm ahead. This is not the way I would like it however, emotionally, it is much easier to average more on a win than on a loss, it can often feel like 2 steps forward, 3 back, but a 60% win ratio keeps it going in the right direction.

Emotional stability is important for maintaining discipline. Keeping records like this allows you to actually see a bigger picture of the war you are fighting rather than the losses you might take in individual battles - which inevitably stick in your mind longer than the wins.

It's this emotional side of things that can wear a trader down over time, we're all different in how we handle losses, some push on and are able to accept things, others suffer negative pangs on the back of each loss, causing further damage down the line. This is a good point to introduce another statistical measure - variance. More accurately, standard deviation!

Many people will remember this from school with some dread, it's worthwhile doing. It gives you a measure of a set of results around the mean.

Typically around two thirds of your results will fall within one standard deviation. In simple terms it's a display of steadiness or consistency of results. If you are one of those people uncomfortable with large swings in fortune, then you need to work on keeping this number lower. Regardless of how low you keep this, there will always be some randomness to the path your profits and losses take.

Here is a superb resource from vertical solutions called the P&L Forecaster. You enter your average trade, result, week or month etc and the standard deviation of those results and it produces a 'forecast' for the next 100 measures of your unit. Eg, you work out your average week, and the standard deviation of all your weekly results and enter these numbers, it forecasts for the next 100 weeks.

It's important to note that this is simply a measure of how varied your next 100 results could be. Try the same figures again and you will get a different looking chart each time, because of the variance in your P/L. Play around with it a bit, enter in some high standard deviations, and some low, notice how up and down a high variance set of results is and how smooth a low standard deviation chart looks.

This should be telling you how important the bigger picture is and how random you can expect your results to be. It helps to understand that losses (and wins) are part of the picture, you can't get down too much when you lose and high when you win. As Brett Steenbarger says, "chance alone will affect the paths of returns. A trader who understands that it's not just about returns, but risk-adjusted returns, can best adapt to these trading realities."

And so we return to the smaller picture. The interesting thing I think to be learnt from this is that the macro image is determined by the micro details and actions we take when trading. A series of results where the win is bigger than the average loss, is down to individual trades with good upsides and small downsides (which happened to be more likely to occur than the market thought).

Getting an extra 0.5% on an opening bet or closing bet can change the variance in your P/L, managing positions better in terms of risk and reward has the same effect. As does selectivity and patience. Cutting losses ultimately reduces the size of your ave. loss, running winners the opposite effect to your ave. win, both reduce the need to be 'right' so often.

So, everything is interlinked down to the fine detail in trading terms, but our mindset and emotions need to be centered on the macro scale of things, understanding how each individual trade, market, week and month, affects the bigger statistical calculations. Some things I have found most rewarding from this analysis:

Cutting losses quickly reduces my average loss, and in turn makes improving the bigger picture a lot easier to achieve.
Taking profits in order to 'get back on' later, (I call this my churn rate) has reduced my own variance slightly, by not looking for such big payoffs, which in turn require more time and potential for losses. Result: ave. wins and ave. losses are both slightly smaller, so standard deviation has dropped... My P/L Forecaster chart has been smoothed out slightly and perhaps I'm less on edge that I might be.
Waiting for more premium risk/reward opportunities has helped get the averages closer to one another or even favouring the win side since I did my analysis.

Most people still don't keep records of their activity, without records you can't really see where you are going wrong. You might not even know you are going wrong, which is the major hazard with 'mental accounting'. Perhaps this is a topic for another post.. for now I'll leave you with a couple of my figures, my win % is 60%, and the standard deviation of my wins and losses 3 days ago was 5018, now down to 4701.

Mini.Punt.com

2008-06-20T09:24:14+01:00

Just letting you all know, there's a new professional gambling sub-domain to look out for - Mini.Punt.com! I decided there was a need for something slightly different where I could post quick links, thoughts and ideas without diluting the more thoughtful pieces I post on punt.com. Hopefully a nice collection of mini posts will build up quickly as it takes less than a minute to enter them.

The site was built using Tumblr, if anyone else is interested in starting a blog or adding an extra sub domain blog as I have done I can recommend it, it's free and very quick to get going. It's a work in progress, but I'm quite pleased with it so far..

Now to prepare for that Wimbledon draw..

Free money for your predictions.

2008-06-16T18:14:03+01:00

I'm sure many users of betting exchanges are familiar with the term "free money" by now. Well, new-ish (they've been running for a few months now) website Predictify.com, is giving away small amounts of cash depending on the quality of your answers to the questions posted on their site.

Basically, it's cash for predictions, but it's not quite as simple as that. Here's a quick breakdown on how you can make some money.

When you visit the site you will see many questions asking for your predictions. Most of these will not have a 'pot' and therefore you won't earn anything from answering these questions. However, you still need to answer them, and fast, because the quality or your response to these pot-less questions will determine your expertise rating on the site. The higher your rating, the more you stand to earn when answering the money questions.

Expertise level doesn't just rely upon getting it right either, you need to answer the questions early, you get more points the fewer people have responded before you. When you see a new question, answer it quickly. It's quite a clever way to keep you coming back and checking the site regularly. You can also ask questions of your own, which is interesting and brings me to my next point..

"Prediction" is a hot topic at the moment. It's cropping up all over the place. Prediction markets are becoming quite the buzz phrase at the moment. MidasOracle chronicles their rise brilliantly, while bestseller The Black Swan, discusses prediction in depth, tackling our inability to predict and the many fallacy's we suffer from. I'll leave these fallacy's for further discussion at a later date, but it's my opinion that we have massive problems predicting anything.

Asking questions on predictify is certainly interesting and a lot of fun, but the answers you receive are very reliant on how you frame the question. Asking a negative question or a positive one will skew the results alone.

As a gambler / trader, I'm taking particular interest in this area at the moment, it's raised many a question about how we as humans see things, question things or are biased and prone to fallacy. What processes am I going through when I make a judgement on something for example.

Most casual gamblers and traders will actively seek to predict, completely unaware of the inherent problems residing in their own psychology. Engaging in the act of prediction alone can mess up your answer.

I trade and win, because of poor predictions, and this is not just the odd one or two people guessing wrong, it's whole crowds, entire markets of people, being skewed by one another and the media. Massive groups of people do get things wrong, and they do it time and again. Markets are rarely in an efficient state, for the most part they are simply an efficient representation of human inefficiency. Fallacy and bias depicted in chart form.

I'm not trying to turn people off Predictify, it's great fun and I'm currently really enjoying seeing the distribution of the answers to some of my questions and others. I certainly wouldn't base any judgements on the answers though. Traders and gamblers are very much better suited to approaching the markets they trade with an attitude of scepticism, and a firm belief in the old saying, "anything can happen", because literally anything can. 99.9% of "anything" in this case, is surely beyond the imagination of even the expert level predictors on Predictify or any other "prediction market".

All money is created equal.

2008-06-11T10:42:08+01:00

You may not have realised, but we all have a tendency to value money differently in certain situations. Let me begin with a story, this one does the rounds in Las Vegas, judging by the amounts of money involved I do have my doubts about the truth in it, but it does illustrate perfectly one of a few psychological problems we have with money, and it's in a gambling context, even better! It's called, "the legend of the man in the green bathrobe".

"By the third day of their honeymoon in Las Vegas the newlyweds had lost their $1,000 gambling allowance. That night the groom noticed a glowing object on the dresser. Upon closer inspection he realised it was a $5 chip they had saved as a souvenir. The number 17 was flashing on the chip’s face. Taking this as an omen, he put on his green bathrobe and rushed down to the roulette table where, not surprisingly, he bet on number 17. He let his winnings ride and eventually he was worth $7.5 million. Unfortunately the floor manager intervened, claiming the casino didn’t have the money to pay should 17 win again. Not to be deterred, the groom caught a taxi to another casino where he bet all on 17 again, when it hit it was worth $262 million. Needless to say, with such luck he bet again, only to lose it all when the ball fell on 18. Broke and dejected, the groom walked the several miles back to his hotel. ‘Where were you?’ asked his wife. ‘Playing roulette!’ he replied. ‘How did you do?’ ‘Not bad, I lost $5.’ "

This had me laughing when I read it, but then I realised this is exactly the sort of mind set that affects some people, particularly gamblers. Admitedly, no one in their right mind is going to bet $7.5m on 17, let alone $262m! But the point about how he felt he only lost $5 is perfectly apt.

Another illustrative scenario is one where you have two items to buy, one is worth £50, and the other is worth £2000. In both cases, you arrive at a store selling these items to find that they are priced at £75 and £2025, but there are locations 5 minutes drive away which have them at the correct price. Almost everyone would decide to drive 5 minutes to save £25 on the £50 item, a much smaller percentage would do so for the £2000 item. Yet both £25 savings are equated to a 5 minute drive.

Finally one more scene for you, imagine there is an item you've wanted for a very long time, but it's not quite been easily affordable. Let's say this item is £500, and you've seen a deal for one priced at £470. Later on, you are investing in a very big lifestyle purchase, perhaps a car or some expensive equipment, the cost for this is £15000. The dealer selling you this, then takes the opportunity to offer you the item you really wanted earlier as an add-on for an extra £600. Suddenly this doesn't seem like such an expense, you are already spending £15k, you take the opportunity to get something you've wanted for ages whist spending the money, "what's an extra £600 on the top of £15k?".

Each scenario slightly different in psychology, they all have particularly wide ranging importance when looking at how we manage and save our money generally, but they are also brilliantly applicable to gambling and trading. Lets deal with the last one, first.

The first thing that struck me was how easy it is to view money as cheaper the more you spend, and how often I have been affected by it. I have to wonder how often others are struck down by this mentality too. Clearly when we think of this scenario in a gambling context, we are talking about adding to losses, or averaging down a losing position by making the bet even bigger, because we see it as cheap.

It became obvious to me that this is one of the reasons a lot of people go bust or never get anywhere. In fact, the three scenarios together form a big part of whether you will win, win for a while then give it back, or go bust.

If you are losing whilst trading, it's very easy at times to convince yourself to add to your position - if you are already losing £10k, what's another £1000 ? The answer of course is £1000! And that's a lot of money. It's also money that you will potentially have to work many hours to make back. The more hours you work making back 'throw away money', the more pressure it places on you. It defeats many people in the long run. Before you know it, you are simply treading water / money, and that's if you are lucky enough to be fairly strong willed.

Don't add to losing positions. Just because you are losing money, it doesn't make losing more money any cheaper, all money is equal and it's all work. Cut your losing positions, save yourself hours more work, heartache and money.

Lets go back to the man in the green bathrobe. They call this the mentality of playing with 'house money'. Mentally you consider it the casino's money rather than your own, because you 'won' it rather than earned it. In other words, it's not real money. ...It's always real money.

This is a classic example of how people who do well for a while, give it all back many times faster than they made it. All the while justifying their actions by telling themselves that they were 'just playing with the profits', 'it wasn't really my money', 'I started with £100, I still haven't lost that, so I haven't lost anything'... what about the £5,000 you just lost then?

You put this in writing and it looks crazy, but this happens all the time in gambling and trading circles. The forums are littered with stories of 'giving it all back' etc.

Finally, lets look at our second scenario. The one where the amount of effort is worth the same amount of money, but is disguised by the amounts being spent. You have to think and act efficiently to make gambling / trading pay. That tick you gave up in order to get matched, that cost you. That time you crossed the spread, took someone else's offer, that can cost you on many levels in the long run.

I've recently done a lot of work on analysing my activities for the last 15 months. Betfair were kind enough to send me through a detailed spreadsheet with all the matches that I had traded on in that time, my profits and losses and traded volumes etc. The sheer scale of what I had done was quite a surprise, even to me. 1066 matches traded and matched volumes of many £10m's, seeing figures like these made me realise many things,

My edge during that time was a tiny %.
This was the sum of all my actions, good and bad, during many hours of work.
Because of the sums traded, a very small improvement in my actions could result in a massive leap in the amount I could win.
The efficiency of my actions was incredibly important over long periods of time.
Every £ is equal ! I needed to value all money.
All the times where there had been 'throw away money', I had spent days and weeks making it back, had I not thrown it away, the profit column might look very different.

How do you avoid these psychological traps? Three ideas for three scenes.

Avoid the 'house money' mentality, by keeping physical/electronic records of your activity. Avoid accounting for things in your head, if it's in your head alone it is very easy to write off as not being real. This will also help you analyse your actions over longer periods of time.
Withdraw your winnings. Don't keep them in your online accounts, whilst they are there it is much easier to see them as just that - "winnings". It becomes tempting to mentally reassign this money as just profits and not really yours. Take the money back to a designated amount every so often. I know people that do this every day, it's a good idea.
Cut losing trades, don't add to them. Set your limits on size, don't go over them. Evaluate each opportunity and trade them as efficiently as you can - get as many ticks as you can, ask for prices rather than take them. Every action you make over the course of a year makes a difference to your bottom line. Value every £ that you play with as real.

"Chance favours the prepared".

2008-05-14T23:34:52+01:00

I love this quote from Louis Pasteur, "In the field of observation chance favours the prepared mind". I'm probably going to take this out of it's context, but I think the sentiment applies in many ways to trading and gambling.

I've been reading a fantastic book lately called "The Black Swan", by Nassim Taleb (links to be added later). A man rather a lot cleverer than I, with a clarity of thought on the subjects of randomness and prediction which is superior to most. I won't turn this into a book review, but I recommend everyone read it, the humour might not be to everyones taste, particularly the French, but it's extremely worthwhile.

Central to his theme is our inability to predict. Especially things which are extreme or unimaginable to us. It left me with a very healthy respect for randomness and much less respect for 'opinion'. I was a big fan of his previous book too, (link on the left side of the page half way down) "Fooled By Randomness". Taleb's background is in options trading, he specialised in setting up positions which exposed him to randomness well beyond the expectation of the market. The payoff for which was vastly beyond what anyone could imagine the probability of it's occurance was. Simply because it was unimaginable, the bets he was making were of fantastic value.

This was a new idea to me, a sort of 'exposure to randomness'. Getting the unexpected, 'onside', in a cheap or even free way, that would pay large dividends if these unexpected events ever occured. Conversly, the people trading in the opposite direction had no clue to the downside of their options and bets. These were people who focused on small, repeatable profits (read short odds) which crucially, were "expected" to happen. The lesson, never expect anything! Especially profits.

Back to the quote. He is not talking about taking your chances, or predicting your chances, or spotting a chance and predicting whether it will happen or not. It's about being exposed to chance in the right way. There is no expectation or prediction involved here. Prepare yourself / your position so that chance's happenings pay off with the most reward.

Taleb says, "you do not look for something particular every morning but work hard to let contingency enter your working life". This is wonderful advice.

On a practical level, I've been doing a lot of work on my trading to do with this. Specifically the realisation that I am reliant on the market to allow me out of a position, really I've not been giving enough priority to this... I hesitate to use the word respect in this instance, having read The Black Swan, I'm fairly convinced the market as a whole underestimates many unexpected things. What I am talking about is the fact that if I am to trade out of a position, then it is the market's position that allows me to do so, not me somehow bulldozing through it or willing it to get to a certain level before I can close.

How does this tie in ? Basically I am allowing market contingency to enter my trading. I'm exposed to the unexpected and thus, ultimately - panic and over-reaction. My reward is greater than it should be, the risk (downside) is minimal. These are the best trades you can have.

A lot of people use the term 'free lay', a bet with no downside and all upside should the unexpected happen. Taleb calls these, "free lottery tickets" and suggests we collect as many of these as we can. He's right you know.

Most of all, look for situations where the unexpected will hurt you, and ones where it will reward you. Minimise the former and expose yourself in as cheap a way possible to the later.

Can we still trust Betfair?

2008-04-20T18:57:19+01:00

...Should we trust Betfair? Or indeed, any betting exchange?

Trust is such a powerful concept, a search on wikipedia says that a "trusted party is presumed to seek to fulfill policies, ethical codes, law and their previous promises." The degree to which we trust is a measure of honesty and competence, and the degree to which we forgive broken trust is reliant on whether trust failed due to an issue of competence or honesty, the later being rather harder to forgive.

This is going to be a lengthy entry. But I owe it to you, it's been a while. This entry is not going to talk about tennis, or my performance, which has been fairly unspectacular but steady (the bank roll is up a further 29% on the year). I'm going to post about an issue doing the rounds right now, and that is whether the recent actions of Betfair (the leading betting exchange) have caused us to lose trust in them. Do we believe they have our best interests at heart, further to this, should we? Why did many of us blindly trust them for years, were we naive?

Some of you noticed I made a post (and withdrew it) a few weeks ago about the recent bet matching controversy at Betfair. It was a strong entry, I was pleased with it, but I took it down, people wanted to know why. Sometimes it is better to hold your cards closer to your chest, to withhold judgement for as long as possible... I decided to give Betfair a few days to sort things out, given what I had been hearing, there was a good chance things would change, and outdate the post. In fact they did change not long after that..

Without going into too much detail for those that don't know, Betfair changed the way they matched bets 'in running' for a while. They did this secretly, and they did so in a way which made them around 15-20% extra profit. Profit, being the critical element here, (previously Betfair made no profit at all from the bet matching process) when you match bets and profit from it, you are in fact trading on the exchange. A concept that Betfair clearly didn't grasp.

The term 'exchange' no longer applies in this case, because you are in fact dealing with the exchange themselves. This method of profiting from the bet matching process was only open to Betfair, because it was done using it's own platform software and technology. ie. it was automatic and without choice, part of the site. If you used Betfair during this period, you would have been vulnerable to this occuring, there was no way around it.

If an 'exchange' profits from the process of matching bets (buy and sells) then it is insider trading.

How on Earth did Betfair think they could do this? Well, probably quite easily I'm guessing. In the betting exchange market, Befair are by far the biggest, and for good reason - the liquidity exists there. As a punter and trader, you go where there are people to bet against, where competition and liquidity offers up sizable bets at good odds. Everyone feels the same way, and so you end up with an exchange that has the vast majority of the action. Indeed, this is the ideal scenario for people looking to use 'exchanges' of any sort. You welcome the liquidity.

This puts this particular exchange in a position of extreme responsibility. It effectively declares them the custodians of our marketplace, this is a great deal of trust to place in one company. Particularly a 'betting' company.

Betfair is a registered bookmaker. Without rehashing the issues of their license and whether this is really right or not, whether they like it or not they are also an 'exchange', running an exchange brings a higher level of responsibility that is perhaps not best bestowed upon a 'betting' company, but a 'financial' one. Not just any financial one either, an 'exchange'.

You see, as a business, having the vast majority of customers turns them from not just any company, into a monopoly. Monopolies have massive power over the market, indeed they control it, the customers are at their control - more so when this issue of liquidity is involved. Rival products cannot gain any share of the userbase without taking them away from liquidity. Who wants to populate an exchange with no liquidity? No one! The customers hurt themselves here, but are beyond blame. It's chicken and egg stuff.

Monopolies have little competition by definition. Competition is good for customers, they get fair deals, they have choice and they can vote with their custom. They don't have to put up with the decisions made by a monopoly.

Why would a 'financial' company be better? FSA (Financial Services Authority) Regulation.

No one expects Betfair or any other betting exchange company not to do it's best to make profits. They are a business afterall. But an 'exchange' has responsibilities to it's users, which restrict some of the ways in which it could make profit. There are ethical and moral (and legal) issues that come into play.

You would never for example see the London Stock Exchange trading on it's own platform, let alone profiting from the way it's software worked. Such actions would have severe consequences for those involved.

Betfair has many times the transactions of the London Stock Exchange per day. Something which amazed me when I learnt of it. They have hundreds of thousands of registered users, matched volumes on the biggest tennis matches are well into 10s of £millions, you can imagine what horse racing is like. All of these transactions have to take place in a fair way, speedily and transparently between customers.

Is this the sort of thing best suited to a betting company? A business with a very strong desire to grow, and to continue growing. Can you imagine the potential conflict of interest at play here. With so many people making deals on their platform, millions of transactions per day, this must seem like a goldmine to some at Betfair.

Indeed, given they make the rules, they own the technology and platform software, the temptation must be huge. Further to this, they are regulated as a betting company, to a large degree this gives them a massive freedom to run their product as they see fit, including the ability to change the rules, the way bets are matched or the degree to which they seem like a bookmaker and not an exchange.

Lets throw in the size of the company and the amount it's grown. Betfair is now in all likelihood a 1000 person plus company. All of these people to be managed well, to tow the company line... and all of those bonuses to pay. It's unlikely most of the company know what is going on elsewhere at HQ, there's hierarchy and politics at play, agendas form and the company comes under the influence of various departments and the way they view the direction of the company.

The attitudes of employees is now quite random and unpredictable, given the nature and size of the company. Employee attitudes are going to be very different to that of a 'user'. They are concerned with internal issues, politics, climbing the company ladder and getting their bonus. Does fairness and 'exchange' ethics, play an important part for them, perhaps not. How many people go to work thinking about such lofty ideals? Yet the question of fairness is not one that is thoroughly regulated. Regulated to a sufficient degree where it becomes unquestionable, and a matter of legality, rather than company direction and temptation.

Many of these employees will be privy to the sorts of knowledge about customer accounts that might best be protected. Many know for example how much some of their users are making, and it's rather a lot more than their pay packet. Money talks, and it does strange things to people..

Which brings us back to the original question. Can we trust them? And, should we? In my opinion, no and no.

2 or more years ago I would have unquestionably trusted them. Why though? They have a great product, it's innovative, I enjoy using it and yes I can make a living. I was naive enough to think this was enough. They also acted differently, the company was smaller, guided by different people with no evidence that they wanted to run anything other than a fair 'exchange' between punters. In hindsight, this was not particularly clever from myself..

Why would a company regulated as a bookmaker, wanting to grow rapidly, never think about the goldmine on it's doorsteps. Especially when a point is reached where it becomes harder for them to continue to grow as fast.

This applies not only to Betfair but all betting exchanges. I began by saying 'trust' is a strong word, but lacking trust in someone does not incriminate them, it just means we must keep a close eye and remain healthy skeptics given the lack of proper regulation in this area.

I also said the ideal is to have all the money in one place. That is common sense, but the responsibility placed upon the people running that company is huge, and it's not one we should simply give to a business without strict rules to ensure absolutely no potential for conflict of interests in the future.