Calcutta auction
A Calcutta auction is an open auction held in conjunction with a golf tournament,[1] horse race or similar contest with multiple entrants. It is popular in backgammon, the Melbourne Cup, and college basketball pools during March Madness[2]
Bidding for each contestant begins in random order, with only one contestant being bid upon at any time. Accordingly, participants (originally in Calcutta, India, from where this technique was first recorded by the Colonial British) bid among themselves to "buy" each of the contestants, with each contestant being assigned to the highest bidder. The contestant will then pay out to the owner a predetermined proportion of the pool depending on how it performs in the tournament. While variations in payoff schedules exist, in an NCAA Basketball tournament (64 teams, single elimination) the payoffs could resemble the following schedule: 1 win - 0.25%, 2 wins - 2%, 3 wins - 4%, 4 wins - 8%, 5 wins - 16%, tournament winner with 6 wins - 32%.
An interesting element of Calcutta auctions is in determining an appropriate wager for each contestant, as the payoff will directly hinge on the size of the pot and thereby the size of the bids being placed. Thus the value of each team fluctuates during the course of the betting. For example, even if a bidder knew the Tar Heels would be the tournament winner and thus pay out 32% of the pool, she would still be unsure of the exact value of the team (unless it was the last team being bid on) since the payout depends on the sum total of all winning bids, i.e. the final size of the pool.
There are two important steps in determining how much we are willing to pay for a team in Calcutta-style pools:
1. Determine what % of the total pot we are willing to pay for a contestant.
2. Convert this % into an actual dollar amount.
This process produces a “fair value” of the team. With this information in hand, you can objectively determine which teams are under-valued (i.e. they are bid below fair value) and attempt to purchase them.[3]
This is similar to parimutuel betting, in that the winnings are awarded from the total pool of bets, but differs in that only one player can bet on any one contestant. However, a player may purchase as many contestants as they desire.
One variation that has grown as the Calcutta Auction is used more in conjunction with March Madness involves bidding on teams in the reverse order of their seeds instead of random order. As bidding evolves, this aids bidders in estimating the final pot size since the heavily favored teams that command the highest bids are auctioned at the end, thereby limiting the risk on the larger bets.
Notes
- ^ Golf.about.com: Calcutta
- ^ Wall Street Journal, 'Calcutta' auction: Brainy twist on traditional NCAA pool, March 13, 2006
- ^ calcuttaauctions.com: Calcutta Auctions Explained
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
Bar bet
A bar bet is a bet made between two patrons at a bar. Bar bets can range from wagers about little-known trivia, such as obscure historical facts, to feats of skill and strength. Some bar bets are intended to trick the other party into losing.
Famous bar bets
- The annual Midnight Sun baseball game played in Fairbanks, Alaska (the only game to be contested after midnight without the use of artificial lighting) was established in 1906 as the result of a bar bet.[1][2]
- Two of Tony Hawks' books, Round Ireland With A Fridge (ISBN 0-09-186777-0) and Playing The Moldovans At Tennis (ISBN 0-09-187456-4), were written describing Hawks' attempts to win two bar bets.
- The film To Have and Have Not is supposedly the result of bar bet between Ernest Hemingway and Howard Hawks, with Hemingway betting Hawks that Hawks couldn't make a good film from Hemingway's worst novel.[3]
- It is widely believed that the creation of Scientology was the result of a bar bet between L. Ron Hubbard and Robert A. Heinlein. The story says L. Ron Hubbard dared that he could create a religion all by himself. According to Scientology critic Lindsay[4] this is "definitely not true", no such bet was ever made, it would have been "uncharacteristic of Heinlein" to make such a bet, and "there's no supporting evidence". However, several of Heinlein's autobiographical pieces, as well as biographical pieces written by his wife, claim repeatedly that the bet did indeed occur.
Enforceability
Under contract law, bar bets may or may not be legally binding, and the winning party may have difficulty having a court enforce the bet. A written contract, drawn up soberly the next day and signed by both parties, can avoid doubt.
For example, if one or both parties are intoxicated when the bet is made, they may be found to lack capacity to agree to a contract, and the contract thus found void or voidable.
However, the fact that the agreement is oral but not written does not undermine it: oral contracts are valid, though certain contracts must be written, under the statute of frauds.
Trick Bets
In the UK in particular, bar bets are tricks which the "mark" cannot win. They usually depend upon a condition set in the bet that the mark doesn't notice. Some famous examples:
- The mark is told that a coin of a particular denomination has been made so it cannot be laid on its edge. The trickster offers him a sum of money for any the mark can lay on edge. When the mark succeeds, the trickster grabs the coin and rewards him with the promised sum - which is always less than the value of the grabbed coin.
- The trickster bets a mark who has just bought a drink that he can swallow the drink without touching the glass or using a straw. When the bet is taken, the trickster grabs the drink and swallows it - and hands over the wagered sum, again much less than the value of the drink.
- A darts player is bet by the trickster that he will lose a game, even though offered many advantages, one of which is always that the mark's scores will be doubled. Only when close to finishing does the mark realise that because he started from an odd number (say, 201) he cannot finish on a double (as is traditional in darts) because he always has an odd score as a target. The trickster can continue to play from, say, 1001, but is bound to win eventually.
- A mark is informed that it is possible to push a wine glass through the handle of a pint jar without breaking either. When he accepts the bet, the trickster places the wine glass next to the handle and pokes it with a finger that passes through the handle.
- A mark is told that if he stands in the middle of the floor, by the time the trickster has walked around him three times, the mark will have walked away from the encounter. Various conditions ensuring no violence will be used are given, but when the bet is taken the trickster simply sits down, leaving the mark stranded in the middle of the bar.
- Some bar bets are physical impossibilities rather than word-based tricks, such as that supposedly invented by music hall start Tommy Trinder.
Sometimes collectors of bar bets will battle each other to see which one knows the most tricks. It is a given that each must accept the bet proposed by the other.
References
- ^ "Midnight Sun Game". Alaska Goldpanners.
- ^ Williams, Van (2005-06-22). "100 Years of Midnight Baseball Fun in Fairbanks: A 1906 bar bet has turned into a tradition on summer solstice". Anchorage Daily News.
- ^ "To Have and Have Not". The Rake.
- ^ Don Lindsay. "Non-Scientologist FAQ on "start a religion"". Church of Scientology exposed.
Further reading
- Diamond Jim Tyler (September 2008). Bamboozlers: The Book of Bankable Bar Betchas, Brain Bogglers, Belly Busters & Bewitchery- Volume One. Diamond Jim Productions. ISBN 978-0-9676018-1-6.
- Diamond Jim Tyler (December 2009). Bamboozlers: The Book of Bankable Bar Betchas, Brain Bogglers, Belly Busters & Bewitchery- Volume Two. Diamond Jim Productions. ISBN 978-0-9676018-3-0.
- Rub Cruit (October 1985). 175 Ways to Win a Free Drink: The Complete Book of Bar Bets. Dodd Mead. ISBN 0-396-08586-5.
- Henny Youngman (1974). Bar bets, bar jokes, bar tricks. Citadel Press. ISBN 0967601819.
- Alan Ericksen (1981). Bar games, bets and challenges. Warner Books. ISBN 0-446-90648-4.
- Rich Ferguson (2010). Tricks to Pick Up Chicks: Magic Tricks, Lines, Bets, Scams & Psychology. Ingram. ISBN 1450560180.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
Arbitrage betting in practice
While often claimed to be "risk-free", this is only true if an arb is successfully completed; in reality, there are several threats to this:
Disappearance of arb: Arbs in online sports markets have a median lifetime of around 15 minutes [1], after which the difference in odds undepinning them vanishes through betting activity. Without rapid alerting and action, it is possible to fail to make all the "legs" of the arb before it vanishes, thus transforming it from a risk-free arb into a bet. High street bookmakers however, offer their odds days in advance and rarely change them once they've been set. These arbs can have a lifetime of several hours.
Making errors: In the excitement of the action and due to the high number of bets placed, it is not uncommon to make a mistake (like traders on financial markets). For example the appropriate stakes may be incorrectly calculated, or be placed on the wrong "legs" of the arb, locking in a loss, or there may be inadequate funds in one of the accounts to complete the arb. Those errors might temporarily have an important impact. In the long term, the benefit will depend on the odds. For example one could actually make more money by placing the "wrong" bet where the outcome happens to be beneficial, though not justified by the arbitrage calculation. However, this stroke of luck being repeated is unlikely, assuming the bookies have calculated the odds so they make a profit.
Bet cancellation: If a bettor places bets so as to make an arbitrage and one bookmaker cancels a bet, the bettor could find himself in a bad position because he is actually betting with all the risks implied. The bettor can repeat the bet that has been cancelled so as minimize the risk, but if he cannot get the same odds he had before he may be forced to take a loss. In some cases the situation arises when there are very high potential payouts by the bookie, perhaps due to an unintentional error made while quoting odds. Many jurisdictions allow bookmakers to cancel bets in the event of such a "palpable" ["obvious"] error in the quoted odds This is often loosely defined as an obvious mistake, but whether a "palp" in fact has been made is often the sole discretion of the bookmaker.
Other Problems: Bookmakers who suspect arbing can set very low maximum stake limits, making arbing insufficiently profitable. Capital diffusion is serious; many bookmakers make it very easy to deposit funds and difficult to withdraw them. Making a return involves many bets spread over typically many bookmakers so keeping track is a considerable challenge, and requires excellent record-keeping.
References
- ^ "How quickly is temporary market inefficiency removed?" Ben R. Marshall The Quarterly Review of Economics and Finance 49 (2009) 917–930
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
Bonus sports arbitrage
Many bookmakers offer first time users a signup bonus in the range $10 - $200 for depositing an initial amount. They typically demand that this amount is wagered a number of times before the bonus can be withdrawn. Bonus sport arbitraging is a form of sports arbitraging where you hedge or back your bets as usual, but since you received the bonus, a small loss can be allowed on each wager (2-5 %), which comes off your profit. In this way the bookmakers wagering demand can be met and the initial deposit and sign up bonus can be withdrawn with little loss.
The advantage over usual betting arbitrage is that it is a lot easier to find bets with an acceptable loss, instead of an actual profit. Since most bookmakers offer these bonuses this can potentially be exploited to harvest the sign up bonuses.
Making money:
By signing up to various bookmakers, it's possible to turn these 'free' bets into cash fairly quickly, and either making a small arbitrage, or in the majority of cases, making a small loss on each bet, or trade. However, it is relatively time consuming to find close matched bets or arbs, which is where an arb / close matched bet service is useful.
Drawbacks:
As well as spending time physically matching odds from various bet sites to exchanges, the other draw back with bonus bagging / arb trading in this sense is that often the free bets are 'non-stake returned'. This effectively reduces the odds, in decimal format, by 1. Therefore, in order to reduce 'losses' on the free bet, it is necessary to place a bet with high odds, so that the percentage difference of the decrease in odds is minimised.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
Back-lay sports arbitrage
Betting exchanges have opened up a new range of arbitrage possibilities since on the exchanges it is possible to lay (i.e. to bet against) as well as to back an outcome. Arbitrage using only the back or lay side might occur on betting exchanges. It is in principle the same as the arbitrage using different bookmakers. Arbitrage using back and lay side is possible if a lay bet on one exchange provides shorter odds than a back bet on another exchange or bookmaker. However, the commission charged by the bookmakers and exchanges must be included into calculations.
Back-lay sports arbitrage is often called scalping or trading. Scalping is not actually arbitrage, but short term trading. In the context of sports arbitrage betting a scalping trader or scalper looks to make lots of small profits, which in time can add up. In theory a trader could turn a small investment into large profits by re-investing his earlier profits into future bets so as to generate exponential growth. Scalping relies on liquidity in the markets and that the odds fill flucuate around a mean point. A key advantage to scalping on one exchange is that most exchanges charge commission only on the net winnings in a particular event, thus ensuring that even the smallest favourable difference in the odds will guarantee some profit.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
Arbitrage using bookmakers
This type of arbitrage takes advantage of different odds offered by different bookmakers. Assume the following situation:
We consider an event with 2 possible outcomes (e.g. a tennis match - either Federer wins or Henman wins), the idea can be generalized to events with more outcomes, but we use this as an example.
The 2 bookmakers have different ideas of who has the best chances of winning. They offer the following Fixed-odds gambling on the outcomes of the event
| Bookmaker 1 | Bookmaker2 | |
| Outcome 1 | 1.25 | 1.43 |
| Outcome 2 | 3.9 | 2.85 |
For an individual bookmaker, the sum of the inverse of all outcomes of an event will always be greater than 1. 1.25 − 1 + 3.9 − 1 = 1.056 and 1.43 − 1 + 2.85 − 1 = 1.051
The fraction above 1, is the bookmakers return rate, the amount the bookmaker earns on offering bets at some event. Bookmaker 1 will in this example expect to earn 5.6% on bets on the tennis game. Usually these gaps will be in the order 8 - 12%.
The idea is to find odds at different bookmakers, where the sum of the inverse of all the outcomes are below 1. Meaning that the bookmakers disagree on the chances of the outcomes. This discrepancy can be used to obtain a profit.
For instance if one places a bet on outcome 1 at bookmaker 2 and outcome 2 at bookmaker 1:
1.43 − 1 + 3.9 − 1 = 0.956
Placing a bet of 100$ on outcome 1 with bookmaker 2 and a bet of $100 * 1.43 / 3.9 = 36.67 on outcome 2 at bookmaker 1 would ensure the bettor a profit.
In case outcome 1 comes out, one could collect r1 = $100 * 1.43 = $143 from bookmaker 2. In case outcome 2 comes out, one could collect r2 = $36.67 * 3.9 = $143 from bookmaker 1. One would have invested $136.67, but have collected $143, a profit of $6.33 (%4.6) no matter the outcome of the event.
So for 2 odds o1 and o2, where o1-1+ o2-1 < 1. If one wishes to place stake s1 at outcome 1, then one should place s2 = s1 * o1 / o2 at outcome 2, to even out the odds, and receive the same return no matter the outcome of the event.
Or in other words, if there are two outcomes, a 2/1 and a 3/1, by covering the 2/1 with $500 and the 3/1 with $333, one is guaranteed to win $1000 at a cost of $833, giving a 20% profit. More often profits exists around the 4% mark or less.
Reducing the risk of human error is vital being that the mathematical formula is sound and only external factors add "risk". Numerous online arbitrage calculator tools exist to help bettors get the math right. For example, the Arb Cruncher sports betting calculator handles calculations for both book arbitrage (back/back or lay/lay) and back/lay arbitrage opportunities on an intra-exchange or inter-exchange basis, and is free.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
Arbitrage betting in theory
There is a number of potential arbitrage deals. Below is an explanation of some of them including formulas and risks associated with these arbitrage deals. The table below introduces a number of variables that will be used to formalise the arbitrage models.
| Variable | Explanation |
| s1 | Stake in outcome 1 |
| s2 | Stake in outcome 2 |
| o1 | Odds for outcome 1 |
| o2 | Odds for outcome 2 |
| r1 | Return if outcome 1 occurs |
| r2 | Return if outcome 2 occurs |
Arbitrage using bookmakers
This type of arbitrage takes advantage of different odds offered by different bookmakers. Assume the following situation:
We consider an event with 2 possible outcomes (e.g. a tennis match - either Federer wins or Henman wins), the idea can be generalized to events with more outcomes, but we use this as an example.
The 2 bookmakers have different ideas of who has the best chances of winning. They offer the following Fixed-odds gambling on the outcomes of the event
| Bookmaker 1 | Bookmaker2 | |
| Outcome 1 | 1.25 | 1.43 |
| Outcome 2 | 3.9 | 2.85 |
For an individual bookmaker, the sum of the inverse of all outcomes of an event will always be greater than 1. 1.25 − 1 + 3.9 − 1 = 1.056 and 1.43 − 1 + 2.85 − 1 = 1.051
The fraction above 1, is the bookmakers return rate, the amount the bookmaker earns on offering bets at some event. Bookmaker 1 will in this example expect to earn 5.6% on bets on the tennis game. Usually these gaps will be in the order 8 - 12%.
The idea is to find odds at different bookmakers, where the sum of the inverse of all the outcomes are below 1. Meaning that the bookmakers disagree on the chances of the outcomes. This discrepancy can be used to obtain a profit.
For instance if one places a bet on outcome 1 at bookmaker 2 and outcome 2 at bookmaker 1:
1.43 − 1 + 3.9 − 1 = 0.956
Placing a bet of 100$ on outcome 1 with bookmaker 2 and a bet of $100 * 1.43 / 3.9 = 36.67 on outcome 2 at bookmaker 1 would ensure the bettor a profit.
In case outcome 1 comes out, one could collect r1 = $100 * 1.43 = $143 from bookmaker 2. In case outcome 2 comes out, one could collect r2 = $36.67 * 3.9 = $143 from bookmaker 1. One would have invested $136.67, but have collected $143, a profit of $6.33 (%4.6) no matter the outcome of the event.
So for 2 odds o1 and o2, where 0-11 + 0-12 < 1. If one wishes to place stake s1 at outcome 1, then one should place s2 = s1 * o1 / o2 at outcome 2, to even out the odds, and receive the same return no matter the outcome of the event.
Or in other words, if there are two outcomes, a 2/1 and a 3/1, by covering the 2/1 with $500 and the 3/1 with $333, one is guaranteed to win $1000 at a cost of $833, giving a 20% profit. More often profits exists around the 4% mark or less.
Reducing the risk of human error is vital being that the mathematical formula is sound and only external factors add "risk". Numerous online arbitrage calculator tools exist to help bettors get the math right. For example, the Arb Cruncher sports betting calculator handles calculations for both book arbitrage (back/back or lay/lay) and back/lay arbitrage opportunities on an intra-exchange or inter-exchange basis, and is free.
Back-lay sports arbitrage
Betting exchanges have opened up a new range of arbitrage possibilities since on the exchanges it is possible to lay (i.e. to bet against) as well as to back an outcome. Arbitrage using only the back or lay side might occur on betting exchanges. It is in principle the same as the arbitrage using different bookmakers. Arbitrage using back and lay side is possible if a lay bet on one exchange provides shorter odds than a back bet on another exchange or bookmaker. However, the commission charged by the bookmakers and exchanges must be included into calculations.
Back-lay sports arbitrage is often called scalping or trading. Scalping is not actually arbitrage, but short term trading. In the context of sports arbitrage betting a scalping trader or scalper looks to make lots of small profits, which in time can add up. In theory a trader could turn a small investment into large profits by re-investing his earlier profits into future bets so as to generate exponential growth. Scalping relies on liquidity in the markets and that the odds fill flucuate around a mean point. A key advantage to scalping on one exchange is that most exchanges charge commission only on the net winnings in a particular event, thus ensuring that even the smallest favourable difference in the odds will guarantee some profit.
Bonus sports arbitrage
Many bookmakers offer first time users a signup bonus in the range $10 - $200 for depositing an initial amount. They typically demand that this amount is wagered a number of times before the bonus can be withdrawn. Bonus sport arbitraging is a form of sports arbitraging where you hedge or back your bets as usual, but since you received the bonus, a small loss can be allowed on each wager (2-5 %), which comes off your profit. In this way the bookmakers wagering demand can be met and the initial deposit and sign up bonus can be withdrawn with little loss.
The advantage over usual betting arbitrage is that it is a lot easier to find bets with an acceptable loss, instead of an actual profit. Since most bookmakers offer these bonuses this can potentially be exploited to harvest the sign up bonuses.
Making money
By signing up to various bookmakers, it's possible to turn these 'free' bets into cash fairly quickly, and either making a small arbitrage, or in the majority of cases, making a small loss on each bet, or trade. However, it is relatively time consuming to find close matched bets or arbs, which is where an arb / close matched bet service is useful.
Drawbacks
As well as spending time physically matching odds from various bet sites to exchanges, the other draw back with bonus bagging / arb trading in this sense is that often the free bets are 'non-stake returned'. This effectively reduces the odds, in decimal format, by 1. Therefore, in order to reduce 'losses' on the free bet, it is necessary to place a bet with high odds, so that the percentage difference of the decrease in odds is minimalised.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
Arbitrage betting
Betting arbitrage, miraclebets, surebets, sports arbitraging is a particular case of arbitrage arising on betting markets due to either bookmakers' different opinions on event outcomes or plain errors. By placing one bet per each outcome with different betting companies, the bettor can make a profit. As long as different Bookmakers are used for arbitrage betting the Bookmakers do not have a problem with this. Each Bookmaker will still make profit due to their calculations.
In the bettors' slang an arbitrage is often referred to as an arb; people who use arbitrage are called arbers. A typical arb is around 2%, often less, however 4%-5% are also normal and during some special events they might reach 20%.
Arbitrage Betting involves relatively large sums of money (stakes are bigger than in normal betting) while another variety, betting investment, means placing relatively small bets systematically on overvalued odds most of which will lose but some win thus making a profit.
The best way of generating profit, which has been established in Britain via sports arbitrage, consists of 'key men' employing others to place bets on their behalf, so as to avoid detection and increase accessibility to bookmakers. This allows the financiers or key arbers to stay at a computer to keep track of market movement.
This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
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