Tag Archives: BetFair

I did drop BetFair from the Midas Oracle coverage of the prediction markets. They should re-establish the direct links, from their 2 frontpages, to the prediction markets on politics, finance, and the other socially valuable issues.

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No GravatarNo direct link to the BetFair prediction markets on politics, finance, and else.

No direct links to the BetFair prediction markets on politics, finance, and else.

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No direct links to the BetFair prediction markets on politics, finance, and else.

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So, I won&#8217-t blog anymore on BetFair (other than re-publishing up this post) till they fix their 2 frontpages and put back the direct links to the prediction markets on politics, finance, and the other socially valuable issues.

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APPENDIX: Here&#8217-s my July 2008 message to the CFTC where I said that TradeSports and BetFair are (&#8221-were&#8221-, in the case of BetFair, now) doing good, and sending some of the liquidity (which they acquire with sports) on the socially valuable prediction markets. See also what I said to BusinessWeek.

When the CFTC look at the 2 BetFair frontpages, they will now get to the conclusion that Chris Masse is an idiot, who was probably paid to talk up BetFair.

Thank you, BetFair.

Appreciated.

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I told you that vice presidential search committees and VP prediction markets are complete bullshit, didnt I?

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The McLaughlin Group of mid-June (yes, I know, that&#8217-s last month):

MS. BERNARD: Well, here&#8217-s what I think. I think the dirty little secret is Barack Obama probably already knows who he&#8217-s going to select to be his vice presidential running mate. You put out the search committee, probably because Hillary Clinton was all over his back last week &#8211-

DR. MCLAUGHLIN: So this is a smokescreen. This is a smokescreen.

MS. BERNARD: I don&#8217-t know if it&#8217-s a smokescreen, but I think he has a good idea who his vice presidential running mate is going to be. And the search committee is much ado about nothing.

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I told you so.

No good advanced, primary indicators.

Don&#8217-t trade on VP prediction markets.

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How BetFair stole Bastille Day from the French -and how Ed Murray became BetFairs best friend (NOT A HOAX).

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Michael Giberson (professor of economics and chairman of our scientific advisory board):

Actually, I would expect the change to improve liquidity, but the real surprise for Ed Murray is that other than his liquidity argument, I pretty much agree with him this time.

It is a better scheme than before, as the exchange will match traders’ bets more efficiently and offer price improvement when available.

As Betfair observes (and Murray notes) the downside is for traders who make a bet in error, and now find the more efficient market has matched the bet before it could be withdrawn. If this is a frequent problem for a trader, perhaps they need to exercise a little more care at the keyboard. But as the Befair announcement indicates — and this time Ed Murray is repeating the Betfair company line! — at least there is the possibility that the trader will be matched at a better price than he would have otherwise.

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Is the BetFairs brand-new bet-matching logic (which matches bets across related selections) the first time a prediction exchange manages to increase liquidity WITHOUT augmenting the number of traders or relying on an automated market maker?

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Professor Giberson,

What do you make of that?

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In a blow to the French, BetFair choose Bastille Day to premiere the revised version of the bet-matching logic of their prediction markets. – IMPROVEMENT MEANS BETTER LIQUIDITY FOR THEIR EVENT DERIVATIVE TRADERS.

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BetFair:

Improvements to Betfair’s bet matching logic today, Monday 14th July:

What’s changing?
We’ve improved the code that matches bets. As well as matching backs against lays as we’ve always done, we’ll also try to match your bet against bets on other selections in the market. We‘ll give you an improvement over the price you‘ve requested where possible, and we‘ll match you against whichever bets get you the best price.

For example in a tennis market:

Roger Federer is 1.9 to back, 2.1 to lay.
Rafael Nadal is 1.8 to back, 2.0 to lay.

If you try to back Federer at 1.9 or less, previously we would have matched your bet against the customer looking to lay Federer at 1.9. Both bets would have been matched at 1.9, even if you‘d asked for a shorter price. In theory we could do even better than that though: we could match you against the customer trying to back Nadal at 2.0 (backing one player at 2.0 is of course the same as laying the other player at 2.0). Our new bet matching process will see which match gets you the better price. In this case we would get you 2.0 by matching you against the Nadal backer (who is offering a better price than the layer of Federer).

When placing a new bet you will only ever be matched by the new process if doing so gives you a better price than you would otherwise have got. We will match your bet at the best price possible that’s a valid increment on Betfair’s odds ladder, as we explained in our update of 6th June.

Does this only work for 2-runner markets like tennis?
No. The new matching logic works for any number of runners in a market. An example with a 2-runner market is probably easiest to understand, but the principle is the same for markets with 3 runners or more. For example if a football market looked like this:

Spain 2.3 to back, 2.5 to lay
Germany 3.9 to back, 4.0 to lay
The Draw 2.9 to back, 3.0 to lay

Then if you want to back Spain we could match you with customers looking to back Germany and the Draw at 4.0 and 3.0 respectively, which would result in you being matched at 2.4, a better price than you would have got had we matched you against Spain layers (who are only offering 2.3).

Which markets will this affect?
We’ll introduce the new code on Monday 14th July, but initially matching will be done exactly as before. As explained earlier in the year, introducing best execution across selections wasn’t possible without significant change to the existing code that matches backs and lays, so we will need verify that performance is as expected for the existing matching process before enabling the new functionality. All being well we’ll enable the new code for a small number of markets to ensure that everything is as it should be later on Monday. We’ll announce which markets on Monday. Again if all is well we’ll roll out to a wider range of markets on Tuesday.

We’d expect to match across selections on the same range of markets as we currently do:

Match Odds in Basketball, Boxing, Cricket, Ice Hockey, Rugby League, Rugby Union, Snooker, Tennis and Volleyball, Greyhounds win markets, Darts match odds, correct score and handicaps and Soccer match odds, HT/FT, correct score and unders/overs.

Horse racing will not be covered for now, due to the possibility of non-runners, and the new process isn’t applicable to markets where runners can be added (for example “Next manager” markets), where runners listed might not take part (e.g. First Goalscorer) or where the runners in a particular “market” are treated independently (e.g. Accumulators).

What about bets placed in error?
We’re aware of a concern that this change might make it more likely that customers would match bets placed in error, for example asking for 1.2 when you really wanted to back at 2.2. One consequence of the change we’re making is that any bet you place is more likely to get matched – making it easier to get a match is the whole idea. Being realistic though, if you had placed a bet in error like that in the past, in the vast majority of cases you would have been matched (against lays on that selection). There’ll now be far, far more circumstances where you would have been matched anyway , but instead you’ll now get a better price, than situations where your bet would have been unmatched and you might have had the chance to cancel. On average we would expect customers who place bets in error to be better off as a result.

On a related point, we’d also expect this change to make it more difficult for people who place “trap bets” to get matched (a trap bet is an offer that is only likely to be matched if another customer places a bet in error). While putting up “trap bets” is against Betfair’s terms and conditions and we close the accounts of persistent offenders, on an exchange where any customer can ask for any price it’s difficult to eradicate this practice. In most instances where a trap bet is the best price available on a selection, customers will in future be matched at better prices against bets on other selections rather than matching the trap bet.

How will the change affect liquidity?
We would expect the change to be beneficial to liquidity. Obviously if we have opposing customer bets in the system that could be matched, whether on the same selection or across different selections, the best thing for liquidity is to match them.

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Further to the above, we’ll be enabling the improved matching on the following markets later today.

Football:

Czech Republic U19 vs. England U19
FC Inter vs. MyPa

Tennis:
Andujar vs. Hanescu
Minar vs. Rochus

Greyhounds:
11:28 Sheffield
11:48 Oxford

Chris Masses second comment to the CFTC on event markets (prediction markets)

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Chris F. Masse
Midas Oracle
cfm &#8212-&#8212- midasoracle &#8212-&#8212- com
chrisfmasse &#8212-&#8212- gmail &#8212-&#8212- com

July 6th, 2008

Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st St. NW
Washington D.C. 20581

Attention:
Office of the Secretariat- [email protected]

Reference:
Concept Release on the Appropriate Regulatory Treatment of Event Contracts
73 FR 25669

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Just a technical note, before I give you my thoughts. In the following, I call &#8220-prediction market&#8221- the specific market where one particular event derivative is traded. (For instance, the &#8220-Barack Obama will be elected US President in November 2008&#8243- prediction market.) And I call &#8220-prediction exchange&#8221- the general marketplace where many prediction markets (on political elections and other events) are traded. (Hence, I call HedgeStreet a &#8220-prediction exchange&#8221-).

Please, allow me to give you my thoughts on the subject of real-money prediction exchanges:

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ABOUT THE INFORMATION AGGREGATION MECHANISM, FORECASTING, THE LIQUIDITY OF THE SOCIALLY VALUABLE PREDICTION MARKETS, THE DEVELOPMENT OF A US-BASED PREDICTION MARKET INDUSTRY, AND THE PROTECTION OF RETAIL TRADERS

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The information aggregation mechanism functions well only if there are enough traders. Probabilistic predictions (which are of interest of the economists cited in the CFTC&#8217-s concept release) are generated only when there is enough liquidity, that is, when many traders come speculating on an event derivative market (e.g., on the topic of the next political election). Just because forecasters are interested in a topic and want to generate a market-based probabilistic prediction does not mean that traders will flock en masse. Market-generating forecasting is an offspring of the trading activity- if you have too little liquidity, you don&#8217-t have any trustworthy probabilistic prediction.

The socially valuable prediction markets should meet 3 criteria:
– their contracts should be very well drafted, so that the probabilistic predictions generated would be useful to society-
– a sufficient number of traders should like the topic-
– there should exist advanced, primary indicators which traders can follow to get early information (e.g., polls, among other sources of information, in the case of prediction markets on political elections).

Here&#8217-s a counter example. Yahoo! Research scientist David Pennock (one of the most active and well regarded researchers in this field) has created a set of prediction markets regarding the percentage share of web searches made in the US in 2008, for each Internet search engine (Google, Yahoo!, etc.) That would be extremely valuable, on the paper. Unfortunately, those sets of prediction markets have attracted only a fistful of traders:
http://www.intrade.com/aav2/trading/tradingHTML.jsp?evID=78364&amp-eventSelect=78364&amp-updateList=true&amp-showExpired=false
Hence, no trustworthy probabilistic predictions were generated.

The CFTC should take with a grain of salt the 2008 petition organized by the American Enterprise Institute
http://www.reg-markets.org/publications/abstract.php?pid=1276
that states that &#8220-not-for-profit research institutions&#8221- and &#8220-government agencies&#8221- should be allowed to run US-based, real-money prediction exchanges, for the good of society. Just because an organization is smart and fascinated by the prediction markets does not mean that its executives and managers will be capable of drawing traders. Obviously, prediction exchanges should be run by trading specialists and event derivative professionals, and properly regulated. No good will be done by the CFTC if amateurs are allowed to run un-regulated, real-money prediction exchanges.

I see 2 important keys for the development of socially valuable prediction markets.

a) The socially valuable prediction markets (which are not very popular, other than the ones on political elections) should be organized by the generalist prediction exchanges that draw traders en masse because they offer prediction markets on very popular topics.

Sports is a popular topic. If the CFTC go to the website of TradeSports http://www.tradesports.com/ , they will see that TradeSports links, on its frontpage, to the InTrade prediction markets at http://www.intrade.com/ and, thus, send the TradeSports traders to the InTrade prediction markets, which is obviously good for InTrade&#8217-s liquidity in general, and especially good for InTrade&#8217-s socially valuable prediction markets. In the same manner, the prediction markets on political elections organized by BetFair UK http://www.betfair.com/ are located within their central prediction exchange that is mainly devoted to sports.

The hard fact is that the most popular topic among individual traders (the retail customers of the prediction exchanges) is sports. As long as US laws and regulations won&#8217-t allow US-based, real-money prediction exchanges to organize prediction markets on the topic of sports, many US event derivative traders will give their business to offshore, real-money prediction exchanges who accept to take money from US residents (as it is the case with TradeSports-InTrade Ireland).

I understand, though, that the CFTC is working under a jurisdiction that presently outlaws prediction markets on sports.

b) The executives of the popular, real-money prediction exchanges should be willing to create socially valuable prediction markets by collaborating with outside researchers who specialize in certain verticals.

As of today, InTrade is the only real-money prediction exchanges that fill these 2 criteria &#8212-a) and b). InTrade&#8217-s executives and managers have deployed a considerable effort to create and run an impressive number of socially valuable prediction markets.

BetFair UK have chosen not to develop socially valuable prediction markets, alas &#8212-other than those on UK politics, which are well developed and of high social utility. And HedgeStreet does not have yet the CFTC&#8217-s stamp of approval to run markets of event derivatives non-financial topics, since that&#8217-s the purpose of the May 2008&#8217-s concept release.

The economists Justin Wolfers, Eric Zitzewitz, Robin Hanson, Koleman Strumpf and David Pennock (among others) have collaborated with InTrade Ireland to frame interesting questions. Obviously, the research institutions which those economic scientists are affiliated with (e.g., universities, colleges, business schools) have no business running real-money prediction markets.

If the &#8220-not-for-profit research institutions&#8221- and &#8220-government agencies&#8221- want to develop socially prediction markets, then they should do it in cooperation with established, popular, regulated, real-money prediction exchanges, who know what they are doing.

(In passing, I fully support Tom W. Bell&#8217-s point made in the 5th paragraph of his petition. The CFTC should not favor the not-for-profit prediction exchanges at the expense of the for-profit prediction exchanges. Tom W. Bell&#8217-s comment to the CFTC has not yet appeared on the CFTC website, as I type this. http://agoraphilia.blogspot.com/2008/07/lets-tell-cftc-where-to-go.html )

As I said, I follow the prediction market industry since 2003, and the 2 most common mistakes I see made by
the people proposing brand-new socially valuable prediction markets are that:
– they forget that the event derivative traders should have fun-
– they forget that, for each prediction market, there should exist advanced, primary indicators that traders should rely on to inform their trades.

I want to tell the CFTC that most people who talk about creating brand-new socially valuable prediction markets are totally unaware of these 2 basic rules.

In the beginning of this comment, I said that prediction markets are forecasting tools (and, hence, decision-support tools) if, and only if, there is sufficient liquidity. I also noticed that the world&#8217-s most liquid socially valuable prediction markets are offered by 2 exchanges (TradeSports-InTrade and BetFair) who use popular prediction markets (on sports, the fact is) to support the marketing of less popular, socially valuable prediction markets. (After making that argument, I acknowledged that the CFTC currently works for a legal environment that prohibits prediction markets on sports.)

My point here is to emphasize the uber importance of liquidity on socially valuable prediction markets. In my view, the best situation is when a big, generalist, real-money prediction exchange organizes socially valuable prediction markets and helps them to thrive. Only InTrade Ireland has done that, so far. My suggestion to the CFTC would be to create a legal environment such that their liquidity could be &#8220-repatriated&#8221- to the US, on a &#8220-InTrade USA&#8221- real-money prediction exchange.

A related issue is that the CFTC should be concerned about HedgeStreet&#8217-s financial health. After its third round of funding, HedgeStreet raised a total of $24.9 million.

http://www.hedgestreet.com/abouthedgestreet/pressreleases/pressrelease_21.html

Lately, HedgeStreet was aquired by an offshore investor for $6 million.

http://www.hedgestreet.com/abouthedgestreet/pressreleases/pressrelease_32.html

Obviously, there has been destruction of wealth, here.

The CFTC did a great job in 2004 when it approved HedgeStreet&#8217-s application as a Designated Contract Maker (DCM). The CFTC should now finish the job by creating a legal environment favoring the profitability of HedgeStreet and of other non-intermediated DCMs (e.g., InTrade USA, or BetFair USA, or TradeFair USA) &#8212-which I hope will be started up in the future in the US.

What I am afraid with the May 2008&#8217-s concept release on &#8220-event markets&#8221- is that the CFTC does not look into the real issues: the liquidity of socially valuable prediction markets, and the profitability of US-based companies operating real-money prediction exchanges (non-intermediated DCMs).

I&#8217-m afraid that all the solutions consisting in &#8220-exemptions&#8221- and &#8220-no-action&#8221- letters are false solutions that do not address the real issues.

Finally, for the issue regarding the protection of retail traders, I suggest that the CFTC looks into the worst scandal that occurred in the field of prediction markets &#8212-the &#8220-North Korea Missile prediction market&#8221- scandal. I am sad to say that InTrade Ireland acted in the worst way possible, and, thus, have indelibly tarnished their reputation, alas.

http://www.midasoracle.org/predictions/nkm-scandal/

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Thanks for listening,

Chris F. Masse
Panorama B, Green Side
305, avenue Saint Philippe
Les Templiers, Sophia–Antipolis
06410 Biot, Alpes-Maritimes
France, European Union

&#8211-
&#8211-

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RELATED POSTS:

– Chris Masse&#8217-s first comment to the CFTC on &#8220-event markets&#8221- (prediction markets)

– What the CFTC is asking.

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What I said to BusinessWeek

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BusinessWeek&#8217-s Ricky McRoskey:

Experts expect the initial reaction to CFTC regulation to be more low-cap, nonprofit markets like the one created by the University of Iowa. Some doubt the forecasting power in these small-scale markets, since there wouldn&#8217-t be enough monetary incentive for traders to seek and discover information. &#8220-We do not need nonprofit prediction exchanges,&#8221- says Chris Masse, editor and publisher of the prediction market blog midasoracle.org. He says that [offshore] exchanges like Intrade and Betfair, which are for-profit, have the capital to continually offer more cutting-edge pricing systems and additional contracts while nonprofits like the IEM have not.

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I meant that real-money prediction exchanges that make profits do support innovation (see BetFair&#8217-s new bet matching system and starting-price system) and are well positioned to foster socially valuable prediction markets (see the huge effort that InTrade is making in this direction).

Voila. :-D

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Psstt&#8230- You&#8217-ll notice that I am the only one in that story to mention and speak favorably of InTrade-TradeSports and BetFair-TradeFair. :-D

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How to make a MILLION POUNDS on the rotting corpse of David Daviss political career (to be used for ethical purposes only)

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1). For the form guide in this two-horse race, please see:

a). THE PRESENT (SHAN OAKES, GREEN):
http://shanoakes.blogspot.com
http://shanoakes.typepad.com
http://www.facebook.com/group.php?gid=33635377720

b).. THE PAST (DAVID DAVIS):
http://www.daviddavisforfreedom.com

2). Mainstream bookmakers such as Paddy Power are not currently putting prices on the Haltemprice and Howden by-election on their website.

Yesterday, however, I emailed [email protected] to ask them what price they would offer for the Green Party to win, and I was given the price of 14-1.
Therefore step one is to email Paddy Power at [email protected] , or call them on
UK – 08000 565 275
Ireland – 1800 238 888
International – +353 1 4040120,

or pop into one of their shops, and ask them to offer you price on Green Party to win.

You can of course also try other mainstream bookmakers.

Paddy Power Politics Website:
http://www.paddypower.com/bet?action=go_disp_cat&amp-disp_cat_id=31

3). If you have been quoted a price, and you wish to (POSSIBLY) make a million pounds (to be used for ethical purposes), divide ?1,000,000 by the price quoted, and lay a bet of that amount. For example, at 14-1, you need to place ?71,428.57. If you do not have such a large amount of money, and are unwilling to risk such a large amount, you can of course bet a smaller amount, depending on the minimum bet rules of the bookmakers you visit. For example, ?10 at 14-1 might make you ?140 back, should Shan Oakes (Green) get elected on 10th July 2008, which looks increasingly likely. Of course, you can maximise your winnings by creating syndicates where you pool your resources with friends, family, and other activists.

4). If you cannot get a price from the mainstream bookmakers, you may be able to put on smaller bets at Betfair. Betfair uses a system whereby you bet against others who bet in the opposite direction, so there are tight limits on how much you can bet based on the liquidity in the opposite direction. Post-credit crunch, liquidity is at a bit of a premium, so you may only be able to put on tiny amounts. However, as an example, ?2 at 40-1 might reap you ?78 (after Betfair have removed their commission) or ?11 at 15-1 might reap back ?154.00.

Betfair&#8217-s matched bets are constantly in flux, so it is worth monitoring it if you wish to use it.

Betfair Politics Zone:
http://politicszone.betfair.com/zone

Betfair Haltemprice and Howden:
http://www.betfair.com/Index.do?mi=21056183&amp-ex=1&amp-rfr=3925suid=3925&amp-bspi=3925

5). Please also use InTrade. I haven&#8217-t worked out how to use this yet.

6). Obviously, it is possible for you to lose your money. If you are not willing to accept that risk, please do not bet. Furthermore, if you believe all gambling to be wrong, or gambling on politics to be wrong, please ignore this advice entirely.

7). If you do bet and Shan Oakes is elected, please consider sending a proportion of your earnings (eg half) to the Green Party. If not, please at least consider sending a proportion to a social or environmental organisation. Please also consider sending me 1% of your earnings at [email protected], as a reward for having come up with the idea. Of course, copyleft ideas cannot be copyrighted, and you are under no obligation whatsoever to send me the 1%, though I would appreciate it enormously.

8). If Shan Oakes is not elected (which looks increasingly unlikely), please do not come after me (at [email protected]) with malice aforethought. Any risks taken are taken on by those betting, and candidates can be unelected as much as elected, just as house prices can (and are) coming down. The housing bubble has burst. So has David Davis&#8217-s so-called &#8216-freedom&#8217- bandwagon, whose wheels didn&#8217-t work after all. Davis supported 28 days without trial and voted for ID cards in 2004, so his &#8216-crusade for liberty&#8217- is, very obviously, naked leadership positioning. Verily the Emperor weareth no clothes. That doesn&#8217-t mean, however, that the voters of H&amp-H are incapable of returning him to rob us off our taxation on his salary, expenses, and second home allowances all over again, and take us into another ill-judged and illegal colonial misadventure such as an invasion of Iran. Hopefully, however, they will see sense and choose not to, and instead reward Shan Oakes&#8217-s positivity by returning her to Westminster with a landslide.

9). To help the flow, please donate as much as you can to the Shan Oakes campaign. You can donate using the online button at http://shanoakes.blogspot.com.

It&#8217-s the ecolonomy, stupid!

ECOLONOMICS INSTITUTE:
http://www.instituteofecolonomics.org/

RAOUL VANEIGEM: CORPSES IN THEIR MOUTHS
http://www.scenewash.org/lobbies/chainthinker/situationist/vaneigem/rel/rel08.html

IAN BROWN: CORPSES IN THEIR MOUTHS:
http://www.youtube.com/watch?v=V4jQf-BeaMA

IAN BROWN: ILLEGAL ATTACKS:
http://www.youtube.com/watch?v=pqfBH1IJkWo

Love from Paddy Hedges
Anti-Hedge Fund Manager (AHFM)