If suspicious betting is detected then the winnings of the specific accounts in question are frozen until such time as BetFair have had the chance to investigate and determine one way or the other. That has no effect on BetFair’-s ability to settle the market for every other customer. If one trader has placed a bet on a match in good faith, that trader’-s bet wins, and there’-s a subsequent investigation, there is no reason whatsoever to disadvantage that trader by withholding settlement, particularly as a full investigation could take weeks.
That applied for the Hernandez v Brezezicki match.
Via Medemi (109 comments on their thread, and still growing), BetFair (PDF file):
3 August 2007
Integrity in Sports Betting Issues Paper Consultation Co-ordinator Gambling Commission Victoria Square House Victoria Square Birmingham B2 4BP
Dear Sir/Madam,
INTEGRITY IN SPORTS BETTING ISSUES PAPER – BETFAIR RESPONSE
I am writing on behalf of Betfair in response to the Commission’s “Issues” paper of May 2007 but have restricted this response to those questions in the paper on which Betfair has a strong view. The questions from the Commission’s paper are reproduced below in italics, followed by the Betfair response.
• What evidence is there of the incidents giving rise to concern about the integrity of sports betting in Great Britain? • Are additional measures necessary and appropriate to uphold integrity in sports betting in Great Britain and if yes what are they? • What is the detailed breakdown of their cost?
The evidence suggests that incidents giving rise to concern about the integrity of sports betting in Great Britain are few and far between. This is perhaps contrary to the perception created by the media and skewed somewhat by the ‘purge’ that is taking place in British horseracing.
Betfair believes that the internal measures it has in place, together with its formal agreements with sporting regulators are necessary but sufficient to uphold the integrity of betting through the Betfair exchange. The cost of ‘policing’ a sport is not something Betfair is able to comment on, but by way of comparison, Betfair’s integrity department (which covers all sport globally) is 7 strong with an annual budget of around ?250,000.
• Should each type of bet in each sport be risk-assessed? If so, by whom? • Do you consider some types of betting to present a greater risk of the integrity of sport than others? • If you consider some types of bets to be riskier than others, should further measures be taken to regulate them? • Should the Commission require the gambling industry to offer only certain categories of betting opporunities?
A risk assessment of each bet type is something which any betting operator would carry out as a matter of course. A betting exchange is reliant on the confidence of its customers that the markets it offers are fair, so will not want to offer a market which is perceived as open to corruption.
Some types of bet do present a greater risk to the integrity of a sport and they are generally those bets that occur within a sporting event as opposed to the outcome of the event itself.
In these cases it is perhaps the performance of one player that could be influenced for commercial gain. However, the vast majority of these types of bet have historically been offered by the spread betting firms (‘player performance’ indices most obviously) who will not be regulated by the Commission.
It is Betfair’s stance not to offer markets which pose integrity and/or perception concerns for sporting regulators. What might constitute such a market can be established through consultation with the sports and historically Betfair has taken the decision not to offer certain markets after such consultation. Betfair would always advocate a voluntary code of conduct between betting operators and sports governing bodies in this matter.
Restrictions imposed on betting operators in this area by the Commission (or any veto given to the sporting regulators) would obviously put UK licensed operators at a competitive disadvantage against operators not licensed by the Commission. In addition such restrictions would be undermined by the fact that they would not apply to spread betting firms and nor would they apply to betting operators in other EEA States who (pursuant to s.331 of the Act) would be allowed to advertise a betting market into the UK that a UK operator was not allowed to offer.
• Would integrity in sports betting be improved if there was a single source of results for each UK sport and if so, how do you suggest this might operate?
In short, no. The final result of any event is almost always taken from the governing body. The collection, presentation and distribution of sports results is an entire industry in itself. The speed with which results are available has to be balanced by accuracy and Betfair considers the data providers in place now, to be more than adequate. In Betfair’s experience customers do not have concerns with the sources used to settle markets providing the details of those sources are clearly stated within the operator’s rules.
Please let me know if you have any questions or require further clarity in relation to any of the above.
Yours faithfully,
David O’Reilly Legal Counsel
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The UK’-s Gambling Commission is keeping this issue under review. (PDF file)
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Previous blog posts by Chris F. Masse:
Become “friend” with me on Google E-Mail so as to share feed items with me within Google Reader.
Nigel Eccles’ flawed “vision” about HubDub shows that he hasn’t any.
How does InTrade deal with insider trading?
Modern Life
“The Beacon” is an excellent blog published by The Independent Institute.
The John Edwards Non-Affair… is making Memeorandum (twice), again.
Prediction Markets = marketplaces for information trading… and for separating the wheat from the chaff.
BetFair’s bet matching process stopped for one full hour on May 7, 2008, and their P.R. people are over-apologizing for it. They are apologizing for the problem, and for their slow response to affected customers —-good move. They are also giving out 10 bundles of ?1,000 each to 10 affected traders chosen at random —-a move I have mixed feelings with.
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OK. Now, the beef.
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During the same period we’ve continually seen record volumes of bets. For example, the value of bets placed on Betfair last week was greater than for any previous week including Cheltenham or Aintree [which are big British horse racing events].
Lawrence O’-Donnell (a leftist journalist –-but a good one, whom I appreciate):
A senior campaign official and Clinton confidante has told me that there will be a Democratic nominee by June 15. […] Yes, Clinton spokespersons publicly seem to be lost on gravity-free planet Clinton, but privately they know the end is near.
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There’-s a quasi consensus among the political pundits to say that Hillary Clinton will not be the Democratic nominee in November 2008.
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Tim Russert:
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That was Wednesday night. I have just watched NBC Nightly News this Thursday, and the same Tim Russert appeared with 2 white boards full of calculations, which all pointed to Hillary Clinton being toasted.
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My general thoughts about the place of the political prediction markets in this primary election season:
The weight of the political prediction markets in the US political scenery is close to epsilon. I have been monitoring Memeorandum (the Web’-s best political news and opinion aggregator), and it has never featured one piece of political prediction market journalism —-not only that, but none of the popular popular pieces, featured by Memeorandum, has ever mentioned the political prediction markets and their probabilities. The people who breathe politics on a daily basis (the experts and the bloggers) don’-t give the first fig about the prediction markets. They couldn’-t care less.
The prediction market luminaries who predicted that the prediction markets were to become a tool used in political campaigns were dead wrong. I have never read that campaign staffers use actively the political prediction markets. Campaigns use private polls, only.
Like in 2004 (when Howard Dean was crowned, early on), the prediction markets, at the start of the primary season, were incapable of foreseeing who would be each party’-s nominee, ultimately —-Barack Obama and John McCain both came out of the blue. But the polls and the political experts didn’-t see them, too.
Nothing surprising in that. While the idiots emphasize the supposed magical power of the prediction markets (using adjectives such as “-fascinating”- or “-intriguing”- when writing about them), the well informed people know for a fact that they simply aggregate information from the primary, advanced indicators and the opinions expressed by the political experts. Nothing more than that. The prediction markets are incapable of foretelling upsets, by essence.
The last weeks were particularly interesting, in that regard, because the Obama-vs-Clinton polls have been of no interest —-only the views of the political experts who could count in terms of delegates and super-delegates were of interest. The political prediction markets on the Democratic side, these last weeks, have been a reflection of the pundits’- calculations.
Outside of our blog, the only person who has aimed at practicing prediction market journalism is Justin Wolfers. He has understood the concept.
I would have my own concept of prediction market journalism, and I don’-t agree with the way he executes, but that’-s a detail. The main thing is that he has gotten the concept. That’-s what is important, and that’-s what makes all the difference between Justin Wolfers and the HubDub bloggers (for instance). The concept. The concept. The concept. The idea is to center the narrative around the inputs given by the relevant prediction market(s) —-not just gluing artificially news bits and a prediction market chart (or a link to a prediction market).
InTrade, BetFair and NewsFutures are, in my view, the 3 prediction exchanges that matter for prediction market journalism —-as of now.
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Now, the charts of the expired prediction markets —-starting with Pennsylvania (of 2 weeks ago):
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Yesterday’-s North Carolina:
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Yesterday’-s Indiana:
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Sources: InTrade &- BetFair
(Go there for the remaining primaries and caucuses. I don’-t put them on, here, because they don’-t matter anymore.)
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Now, the charts of the prediction markets, going forward:
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2008 US Presidential Election Winner – Individual
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2008 US Presidential Elections
Source: Dynamic, compound prediction market charts from InTrade
Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that traders bring when they agree on prices. Prediction markets are meta forecasting tools that feed on the advanced indicators (i.e., the primary sources of information). Garbage in, garbage out…- Intelligence in, intelligence out…-
A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 6 times out of 10, the favored outcome will occur- and 4 times out of 10, the unfavored outcome will occur.
Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.
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More Info:
– The Best Resources On Prediction Markets = The Best External Web Links + The Best Midas Oracle Posts
– Prediction Market Science
– The Midas Oracle Explainers On Prediction Markets
– All The Midas Oracle Explainers On Prediction Markets
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Previous blog posts by Chris F. Masse:
Prediction Markets
Meet professor Justin Wolfers.
Become “friend” with me on Google E-Mail so as to share feed items with me within Google Reader.
Nigel Eccles’ flawed “vision” about HubDub shows that he hasn’t any.
How does InTrade deal with insider trading?
Modern Life
“The Beacon” is an excellent blog published by The Independent Institute.
The 2008 TopCoder Open @ Las Vegas, Nevada, U.S.A. – 2008-05-11~15
BetFair Corporate – Jobs &- Careers
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Previous blog posts by Chris F. Masse:
A second look at HedgeStreet’s comment to the CFTC about “event markets”
Since YooPick opened their door, Midas Oracle has been getting, daily, 2 or 3 dozens referrals from FaceBook.
US presidential hopeful John McCain hates the Midas Oracle bloggers.
If you have tried to contact Chris Masse thru the Midas Oracle Contact Form, I’m terribly sorry to inform you that your message was not delivered to the recipient.
THE CFTC’s SECRET AGENDA —UNVEILED.
“Over a ten-year period commencing on January 1, 2008, and ending on December 31, 2017, the S & P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses.”
Meet professor Thomas W. Malone (on the right), from the MIT’s Center for Collective Intelligence.
I want to quibble with one of Dave Pennock’-s comments on the CFTC request. Pennock wrote “-It’-s not often that an industry in its infancy cries out for more government oversight.”-
It’-s actually quite common. The term in the economics literature that includes this is regulatory capture. When there’-s a regulatory body specific to a particular industry, it’-s very common for industry to be the major source of expertise in the area, and so for the regulators to be reasonably friendly with the businesses. The businesses can work for regulation that limits entry, and cuts down on competition that reduces profits, and they can work together to ensure that public relations problems are addressed in a cohesive way. But cutting down on competition often means fewer choices for consumers by way of tighter controls on what products are offered.
In our case, the thing I worry about is a narrow ruling that only “-socially valuable”- questions can be asked, and an expensive process for deciding what innovative questions can be posed. It seems likely that some interests will work to ensure that sports and entertainment questions be declared off-limits. The companies that have the strongest interest in fighting that faction are mostly persona non grata in the CFTC’-s eyes, since they currently operate outside the law (TradeSports) or outside the country (BetFair).
The narrower the set of approved questions, or the more expensive the process of getting approval, the less chance that markets will be commercially successful. I think the experiments within companies have indicated (though not proven) that a mix of valuable and popular claims is necessary in order to attract continuing participation.
My biggest worry about fighting for CFTC regulation at this point is that they’-ll approve something narrow, and this won’-t produce enough successes to demonstrate that loosening the restrictions over time would be beneficial. The alternative is to continue to find ways to introduce markets under the radar and demonstrate their value to the academic audience, which could lead to a friendlier hearing in a more distant future after prediction markets have demonstrated social value and little risk of harm.
Of course the other likely outcome is that the novel experiments don’-t happen because of the threat of litigation or regulation. But that seems unlikely given the growth in internal markets within companies. I think there’-s more likelihood of long-term success without regulation than with it, and we’-re better off waiting until the chances that the regulations will provide a broad approval are significantly higher.
BetFair’-s prediction markets, on which country will get the most medals —-it’-s China, but the U.S. is not far behind.
InTrade’-s prediction markets, on the boring boycott thing.
TradeSports is AWOL.
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A proposal: Will the Olympics get derailed by air pollution?
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Previous blog posts by Chris F. Masse:
The CFTC is going to close the comments in 11 days. We have 11 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).
The definitive proof that FOR-PROFIT prediction exchanges (like BetFair and InTrade) are the best organizers of socially valuable prediction markets (like those on global warming and climate change).
Fairness Doctrine prediction markets
2 MILLION TRADES LATER: Inkling’s play-money prediction markets are accurate —too.
Web Forums on Prediction Markets
Jason Ruspini will answer SOME of these CFTC questions. — 12 days left, Jason.
QUIZZ OF THE DAY: Which blog is the most open minded?
How did you forget yadda yadda yadda. [ Hilarious. ]
Nice list, roughly makes sense but lots to disagree with (as you would expect). However one clear mistake is BetFair. They should be valued at $3 billion. They just did a recapitalisation which distributed 10% of the company in cash to shareholders (I got the check this morning). It was at a valuation of ?1.5 billion, so unless you are even more bearish on the exchange rate that works out at $3 billion.
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Henry Blodget:
Thanks for the info on Betfair–-that’-s exactly the sort of concrete detail we’-re especially looking for. We’-ll see if we can confirm, and, if so, the valuation will drop to $3 billion.
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And there’-s another interesting comment, on the other page:
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Insider:
why the gratuitous —- and painfully ignorant – -swipes at the USA?
can’-t you do your job without the silly —- and, again, factually incorrect —- morals lectureds and editorializing?
actually the U.K. is one of the few countries in the world where online gambling is essentially legal (though the U.K. still hasn’-t sorted out all the laws it is creating to govern online betting)
many EU countries are literally at each others throats about how/when to tax internet gambling (principally because state-run lotteries are specifically carved out of the E.U. free trade agreements)
japan, australia and china have sever and horrible and harsh punishments for internet gambling
of course, pretty much all of the islamic world puts people to death or dismemberment for breaking qu’-ran-ic law – and gambling is totally and utterly forbidden under the qu’-ran
it is you who are “-of arbitrary morals”-. stick to blogging.
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Insider’-s comment sounds informed, but he/she should have avoided the nasty last line.
“-Stick to blogging”- is an insult I was served with, recently, (by a UK-based financial trader), so I can relate. But that’-s never helpful. Educate that blogger, instead. You’-ll get a better ROI, believe me.
The navigation is easy —-see the menu on the left-side sidebar.
I encountered only one 404.
They are using Movable Type, and not WordPress, alas.
The list of posts is comprehensive.
They could have integrated their events with Google Calendar —-just like the BetFair FireFox add-on does.
The only bit of criticism I’-d make is that their betting “-knowledge”-, which they want to “-educate”- their traders with, is not based on economic science. I think the next revolution in betting is science-based betting knowledge and science-based betting tips. That’-ll happen outside of BetFair, I guess.
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Both InTrade and NewsFutures are in the process of overhauling their website. We’-ll see within the next weeks what they have to offer.
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