Your March Madness office pool is like the Charles Schwab of sports betting. Beyond those hastily chosen brackets, there’s an entire cottage industry of sports betting that’s increasingly resembling Wall Street.
In 2016, total sports wagers in Nevada were $4.5 billion, according to the Nevada Gaming Control Board. With that much at stake, gamblers are turning to more sophisticated tools that involve complex data analysis to achieve better odds, real-time wagering during games, fund managers who pool bets and risk management practices. The result is something akin to day trading. Here’s how:
1. Robot oracle
Gamblers can find a plethora of sources online guiding them to the best sports picks. IntelligentBettingTips.com is one service that provides suggestions based on a prediction model similar to “collective intelligence” used by the big banks. Collective intelligence aims to gather opinions from a group of people, hoping it will lead to a consensus that’s better than a single person’s guess.
IBT provides predictions, picks and tips for college, professional and international leagues by combining input from industry experts for each sport combined with sentiment data extracted from social media. “We then take these data sources and use our own algorithms to run various scenarios to find profitable trends and patterns,” said Kael Mansfield, chief executive officer at IBT. Currently, the site has more than 11,000 paying members, Mansfield said.
2. High-frequency betting
When you think of sports betting, you probably envision people making calls before the start of a particular game or tournament. But bets made during live games are on the rise: In 2016, 20 percent of all bets at William Hill Plc’s Nevada locations were made “in-play,” marking a 33 percent increase from the previous year, according to Michael Grodsky, the company’s vice president of marketing.
That’s in turn driving the demand for real-time data. The information can be disseminated faster than a television broadcast, which comes in with a multi-second transmission delay. “Ultra-fast and accurate data provide sophisticated gamblers with a material advantage over someone operating on a five to 10-second delay via a television feed,” said Ryan Rodenberg, an associate professor of forensic sports law analytics at Florida State University. “The edge is most notable in live, in-game wagering where odds and prices can fluctuate wildly upon the occurrence of a particularly important event like a late-game three pointer in basketball or key third-down conversion in American football.”
The practice is called “courtsiding,” and the advantage real-time data give to bettors can be compared with a trader acting on news of an acquisition seconds before his or her competitors. Courtsiding can give a gambler an edge on even the bookmaker.
3. Fun(d) managers
Some professional bettors have started to take on the role of fund manager, pooling together money from backers looking for better returns. Legalized in 2015, entity betting allows a person or group of people to set up a fund in Nevada offering sports betting as an investment opportunity.
Contrarian Investments LLC is one example. Owner Chris Connelly said he has both domestic and foreign investors. Similar to the common Wall Street method of looking for arbitrage in overvalued or undervalued stocks, Connelly said he uses a computer model to look for overvalued gambling spreads and bets against them. “Instead of investing in the stock market and taking a certain stock, I’m investing on sports spreads of athletic teams,” Connelly said. “So I focus on football and basketball, college and pro.”
Contrarian Investments LLC fund is under $500,000, but Connelly said he anticipates breaking the $1 million mark by next football season. He’ll have plenty of competition as the practice becomes more popular.
A growing and increasingly complicated market can foster cheating. Many bookies are relying on technology and consultants to try to ensure a fair market.
While not quite the Securities and Exchange Commission, there are businesses that monitor for fraud in gambling. Genius Sports Group Ltd. works with sports leagues and gambling operators around the world, tracking suspicious activity in the international betting markets. Genius Sports looks at reams of data for deviations from normal industry movements by monitoring hundreds of sportsbooks and tracking social media, said Christopher Dougan, a company spokesman.
“We offer the same system as a high-tech algorithm and reporting systems for sports around the world, including English Premier League, to track any unusual activity in the international betting markets that might indicate something unusual happening,” he said.
This article originally published at Bloomberg