Sports Trading Explained

Sports Trading Explained

Sports Trading Explained
Autor betsonly 10 Jun 2019

An explanation of the phenomenon of Sports Trading, its links and comparisons to Stock Trading and why it is a suitable strategy for novices.

Sports Trading is a relatively new phenomenon in sports betting that can trace its origins back to the introduction on the market around the turn of the millennium of the world’s first betting exchanges.

A betting exchange, in simple terms, is an online marketplace where customers can bet on the outcome of sporting events. They operate in similar ways to bookmakers, but with a few crucial differences. With a traditional bookmaker – whether online or “bricks and mortar” – a punter is betting against the bookmaker while, with an exchange, they are betting against other players on the market. Secondly, with a bookmaker, you are almost always backing something to happen – betting on one particular outcome or another. The bookmaker, for their part, is effectively laying the bet, betting against a punter that the outcome will not occur. However, with a betting exchange a player can both back and lay a bet at the same time.

A bookmaker acts as the market maker, sets the odds, and charges bettors for this service. An exchange, however, acts like an information warehouse, collating data from thousands of football games, tennis matches, and horse races, and then displaying the available odds accordingly. The also effectively police the market, making sure that winners get paid, and losers pay-up. For all this they charge a commission – usually around 5% - on winning bets that is usually substantial less than bookmakers charge through marked-up odds.

Sports Trading is analogous to stock trading; with stocks a winning strategy is usually to buy low and sell high, which translates to lay low and back high on betting exchanges. It is comparable also to arbitrage trading in financial markets where dealers are looking to exploit differences between predicted future foreign exchange and interest rates in order to make money.

It is not guaranteed to always work – there may not always be a market to be made, or, the gains on offer are not sufficient to outweigh the cost and time involved in placing the bet. But, when it does come off, it can be lucrative for the trader.

An example might help illustrate this. Imagine that Novak Djokovic is playing Kevin Anderson on the ATP Tour, and you want to bet on Over/Under 2.5 sets. Before the start of the match, three different market makers may be showing the same odds for over 2.5 sets. However, as the matches progresses, and Anderson wins the first set, all three bookmakers will increase the odds for over 2.5 sets, but not necessarily at the same rate. Market A might offer 2.15; Market B; 2.10; and Market C 2.05.

If you are confident that Djokovic will take the match to a third set, place a bet of €100 on each; depending on the outcome you will win, alternatively, € 15, €10, or €5.

Sports Traders will go one step further, however, and effectively lay the bet by betting on under 2.5 sets as well, again exploiting the small differences offered by separate market makers, to try and ensure that a profit is earned, irrespective of whether the match lasts two or three sets.

It is not a full-proof strategy. No betting is guaranteed to always make a profit. It is also not for novices, who are still learning the detailed nuances or sports betting, or those who are poor at maths. Whilst sophisticated software programs are available to help with the decision-making, Sports Traders need to be good at mental arithmetic, and prepared to make decisions instantly, as opportunities present themselves.