The world of cutting-edge sports betting is one usually carried out behind closed doors. It’s an intensely private sphere where its specialists pore over data to keep ahead of market changes developing wildly differing and carefully guarded strategies. But the Matchbook Traders Conference threw open the door to this enigmatic world and offered a glimpse of the future.
After a two year break, the much-awaited Matchbook Traders Conference returned in style with a day featuring everything from the fate of the global economy to expert views on sports data-modelling and political trading to why Wembley stadium once had hundreds of people waving inflatable bananas. It was a day of contrasts and insights as 300 of the sharpest minds in gambling gathered together in the heart of London’s financial district.
Everywhere you looked there was a big name or a big player from the gambling world and everyone was in the mood to talk. It was the type of event where if you threw a brick you’d hit someone who’d forgotten more about gambling than you’ve ever known. If you missed it, then you missed out on a rare chance to learn from some of the best in the game.
Insights and Models
What’s unique about the Traders Conference was the breadth and depth of the speaker line-up. Rather than navel-gazing discussions around the minutiae of gambling the event line-up was all about looking up and out at the wider world and how it relates to the modern trading environment.
In that vein first up was leading economist Douglas McWilliams who rattled through the global economic outlook. In summary: China could drag us all into a recession, Brexit will be painful at first but will work in the long run and gambling and insurance are due to merge. The latter point is a fascinating viewpoint with McWilliams even suggesting we may see insurance firms offering more betting style products in the future as the gambling world becomes ever more mainstream.
Another area that is rapidly changing from a niche interest to mainstream is sports data and modelling and next up was Luigi Colombo who hit the audience with the first of many big questions of the day: how should we adjust the classic sports models for the modern age. As the head of the quantitative team at sports data specialists Smartodds he is one of the leading experts on building models and the camera phones were out in force as he took apart the Dixon and Coles model for predicting match results and put it back together again.
Dixon and Coles was first revealed in 1997 and has become the benchmark for modelling probabilities in football but through a few slides and some elegant explanations, Luigi explained how adjusting for opponents is just one way of improving its outcomes. He used the example of the early season form of Everton and Leicester and added additional variables to better represent the relative quality of their opponents in the opening games of the season.
The result? It seems Craig Shakespeare was pretty unfortunate to get the boot with a wide discrepancy between their expected performance using the empirical and adjusted models. And this was at the heart of Colombo’s talk, that defining and correctly utilising good data can make a huge difference to the accuracy of your betting decisions. Although perhaps the most interesting point he made was broader when he appeared to suggest data from the last season suggests the football markets are maybe getting less efficient (or more unpredictable if you prefer). And where there is inefficiency there is opportunity.
Living in the City
The Matchbook Traders Conference took place just around the corner from the City of London and the parallels between the sports trading and financial worlds were clear from the outset. Despite its scale, the world of betting and trading exists in the shadows of its big City brother but the core themes of using data, discipline, hard-earned judgment and using technology to stay ahead were consistent for both. And nobody summed this up better than “Flash Boy” Ronan Ryan.
In a special session that was closed to the media the man who helped lead a revolution on the US stock exchanges shared his war stories from a time when high-frequency trading dramatically changed how Wall Street operated. He talked of financial trading firms spending increasingly ridiculous amounts of cash just to be a few centimeters closer to the trading servers as speed became everything. How the race to gain a few less milliseconds on each trade became a competition fought in microseconds and even smaller time increments.
Speed is now all in financial trading and technology has changed the way everyone operates. The parallels with sports trading couldn’t be more obvious and the warning signs were there for everyone who was willing to listen. Ryan’s core point was he is now trying to create a more level playing field and fairer way of trading through his own exchange and once again it was an indirect lesson the betting exchange sector would be wise to learn.
In a similar but more directly related tone the previous speaker Charles McGarraugh, CEO of Stratagem, spoke about the changing nature of the sports betting markets themselves and how they are creating a more informed bettor. As a transplant from the financial world, spending 16 years at Goldman Sachs, he explained how technology is having a major impact on the gambling world. As the head of tech-led sports trading firm that uses robots using to watch and analyse football games he explained why the world of sports trading is changing fast.
His central point was margin compression, centralised liquidity in the markets and the drive by sports media to give more data to its customers would create more information-rich differentiated betting products in future. In theory, this could lead not just to a new type of in-play trading driven by AI and machine learning but also to sports betting becoming its own asset class that the average punter can invest in.
The business of politics
But the event wasn’t about being perpetually blinded by science and there was also plenty for the average punter to take away not least from the NFL and Trading panel discussions. Although perhaps the most useful information came from US political analyst and writer Harry Enten. As one of the leading figures from data-driven political analysis firm fivethirtyeight he spoke about the current political betting landscape and the huge errors and corresponding opportunities that exist in these markets.
In particular, Enten looked at the current markets around President Trump seeing out his first term and questioned the odds that he was a 50% chance to do so. Unless he quits then removing him by due process is an incredibly difficult process Enten said and the prices seemed wildly off true probability. But he added this remains an exciting and challenging time for political betting and analysis with old models dying and new ones taking shape and he predicted a lot of value to come from upcoming 2018 and 2020 elections in the US. To sum up: people don’t understand probability and that creates opportunities in the market. A more classic summation of what we all look for in gambling it’s harder to find.
And one man who knows all about finding and exploiting these sort of edges is Harry Findlay, who was the perfect way to close out the day. Findlay is a gambler from another era. One where thousands of pounds changed hands on greyhound racing at Wembley and where information was scare and edges could sometimes be huge. His stories from a lifetime in gambling had the audience of hardened gambling cynics in fits of laughter as he closed out the day with some stories that will mostly have to remain off the record.
One tale was of a greyhound called Chiquita Banana who Findlay owned and who through a series of increasingly improbable and profitable events ended up winning him a load of cash. The highlight was a packed Wembley stadium with hundreds of fans waving inflatable bananas cheering his dog on to victory. It was a different time and Findlay admits it’s not going to come back although he maintains greyhound racing is still the best sport to create “judges”. Perhaps none will ever quite be at Harry’s level though.
But that’s really what the Conference was all about. Learning from the best in the game and getting a glimpse into what it really takes to make it work in a world where everything is impermanent and change is the only constant. There is no one perfect strategy and no one way to win and that’s probably why sports trading and betting remains such an entertaining and involving game. And why events like this are such a vital part of it. In a disparate and private gambling world, everyone benefits when it comes together, even if only for a day.