NEW YORK – At Jay-Z’s 40/40 Club, just across the street from Madison Square Park in the heart of the Flatiron District in New York, the golden bottles of Armand de Brignac champagne stretch from roughly eye level all the way up to what looks to be about a 60-foot-high ceiling.
The club’s décor, and its atmosphere of slightly ostentatious opulence, was a somehow fitting host for the sports betting masterclass on Tuesday that functioned as a sort of soft opening for this year’s Betting on Sports America conference.
Presented by Sportsbook Training Services founder Jonathan Smith and RedZone Senior Odds Compiler Anthony Gray, the class offered a brief history of oddsmaking, an overview of how European oddsmakers determine their odds and how business-to-business operators like BetFair and BetRadar set their lines and offer the myriad betting options, many of them in-play, that they do.
“Why wasn’t (setting odds) difficult then?” Smith asked in his introduction, citing the days of “legendary Las Vegas odds compilers and… less legendary British odds compilers.” It wasn’t difficult, then, he said, because there was relatively little product – a weekly NFL game, the occasional basketball game, that sort of thing.
And, he emphasized, there was no in-play or exchange betting at the time, a theme that was returned to regularly during the presentation. Now, with the explosion of new sports to bet on, and new ways to bet on them, this masterclass was a way of “telling the truth about what people are doing in terms of odds provision.”
Third-party oddsmakers, in the analogy presented, basically take feeds from “every other bookmaker out there,” put them into their own algorithmic models, strip away the outliers, and present those odds as their own.
“It’s like buying a ready-meal from the supermarket and giving it to your wife and saying, ‘Look, I’ve made you dinner,’” Smith said.
The benefit of B2B oddsmakers, he said, are in the amount of volume they can handle in a short time period and the amount of markets that they can make off of very few variables. In baseball, for example, all that you really need to know is how many runs each team is expected to score.
Once you know those two variables – however you get them, through self-generated data or through “nicking it” off of someone else – you can create dozens of markets.
He went on to display, on the HD screens hanging over the audience, software that allows a B2B company to produce their own markets based solely on how many goals each football team – in this case, Manchester United and Manchester City – would score.
The B2B companies offer some further significant advantages: live streaming of sports, editorial content to keep the customer engaged, automated risk-adjustment prices and analytics to try and weed the profitable from the unprofitable. The more information you can add to the mix, the more the price becomes efficient, and nowhere is this better exhibited than in Southeast Asia.
Smith called the Asian football market “an absolute monster,” saying that the legal market is in the multiple billions and the illegal market is “probably into the trillions” and that most of it is on soccer betting.
“So when the market moves to Asia, there’s a more decentralized, diverse opinion that will help the market … The result is that you are going to get true probability.”
The shame, he said, is that the craftsman oddsmakers have largely been superseded by the sort of assembly-line model necessary to feed these new markets.
Gray added that, with the use of B2B providers, there tends not to be much variance within lines; providers generally offer very similar odds, which doesn’t allow a betting provider to stand out from the field.
In-play betting, which is in its infancy in the US, dominated the second part of the presentation. Smith said that between 80 and 85 percent of the current UK sports betting market comes from in-play and called that a “conservative estimate.” This is why, he said, operators find themselves using B2B providers – they provide quick-hit markets and allow operators to keep the customer engaged.
“Have a bet every five minutes. Have a bet every minute. How many points are there going to be in the next quarter of the basketball game? You can dilute it into how many points are there going to be in the next two or three minutes… All that technology is keeping the customer engaged on your site and losing his money. Which is, of course, what you want.”
That said, Smith said, you still need people who know what they’re doing.
Two subsets of in-play that are predominant in Europe but are, so far, fairly unknown in the US are Cashout and Betbuilder. Cashout allows a customer to take their profit – or cut their loss – before the game or match is over. It, in effect, allows the customer to cash out or in at will. Betbuilder allows the customer to construct and place his or her own prop bets – for example, selecting how many points a football team will score, how many penalties they will accrue, and how many touchdowns the quarterback will throw.
Following the break, Smith ran an ersatz oddsmaking workshop in which the audience was asked to predict the granular outcome of the upcoming Man U/Man City match – odds of goals scored for each side, number of corners, and odds of the league’s leading scorer scoring a goal. The prize was to be a lifetime subscription to his website. It’s uncertain whether anyone won the prize.