Could it be, that if approached from the right perspective, the sports betting industry could offer an undiscovered investment opportunity as opposed to just a platform for gamblers? In the light of personal experience and statistical and mathematical modeling, I attempt to answer some pressing questions such as:
- Can a satisfactory ROI be achieved from following a tipster account?
- What are the risks involved when investing in a tipster account?
The Three Main Characters
Punter: A punter is a person who places monetary bets usually on the outcome of a sporting event
Bookmaker: A bookmaker is an organization or a person that accepts and pays off bets on sporting and other events at agreed-upon odds.
Tipster: A tipster is someone who regularly provides information on the likely outcomes of sporting events on internet sites or special betting places.
Tipsters help punters identify hidden value in sports betting markets. What does it mean if a market has “value”? A tipster deems a market to have value when the implied odds of the market is either higher or lower than the odds of the market as determined by the tipster.
Let’s look at an example: There is a new bookie in town who is first to release a market on the Crusaders vs Blues. They offer odds of 1.80 in favor of the Crusaders beating the Blues. That is an implied probability of _1/1.80*100 = 55.5%. _A tipster notices this market and his first impression is that this market offers value. This impression is followed up by rigorous research into past matches, current form, starting line-ups, weather forecasts, match referees, etc. In this example, the research confirmed the tipster’s first impression and indicated that the Crusaders are about 70% favorites to win the match instead of 55.5%. If the tipster is right then there certainly is value in taking the bet on the Crusaders of _1.80. _According to the tipster, the correct odds should be closer to 1.43.
The best tipsters are usually dedicated to a certain sport and spend hours upon hours every week researching markets to identify the markets that offer the most value before making their tips available to their subscribers. Punters use these tipster accounts to attempt to gain an edge on the bookmakers in the sports betting industry.
Think of tipster accounts to punters as etoro is to novice traders. In a nutshell, casual punters would rather pay a monthly fee to mirror a reputable tipster to research which sports betting market holds the best value (if any) than doing the hard miles themselves. Similarly, etoro allows the novice trader to automatically copy the leading traders.
The Danger of Greed and Assumption
This all sounded easy to me. When I got involved in sports betting I scoured Twitter in search of tipster accounts. Assumption and my eagerness to start earning money from sports betting assured me that mirroring the tipsters with the most followers had to be profitable in the long run. To my surprise I was wrong. I learned a hard lesson that without proper due diligence this was a sure shot way to donate money to the bookies.
Math Prevailed
How does one do proper due diligence on a tipster? It quickly became apparent that the two main variables that determine the viability of a tipster account are the accuracy and **average odds **of their tips. Let’s explore these two concepts in more detail. Tip accuracy is fairly self-explanatory: it is the number of successful tips (tips which result in a payout from the bookmaker) divided by the total number of tips provided by the tipster. This can be displayed as a decimal or a percentage.
Odds are often presented in form of decimal odds and represent how much the bookmaker will pay the punter in the event of a successful pick.
Let’s look at an example: A bookmaker might offer odds of 1.80 in favor of the Blues to beat the Reds. This means that if a punter places a $100 bet on this market, then they will win a total payout of $180 (which includes their stake) for an ROI of 80% in the event of a successful pick.
**Average odds **are the average of all the market odds for which the tipsters have provided a tip.
#sports-betting #data-science #analytics #investing #statistics #data analytic
