Hi everyone, Joonas here, the founder of Edge Alerter. In this blog post I’m going to go through a spicy topic which is, how the book is profile accounts and how you can stay under the radar.
Just what can you expect in this article
We go through some key stats about the bookies with respect to profiling accounts. I’m going to go through the maths of what the bookies are essentially looking for. I’m going to talk about how the buckets are in terms of profiling and what happens if you’re in the undesirable buckets.
I’m going to go through the key things that they look for when profiling customers and how you can basically get profiled into the right bucket so you can maximize the lifetime value vary accounts which is essentially what it’s all about.
There’s also going to be a competition. We had this last week as well. In the video it was very popular, so the best question in the comments section in the YouTube video will win $100. We’ll draw that next week and the whole idea there is to get a lot of questions going. Many people who watch the video are kind of thinking similar things and it gets a bit of a conversation going. We respond to every comment and the best question will get 100 bucks next week.
Those unfamiliar, I have a background in quant finance. I’ve been a professional derivatives trader for many years. I did a decent stint at Bet365 as a bookie and the head of in-play golf for the Asian time zone and I’ve been betting for many years successfully.
The key facts about bookies
Firstly, winners versus losers. 99.5% of punters lose in the long run. It’s pretty much standard across the board, across the globe, that those stats are very stable. It’s actually very similar in betting as it is in CFB trading or other products. It’s literally one in 200 who are profitable long term. In Australia, the lifetime value of a customer who opens up an account with a betting company is 1200 bucks. What that means is that when a new customer opens up an account the bookies by default have a starting point of, we’re probably going to make $1200 out of this customer.
The key risks that the bookies face?
There are a few things that a book maker risks and some issues that they face as well. There’s a lot of banking fraud unfortunately in the industry. People will basically deposit money and then they just tell the bookies that that’s not them and that gets charged back and whatever. There are match fixing issues in the betting industry as well. It’s always a bit of a tower risk for the bookies.
Another risk is a sharp account, so by sharp I mean those who are basically picking off the bookies on mis-pricings and it will basically be able to price more accurately than the bookies so the risk there is for the bookies, if there are people who are able to 1; find mispriced betting markets and 2; staying under the radar because if they don’t stay under the radar the bookies can really ban accounts. They can do all sorts of other things.
The final thing which is very relevant to the Edge Alerter members and Edge Alerter system is promo abusers who stay under the radar. Those who milk the promos for months and years but the bookies look at him and go, oh this this guy or this girl, they look like they’re going to be a long-term loser however they’re able to follow a system, stay under the radar and milk the promos and this is really, this last point is what we’re all about actually.
What are they looking for essentially?
I mean you could even say that this is just a general principle of business. It’s all about present value of expected future cash flows and this is how the bookies look at every customer who opens up an account. They’re going OK, how much do we expect to make from this person. Directly, as in that person losing money or winning money, as well as through referral. Maybe they’re referring good customers, maybe they’re “losing” customers or maybe they’re referring bad customers who are going to take money from the bookies.
A key thing here to know then is, when you open up an account the bookies are like OK, Joe Blow opens up an account, what sort of profile do we have on this Joe Blow here. Essentially you could draw it down into four buckets.
The first bucket
Someone who very clearly looks like a mud punter and the bookies are like they don’t look intelligent at all, we expect to make truckloads from this customer so just let them bet whatever they like, including all promos, no issues, all good, have a crack, you don’t even have to look at them.
The second bucket
He’s moving down the continuum, so bucket two is like, OK they’re showing some indications of maybe being a little bit sharp here and there but they’re mostly a mug, maybe just check their account every month or so.
The third bucket
This is where it starts getting a bit concerning. The bookies are a little bit worried, they’re showing some continuous sharp tendencies. We don’t really like that and let’s promo ban these guys/this account immediately. Also, let’s take it a step further. Whenever they propose to place a bet, let’s just send that off to a manual referral and what that means is the bookies have the bets not placed until someone had manually at that betting agency had a look at that bet and just confirm that it’s good to go. And if not, they can just knock it back and go sorry mate, we don’t want to take your bet. Now it starts getting a bit worrying for the punter.
The fourth bucket
Bookies don’t want this account at all. We have to abide by the law so we’re going to let them bet on the minimum bet laws. No bet, no promos for you and we hate your account so much that we’re going to restrict you to 1% of the betting limits on everything else. Instead of being able to bet to win 500 or 5000 they can bet between like 5 bucks or 50 bucks depending on the markets.
What happens if you’re find yourself in those undesirable profiling buckets like buckets three and four, especially four.
As I mentioned, promo banned, they can hang your bets so when you propose to place a bet not only does it go to a manual referral but it can just sit there spinning. Maybe it’s an in-play bet, they can let the game play out a little bit and see if the bet moves against the punter at which point they let you on or if it moves in favor of the punter they knock you back.
They can move the prices. You try and bet on 3 bucks, they let it hang there and then they go, it’s 270 now and you’re like yeah, I’ll still take 270. No, its 240 now and it’s just a race to the bottom. They can reject you. Minimum bet laws on racing do solve this a little bit but there’s no true regulator over that either so the bookies are getting away with murder.
The final thing there is very interesting actually, so some of the smaller and medium sort of T2/T3 bookies, a lot of them do hedge flows. When they get sharp bets they can actually front run you which means they’ll over hedge your bet or even hedge your bet but not let you on. It’s all very spicy stuff to be honest. One other point here is some of you might be familiar with CFD trading, so FX or other traditional markets opportunities, in fact there are CFD’s on crypto now as well. Exactly the same thing, they’re just trying to work out if you have any sharp tendencies, if you fall in to that mug category, the categories one and two then they won’t even hedge your trades. Which are bets you could argue. If you start looking half sharp then they’ll hedge and potentially even over hedge.
How do they estimate your lifetime value?
There are two key things. One, is based on betting patterns especially early on when you’ve opened up an account they’re really looking at you. They’re like OK, Joe Blows opened up an account let’s keep a close eye on this guy and work out what he’s all about.
The second thing is any links to existing customers because if you if they can link you to an existing customer they can basically apply the profile of those customers that you linked to, to you as a bit of a default. They may go, hang on a minute OK, maybe they’re likely to be the same. Betting patterns, so red flags. If you’re always taking top price they don’t like, it’s just the fact. You’re basically picking them off. You might be picking them off on movers, you might have some odds comparison software through whatever provider but if you’re always taking top price it’s just not a good look, they don’t like that. If you’ve got a high promo to non-promo turnover ratio, that’s an obvious one.If all you do is bet on promos as an extreme then you can see why they wouldn’t like that.
If you’re arbitraging, so if you’re always just betting something where Betfair is shorter it’s not a good look. They don’t look at you and go this guy is likely to lose in the long run in fact the opposite. If you’re betting on really low-level sport or racing.
If you bet on third division Russian volleyball on a Tuesday morning it just looks a bit weird as opposed to betting on NBA for example, 5 minutes before the game starts. Betting early in racing as well, if you’re betting like on a Tuesday for a Saturday race it’s kind of like, I wonder if they know something whereas if you’re betting in that last minute or two minutes then that’s when 80% of the bets are and the bookies are the most confident in the price.
See green flags with respect to betting patterns.
If you’re betting into mid-market odds, so if you bring up some odds comparison software and for example, a golfer is between $8 and $12 across the board with a lot of bookies and a punter has a bet at 10 bucks, then they will look at that and go well we’re 10 bucks you know some other bookies 8 bucks, 365 might be 12, they tend to be the highest, that looks like a reasonable bet no issue.
Betting into top tier sports is, as I mentioned, these are kind of the inverse of one another really but if you’re getting into top tier sports and codes, the bookies are basically just banking 5-7% percent in their sort of discounted cash flow model going forward. If you’re betting 50/50% on non-promos is also a good thing, it’s like you’re betting on non-promos so therefore you’re going to dump plenty over there and good luck too. You can have a play around at the promo basket there and they know full well that they can cut you at any time so if it’s over 50% on non-promo they’re usually quite happy and if you’re betting late in racing then that usually makes them confident that you’re going to lose long term.
The second thing is, links to existing customers. When you open an account, as I mentioned in the point number one, that would be your initial betting patterns especially but the other thing is they can quickly go OK what’s their address, what’s their IP address, what are their bank details, where exactly are they betting and what are their betting patterns.They can run some models that work out if any of these key five items here match up with any of their existing customers and if they do they can drill down.
Long story short, if you’re linked to anyone who has previously been thrown into that bucket 3 or bucket 4 which is sharp and the bookies don’t like then you by default have that as a starting position and you’re pretty likely to get promo band straight away.
Then the question is, so how do you get into bucket one which is that mud bucket of let them on with a full access to promos, we don’t have to worry about these customers.
Number one, maintaining 50/50 in terms of promo versus non-promo. Ideally more early on because that’s when they’re really keeping a close eye on you in that first month, first 30 bets.
Number two, percentage of promos taken, so SportsBet is a good example, they might do 28 racing promos on a Saturday, they might do like 12 on a Wednesday, so that’s 40, so let’s just say they’ve got 40 racing promotions and they might do 20 sport promotions then they’ve got 60 in a week. If you’re taking 55 out of the 60, it’s not a good look. Take less than 50% of whatever any bookie offers you and it’s pretty easy to do these days and make truckloads of money because there are so many bookies offering these promos. Just don’t be too greedy with any one bookie at one time.
Number three, harmless looking betting flows. So, mid-market and high-level sport. That’s where the book is a basically, in their minds they’re going, if you’re getting into an NBA line at $1.91, they’re just like we just printed 5%, thanks for that. It’s very easy way to look harmless.
Thanks for reading and don’t forget to check out my Youtube channel for the competition where you stand a chance to win $100.