Hi everybody, Joonas here, founder of Edge Alerter. Welcome to this blog, it’s a very spicy topic today. I’m going to go through the top five tipping industry scams going on in the Australian market right now and how you can avoid them. Firstly, if you aren’t familiar, my background is in quant finance. I’ve been professional derivatives trader for a bunch of years. I worked at Bet365 for five years and I’ve been betting successfully for many years as well.
Just before I get started here is a little bit of a market sizing exercise here. In Australia, we’ve got about 5 million active sport and or racing punters. That doesn’t include those who slap the pokies or play Lotto so it’s a meaningful number. You can say it’s about one out of every four of the adult population. Of those only half a percent are long term profitable approximately. In Australia, we’ve got about 150 tipping services and that’s growing really fast. In the last year, it’s gone up about 30% but barriers to entry are super low so you know every man his dog are trying to become a tipster. what’s mind blowing out of all these numbers is the number of Australians that are following these services and based on our research approximately 1,000,000 Australians are following at least one tipping service. It’s 20% of the five million actives are out there looking for assistance. Some might be looking for a bit of entertainment or whatever but ultimately approximately 20% are there looking for an edge through these services.
What sort of services are these people finding when they go and seek tipsters or tipsters find them which is often the case. These are the top 5 and I’ll go through them in a bit more detail in the in the upcoming blog.
- Number one, by far the biggest scam in Australia at the moment is the ‘affiliate tipster’ scam. That will get you to sign up to a bookie through one of their links and they literally get paid on your losses into perpetuity. We will go through that in a second, very spicy. Not many people know about it but it’s going on, on a large scale at the moment.
- Secondly, no proven edge. I mean why would you follow a tipping service, why are you going to invest in a certain fund manager or hedge fund manager over others. You want some proof of edge. Some sort of proof that they can outperform the market but unfortunately a lot of the tipsters out there they just guess essentially. They often pretend to have some sort of a model or data driven approach. It’s easy to fool you, it’s easy to get lead down the garden path by these sorts of buzzwords but that’s a really big one there.
- Thirdly, false claims and ‘Australia’s best’. We will go through that in a sec, but 20% of the tipping services in Australia claim to be ‘Australia’s best’ which is spectacular.
- Fourthly, the assumptions top price. This is actually a huge assumption, I’ll go through in a moment. In the pro trading-world the slippage assumption with your back test is extremely important if you’re assuming top price every time. “I hear zero slippage”, you’re kidding yourself and a lot of tipsters including the high-profile ones do assume zero slippage which is totally irrational.
- Number 5, their fake reviews. It’s easy to get them these days so you must be aware of that.
Number one
Affiliate tipsters, this is by far the worst. They literally get paid to tip losers. Maybe you’ve seen a Facebook ad, free NRL tips, free racing tips, whatever it might be and all they say is it’s free as long as you sign up to a bookie or bookies through one of their links. If you click on the ‘bit.ly’ link, that’s actually a URL short. Makes it look kind of legit but if you sign up through them they’ll, typically the referrer, the tipster here will keep 30% of your future losses.
If you drop 1000 bucks in the next year they’ll keep 300, if you drop 50 thousand in the next five years they literally made 15 thousand from you. So obviously it’s a ridiculous conflict of interest given that they’re also tipping you and they’re profiting from losers. Meaningful numbers, about 300 000 Aussies are following them right now so lookout for them.
Number two
No proven edge. As I mentioned, they’re just guessing. They tend to have some sort of a model or typically a data driven approach so it sounds sexy. They might even drop AI and all sorts of buzzwords in there to really sell you but at the end of the day there’s no proven track record.
You want to see a proven track record or a statistically significant sample. You don’t want to know about last week’s 50 to one winner because it means literally zero. You want something over hundreds and preferably thousands of bets that don’t have a concentration towards just one or two massive winners.
In the professional trading world when you get pitched strategies from teams it’s all about the track record of success and you really drill down into the numbers. How they went last week or yesterday makes no difference. How many tipsters out there have no proven edge? About 450,000 Aussie’s are following them, so very meaningful number.
Number three
False claims. As I mentioned I think just a moment ago, about 20% in Australia claimed to be ‘Australia’s best’ but ultimately just ask for evidence. Don’t take anything at face value because it’s very easy to just make things up.
Number four
Assumption of top price. As I mentioned, this is a real subtle one and it’s easy to fall into the trap of this. You’ll see sometimes with a really top end high profile tipster, they’ll have it hidden in the disclaimers of how we assume top price at the time of the tip. Really that’s a zero-slippage assumption, if you get on the googles, you’ll see Investopedia spits out this definition: “Slippage refers to the difference between expected price of a trade in price at which the trades executed.”
So, if you’re just saying we assume that we got 10 bucks because that’s it was 10 bucks at the time the time of the tip, then you’re assuming zero. In fact, often the first couple of clients might get on at 10, the next couple of clients get on at 9, 8, 7 and so it goes. Really big assumption and a really subtle one so be careful not to fall into the trap of this one.
Just for transparency with Edge Alerter, we assume sports bets price across the board with all our racing tips, all our golf tips and all our other tips. In fact, they tend to be mid-market, maybe slightly better than mid-market but there is almost always the ability to get on higher somewhere else especially on Betfair where you can often get 10-15% better.
Number five
Fake reviews. Just be careful with these, it’s easy to get them these days. You can open up burner accounts, you can open up fake Facebook profiles and just go this is amazing, this is amazing. It’s trivial on this one but just be aware that you can’t really trust reviews necessarily.
Those are the five main ones so how do you avoid them?
Number one, affiliate tipsters.
Be very wary of any sign-up links. UTM, this is just like a unique tag that they have so it’ll say ladbrokes.com/scamtipster or something, it might just have a number so just be aware of sign-up links.
Number two, no proven edge.
How do you work this one? Ask for long term results. To be honest they might have made up those results but if they’ve got some Google sheet or some other way of presenting some data. Maybe follow them for a few weeks. Do some paper trading but ask for results.
The other thing is, know the difference between profit on turnover and ROI which is return on investment. Huge difference, I’ll create a different blog for that one but profit on turnover essentially, if someone has a profit on turnover of 10% and you have one bet on that, you expect it to have $110 on a $100.
If you have another bet then because you’re betting $110 now on that, if it’s gotten expectancy of 10% you’re going to have $121. That’s an ROI of 21% with a POT of 10%. That’s a very big difference so just be aware of the two.
Number three, false claims.
Just do a bit of research. My tip is if you pick up on one lie there are probably a bunch more.
Number four, the assumption of top price.
Look through and see what assumptions they make and then if they are assuming top price, it doesn’t mean it’s a dead service. Try and work out how sensitive the results are to that assumption. If you find that only 5% of the members of the service for example, can get the top price and 95% to getting an average of 20% shorter then the long-term results that they publish are probably wildly unachievable.
Number five, fake reviews.
You can look into how legitimate the reviewers look but to be honest these days it’s easy to get hustled. My main thing there is just be aware that you can’t rely on reviews they may be fake.
Thanks for reading and don’t forget to check out my Youtube channel for the competition where you stand a chance to win $100 a week.
