Let's understand mutual betting together

Wednesday, 06 February, Year 5 d.Tr. | Author: Mircea Popescu

BitBet uses what's well known and well loved in most of the world (literally, headcount majority) as parimutuel, mutual betting. A small but vocal minority of mostly English speaking people is so well used to being fleeced by an inferior system known as line betting that they're actually clamoring for this mistreatment. Let's then take the time and put things on some sort of sane footing.

Any binary event (something that may either happen or not happen) has a probability profile (the odds of it happening), or if you prefer a risk factor (the odds of it not happening). The probability and the risk added together always equal 1, because it either happens or doesn't happen, by definition.

In line betting, someone actively sells this binary event betting. In order to justify the effort, they take a margin. If the odds of it happening are 50% (which means the odds of it not happening are also 50%), they'll sell you either side as 60% or something. That 10% difference between what you buy and what's the case adds up into their bankroll as profit. Thus, it makes absolutely zero difference whether you correctly predict the chances as being 55%, 51%, 50.05% or 50.0001%. No matter how accurate (close to the 50% reality) your prediction is, you still have to buy the bullshit 60% line the bookie (seller) is willing to sell. The spread is not fixed by your ability to correctly guess, it is fixed by whatever the bookie wants to take as profit. You're stuck.

In mutual betting, nobody sells you anything. You can buy in at whatever odds you wish. If the bet is currently at 60% and you think reality is 55%, you can put money towards the side up to either as much as you're willing to spend or as much as it takes to bring it to 55%, whichever is lower. This will net you more than you buying at 60% on a bookie's line bet.

But since the bet is open still what if, I hear you say, what if someone comes and pushes it even further down, to maybe 40% ?! My Bitcoin is now lost! I wanted in at 60% not at 40%, it's not worth it at 40%. This is not actually true : somebody is giving money away. All you have to do is take the other side, and push it back to the 55% (or as high as your capital allows, whichever comes sooner). This is in effect a hedge, and if you end up doing it you are in the brilliant position of making sure money no matter which way the bet ends. In mutual betting you have the magnificent chance of actually being the house. You can get vig, by yourself, for yourself, with no setup costs, no hassle and no trouble. All you need is to get lucky enough for someone to bounce the bet across the line once you've bet one way (and have the capital, of course).

Mutual betting isn't the "buy a ticker and forget about it" sort of thing that leaves chumps with steady losses resulting from a -EV while bookies get the bread to hookers and blow. Mutual betting isn't about imaginary spreads, completely pulled out of someone's ass vigs and fixed odds and spreads. Mutual betting is all about getting the right odds, as a collective, market effort. You don't fire and forget, you watch your bet, you adjust your wagers as often as need be. Mutual betting is probably a great place to write a bot.

Learn to love it. Mutual betting is the way to bet, if you don't want to be a chump.

Any questions ?

Category: Trilenciclopedia
Comments feed : RSS 2.0. Leave your own comment below, or send a trackback.

8 Responses

  1. BldSwtTrs`s avatar
    Monday, 24 March 2014

    That's assuming an infinite bankroll.

    In real life you have to manage your financial exposure at one event. So you end up being screwed by the moving odds.

  2. Mircea Popescu`s avatar
    Mircea Popescu 
    Tuesday, 25 March 2014

    In general you can evaluate what the pool will end up being, with a little experience or a little time spent doing research. There's a thousand or so bets closed already, and you can see sports do 1-10 BTC tops, mining stuff can go as high as 1-2k etc.

  1. [...] events in this manner as well.  ↩I had bets on both sides, for reasons related to the nature of parimutuel betting, and though I realized a net loss have lost much more betting on things I care much less about [...]

  2. [...] again this was their last communication in weeks, plural.  ↩This is in stark contrast to mutual betting as exemplified by BitBet where the pot of money on both sides defines the odds. Line betting to [...]

  3. [...] This article may also interest you : Let’s understand mutual betting together. [...]

  4. [...] This leaves open the problem of bets that end early. In our earlier example, what would happen should the bet actually be satisfied December 7th ? Obviously, it would be closed, and the winners paid. However, in that narrow interval of time between the event actually occurring and the bet being closed, people could send bets that are credited at a high weight, which is unwarranted by the actual circumstances. The guy getting credited with half your weight in spite of betting moments before, or moments after the event taking place isn't being adequately compensated for the risk he actually undertook, which means that neither are you. After all mutual betting isn't a casino racket, dedicated to fleecing people in a man-against-the-house scam. [...]

  5. [...] for the cellular apoptosis mechanism, except it doesn't work nearly as well, sadly. [↩]See Let’s understand mutual betting together to understand what the technical problems in question actually are. [↩]To better understand [...]

  6. [...] Another: they aren't used to betting on games parimutuel style. mircea_popescu Prolly a large factor also. The other way to formulate this is, sports bettors are [...]

Add your cents! »
    If this is your first comment, it will wait to be approved. This usually takes a few hours. Subsequent comments are not delayed.