Having some understanding of econometrics and Game Theory, a few friends and I have started looking at betting exchanges, particularly Betfair; whose growth has made traditional bookmakers increasingly obsolete. This is quite similar to the phenomenon of financial exchanges going electronic, leaving masses of floor trading "dinosaurs" unable to cope.
Here's a screenshot of US Open 2011 (Tennis) Winner market depth from a few minutes ago, like that of an order book off financial exchanges:
The best Back/Lay quotes (in the form of odds) resemble best "bid/offer" spreads for the traders. The quotes are dynamic, with respect to liquidity from each side. So from a financial trading perspective, these individual bets are really futures contracts that expire at the conclusion of the underlying events.
This of course brings a whole world of possibilities with sports betting. The arbitrage opportunities are diminishing as growing volumes have increased efficiency; yet at the same time increased liquidity makes shorter term trading and perhaps one day High Frequency Trading of sports bets possible. The key remains, as these exchanges have yet to uphold mature infrastructures, and are filled with dinosaur punters who have not kept up with technological advances, significant inefficiencies exist for profitable (and legal) exploits.
Here's a screenshot of US Open 2011 (Tennis) Winner market depth from a few minutes ago, like that of an order book off financial exchanges:
The best Back/Lay quotes (in the form of odds) resemble best "bid/offer" spreads for the traders. The quotes are dynamic, with respect to liquidity from each side. So from a financial trading perspective, these individual bets are really futures contracts that expire at the conclusion of the underlying events.
This of course brings a whole world of possibilities with sports betting. The arbitrage opportunities are diminishing as growing volumes have increased efficiency; yet at the same time increased liquidity makes shorter term trading and perhaps one day High Frequency Trading of sports bets possible. The key remains, as these exchanges have yet to uphold mature infrastructures, and are filled with dinosaur punters who have not kept up with technological advances, significant inefficiencies exist for profitable (and legal) exploits.
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