BR - Using the calculators & more tips and tricks, part 2
Level 4 - WAGMI 2.0
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Due to email length limits, this post has been divided into two parts.
If you are here but have not read part 1 yet, head over to part 1 and begin there.
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Case 2: Washington Capitals wins it [remember, the CBJ bet is risk-free → Barstool returns the $1 000 so no money lost from that one].
65.1 % of the value retained, just above the lower bound mentioned in the previous section.
Exchange Calculator
If you are in the EU/Australia, you most likely have access to a betting exchange [Betfair, Smarkets, Betdaq, Matchbook etc.]. Even in the US, betting exchanges are beginning to launch in some states. Using an exchange for BR simplifies the execution quite a lot and there are several reasons:
No more time spent on shopping around for the best lines available in the market. As long as there is sufficient liquidity, the best odds are always available at the betting exchanges.
Increases capital efficiency without having to invoke the Master Calculator since similar optimization algorithms are prebuilt into the exchanges’ matching engines.
If you place a $1 000 QB (qualifying bet) on heads (odds 2.00), hedge it at Betfair, then place a second $1 000 QB on tails on the same coinflip (again odds 2.00), Betfair will automatically adjust your exposure such that no money is withheld from your Betfair account during the coinflip (no matter the result, you’re guaranteed to come out +- $0). On the contrary, if hedged using a basic sportsbook, the amount of money withheld will *increase* from $1 000 to $2 000 when placing your second bet (even though there is no way both bets win/lose).
One and only one betting site is enough for all the hedging.
Makes the operation well structured and easy to follow.
Likelihood of noticing mistakes goes up since everything is collected at one place → painless to perform extra checks.
How do you use the Exchange Calculator?
Step 1: Pick your bet type.
Step 2: Plug in your numbers and run it.
Simple as that.
Example: A $2 200 qualifying bet has been placed on Barcelona 2.60 against Atletico Madrid. The best lay odds offered at Betfair is 2.64 but with limited liquidity [$933]. However, at 2.66 enough liquidity is available to hedge the full bet, thus we feed the calculator either 2.66 or a weighted average of the two odds, say 2.65 in this case.
Note: There is often hidden liquidity [iceberg orders, see e.g. The impact of hidden liquidity in limit order books, Frey, Sandås] on the exchanges [market books convey information → information affects prices → market participants prefer hiding their intentions and present incomplete information to others → participants send partial orders programmatically instead of huge orders at once]. In this case you could take the available $933 → await more liquidity → take the remainder. If no new liquidity comes along, continue your hedge at 2.66 instead. For this particular game it does not matter too much but if there is a 20-point gap you may save some money using this method (especially long-term).
Case 1: Barcelona wins the game.
Case 2: Barcelona *does not* win the game.
where the 0.02 is the 2 %-fee applied by the exchange.
Master Calculator
We have now arrived at the most important section of today’s two-part post. If your goal is to be somewhat serious with BR, it’ll be absolutely necessary to at some point learn why and how you should apply the Master Calculator. For the first few bonus offers, i.e. while you’re still in the initial learning phase, making use of one offer at a time is an appropriate game plan to get a hang of the concept and avoid making any costly mistakes. However, as soon as you have fully grasped the basics we’d recommend revising the strategy and successively upgrading it to the much more efficient alternative.
What’s the difference, one might ask? Nothing explains it better than an example.
Suppose you are starting out with a new person/identity (say, your partner/friend) and are to decide between the following two paths during the first round of “registering accounts and placing bets”.
Set up accounts at two different bookmakers, deposit money into each of them and place your initial bets (two qualifying bets) on two *different games*. Hedge them *one by one*.
Set up accounts at the same two bookmakers as in (1), again deposit money into each of them but now place your initial bets (two qualifying bets) on different outcomes in *the same game*. Then hedge them *all at once* using the Master Calculator.
For simplicity purposes and to convey the point in a straightforward manner we have chosen to do the comparison for two bets/offers only. In reality, the true advantages become even more evident as the number of bets increases.
The point: (2) is a considerably sharper strategy than (1). Why?
REASON NUMBER ONE: Capital efficiency. When wagering a certain amount (say, $1 000) on a specific outcome in a game, this immediately translates into a specified amount to bet on the remaining outcomes to attain a zero-variance position. For example, given an odds of 4.00 in a 3-way market (three possible outcomes), a total of ~ $3 000 have to be wagered on the other outcomes to hedge the $1 000 bet. Suppose now that you place a second bet on one of the remaining outcomes, again at odds 4.00 and with size $1 000. This second bet, when put into effect, automatically executes two hedges:
Parts of the first bet [$1 000] is hedged and less money will have to be deployed to fully close the first position.
Parts of the second bet [$1 000] is hedged by the previously placed first bet, again reducing the amount needed to close this second position.
Thus, to achieve a fully hedged position, there is now a remaining ~ $2 000 to wager on the third outcome. On the other hand, if instead the two bets were to be placed on two different games, a deployment of ~ $3 000 to *each* of the two games, or a total of ~ $6 000, would be required. A huge difference.
Note: In a perfect world you would always want to spread your bets in such a way that there is nothing left to hedge (e.g. two qualifying bets, $1 000 on heads, $1 000 on tails). While theoretically optimal, this is rarely achievable. Therefore, what you should strive for in practice is to come as close to this equilibrium as possible, and then employ the Master Calculator to find out which wagers are required to remove any leftover variance.
REASON NUMBER TWO: Net profits go up significantly. To see why this is the case, let’s continue building on the above argument. Assuming, for simplicity, that all accessible markets offer a RTP of 0.97 (i.e. the bookmaker’s take is 3 %), the total amount paid in fees will be 0.03 * total turnover. Since fees are a basic function of total turnover, you obviously minimize them in one way and one way only: by minimizing total turnover. Well, isn’t that exactly what we did in the previous paragraph by choosing to distribute our bets on different outcomes in the same game? Instead of having to employ a total of $8 000 [$1 000 + $3 000 + $1 000 + $3 000] we managed to reduce this number to $4 000 [$1 000 + $1 000 + $2 000], saving/increasing our profits by an extra $120 [$4 000 * 0.03]…
Now go ahead and extrapolate this $120-change to a sequence of 2-300 bets and you will quickly realize the *extreme* effect this change in betting behaviour will have on your net profits.
REASON NUMBER THREE: Speed. Doesn’t matter too much if you are new to the game, but for the experienced bonus rugger this is definitely something to consider. If averaging 20 bets/day [did this for years back in the days], the Master Calculator will decrease the amount of time spent on hedging severely. Plugging 20 bets + one set of odds into a calculator once is significantly faster than repeatedly (20 times) having to feed it a new bet + set of odds.
Turbo note [has also been added to our practical post]: The main disadvantage with US scraping services (such as OddsJam/ProfitDuel) is that they tend to focus on 2-way markets (two outcomes, e.g. moneyline or against the spread in the NFL/NBA/NHL etc.) which is suboptimal for the more advanced bonus rugger who wants to make use of multiple offers at once as described above.
Reason: for BR you want to focus either on higher odds (> 4.00) (new offers and freebets/risk-free bets) or on odds in the range [1.80, 2.00] (second and third bets, placed only to meet remaining turnover requirements). In a 3-way market you often find a set of odds similar to what we had above [2.00, 4.00, 4.00] which is absolutely perfect for BR by allowing the ‘rugger’ to place all freebets, risk-free bets and *initial* qualifying bets on the underdogs, while saving the “playthrough requirement bets” for the favourite.
However, in a 2-way market, a 4.00 on one side disqualifies the other side (due to odds < 1.33) for the majority of bonus offers, requiring you to choose different games for your various offers & hedge your bets *one at a time* → increases turnover → bookmaker’s take eats into profits at a larger scale.
Usage of the Master Calculator
Example: Assume that you have placed five different bets on the same game [Milan v Roma]. Two of them are freebets, $300 on Roma [odds 4.40], $500 on The Draw [odds 3.60], one is a $500 risk-free bet on Roma [odds 4.50] and the remaining two bets are qualifying bets of $300 [odds 1.88] and $1 000 [odds 1.92] respectively on Milan. Furthermore, the best market odds available for the game is Milan 1.93 at DraftKings, The Draw 3.65 at Unibet and Roma 4.45 at Bet365. Feeding the Master Calculator all of the above information and running it yields the following recommendations.
Conclusion: Bet $148 on Milan at DraftKings and $403 on The Draw at Unibet.
Let’s verify:
Case 1: Milan wins the game [remember, freebets and risk-free bets does not cost you any money when lost].
Case X: The game ends in a draw [remember, freebets and risk-free bets does not cost you any money when lost].
Case 2: Roma wins the game [remember, freebets and risk-free bets does not cost you any money when lost].
Cool!
Closing autist note: A common offer in the US is a risk-free bet, which if lost, is returned in freebet credits. Since the true value of a freebet is ~ 70 % of its nominal value this kind of proposition is equivalently modelled as the combination [70 % Risk-free bet, 30 % Qualifying bet]. Therefore, if offered such a risk-free bet (returned in freebets) of 1 000 USD, by instead considering it as a union of two bets, one “true” risk-free bet á 700 USD and one qualifying bet á 300 USD, you could again consult our website calculators to find out how to hedge it properly.
If the above autist note did nothing but confuse you, simply consider a risk-free bet = a risk-free bet and do not waste your time worrying about the minutiae.
Code
Interested in inspecting the code for the calculators? Check out our calculators.py file on Github!
Autist note: In hindsight we have figured out that the Master Calculator could have been built in at least two different ways without having to invoke any optimization algorithms. Can you figure out how, anon?
Summary
Well, this turned into a rather lengthy post but our hope is that we have been able to convey some important information in it and that the read was well appreciated. It is much recommended to revisit to both this and the practical post content on a regular basis to make sure you are not forgetting anything of importance.
Going forward, the next few posts will be on the following subjects:
Web scraping. We’ll be scraping websites which are utilizing the WebSocket protocol (popular for sports betting) to gather the data they present to the end user.
H2H-betting in horse racing.
An overview of betting exchanges and our experiences using them.
That’s all for today!
Until next time…