Do BetFair understand the statistical concept of expectation?

No GravatarGraham &#8220-Sharp&#8221- Minds:

[&#8230-] When I was interviewed by BetFair and they explained to me all of the problems with the multiples operation, most importantly the fact that it is a loss making despite the huge overrounds, I was asked for my opinion. I told them the simple solution was to take the bets on the chin like a traditional bookmaker and keep away from the markets as the bets they placed were likely to be taken by traders that are shrewder than their own, especially in-running where most of the BetFair trading activity actually occurs.

They were horrified at this prospect and were insistent on producing a formula to place the bets into the main BetFair market to reduce the risk as close as possible to zero. I was more horrified that they didn’t understand the statistical concept of expectation.

Discussion here, too.

Previous blog posts by Chris F. Masse:

  • 50% of our prediction market luminaries have a MacBook.
  • Ron Paul (R) and Barney Frank (D) ally together to attack “the practical hurdles of the federal law, known as the Unlawful Internet Gambling Enforcement Act, rather than its legitimacy”.
  • Clicking on the “SPHERE: RELATED CONTENT” button, at the bottom of each Midas Oracle post, will bring you a list of external webspots.
  • FRIGHTENING: Jed Christiansen’s prediction market blog was briefly overtaken by web spammers, who inserted invisible links to their commercial sites so as to game the Google PageRank system.
  • InTrade ditch market-leader Bloomberg for low-cost, second-tier data provider eSignal.
  • Drawing a parallel between our reluctance to seek advice and the experts’ reluctance to take the market-generated probabilistic predictions in an un-discriminating, un-critical fashion

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