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Showing posts with label bet. Show all posts
Showing posts with label bet. Show all posts

Thursday 18 July 2013

Cricket Betting in India

For the better – or worse?


It is just not possible to bet on the minutiae of a match, including that of a bowler sending down a pre-designated no-ball. © Getty Images
It is just not possible to bet on the minutiae of a match, including that of a bowler sending down a pre-designated no-ball. © Getty Images


Never meet a hero, they reckon. But what of a villain? Say hello to Vinay, from Bhopal, capital of the central Indian state of Madhya Pradesh. He is an illegal bookmaker, which also makes him a scourge of the game, and a malevolent, match-fixing mobster. Right?
When I met Vinay in a hotel lobby, the reputation of his brethren – there are estimated to be more than 70,000 bookies in India – preceded him. All, bar those who work at race courses (where gambling, so the argument goes, is based on skill rather than luck, and therefore socially acceptable) are illegal. It is said – by the ICC, corruption officers, national boards and player bodies – that the illegal bookies are dangerous men from the underworld. People fear them. And so, in truth, did I, as I waited for Vinay, nervously tapping my feet to inane pan-pipe music.
Yet when he arrived, I immediately felt at ease. There was no cloak, no dagger. His smile was brilliant, his handshake warm, his enquiry after my health genuine. We had already exchanged emails, Twitter messages and phone calls. What followed was a crash course in India’s vast gambling industry. Over several weeks as part of my research for a book on corruption in cricket, I would spend time living with him and his family, and watch him run his business (he also owned a construction firm); I would hide from the police, learn how bookies control betting markets, and hear of fixes before they happened. When we parted, I told Vinay of my initial apprehension. “Me?” he guffawed. “This is too much amusement for me. I hope you know me now, ya? But perhaps I understand why you were like this. Bookmakers in India are supposed to be all bad. No. We are trying to make our living in a corrupt country, and we do this by taking any opportunity we can.”
The backdrop to my visit was the sound of exploding myths. Chief among them was the notion that it is possible to place a bet on a no-ball, a misconception that called into question the precise nature of the conviction of Salman Butt, Mohammad Asif and Mohammad Aamer in the spot-fixing trial of November 2011 – though there is no doubt that the News of the World sting showed them to be corruptible. But preconceived notions about corruption in cricket simply collapsed, for it is just not possible to bet on the minutiae of a match: a batsman scoring a certain amount of runs, a fielder being placed in a particular position, a bowler operating from a specific end – or even sending down a pre-designated no-ball. Why? Because just as Indian bookies are not the threatening hoodlums of popular depiction, neither are they knuckledragging imbeciles. “Do you think we’re fools?” asked Vinay. “If someone says they want this no-ball bet for big monies, and I’m Ladbrokes in London, I tell them to go away. No bookmaker in the world takes this bet.”
One does not need to be invited into Vinay’s home to understand that any bookie worth his salt would suspect that this customer had inside information. Yet throughout the Southwark trial of the three Pakistanis and their agent, there was a wilful acceptance that the News of the World would have been able to place a bet on the timing of a no-ball, had they so wished. This was clear from the sentencing remarks by Mr Justice Cooke: “Bets could be placed on these no-balls in unlawful markets, mostly abroad, based on inside advance knowledge of what was going to happen… Individuals in India were making £40,000–£50,000 on each identified no-ball. On three no-balls, therefore, the bookmakers stood to lose £150,000 on each bet by a cheating punter.”
In fact, this is impossible. The illegal Indian market is highly organised and, crucially, uniform. It offers only four markets for its gamblers: match odds, innings runs (known as lambi), brackets (the number of runs scored in a certain amount of overs), and lunch favourite (essentially, betting that the team who are favourites at lunch in a Test, or at the innings break in a limited-overs match, will go on and win the game). In the case of the lambi and brackets, a spread is set for the number of runs to be scored, and gamblers bet over or under.
The odds for these markets are provided by four syndicates, who have reached the top of the food chain through their expertise in the field. They charge a fee to bookmakers to use those odds, then take a cut of the profits from all over the country. Think of the syndicates as wholesalers, and the bookies as convenience-store owners, who buy the goods, then sell them on. Vinay is what is known as a first-tier bookmaker. Occasionally, because he is highly regarded, he acts as one of the syndicate heads, who are often based in Mumbai or Dubai, sending out odds to bookies lower down the chain; bookmakers from the second, third or fourth tiers have fewer customers, and receive the odds via SMS, with the syndicate able to reach hundreds of them at once using bulk messaging software. “All bookies in India are connected,” said Vinay. “They will send on the prices to even more.”
Because the syndicates are so dominant, the potential for the manipulation of markets is obvious. And it is certainly more profitable than paying a bowler to overstep. “The Indian market is very big and powerful,” Vinay told me just before England’s One-Day International against India at Hyderabad in October 2011. “There are much smarter ways to manipulate betting. Look, I’ll show you.”
On his laptop he logged on to Betfair, the person-to-person betting exchange with more than four million customers around the globe. After it was announced India had won the toss, he sent updated odds to 200 bookmakers across the country. On the match-odds market, India were favourites at 1.95 (even money would be 2.00). These decimal odds translate into the traditional fractional odds used in the UK as 20-21: in other words, if you bet £21 you can win £20.
“Now watch how I move the Betfair market,” said Vinay. When he sends the SMS to his cohorts instructing them to lower the odds, they flood Betfair with money – or, to be precise, with people prepared to place bets at these odds. He explained: “It is currently India 1.95. Watch how they become 1.85 in line with our odds… wait, you’ll see here how it works… we want to get India short.” Vinay was keen to price India as short as possible because he knew most of his punters would back the home team. Since an Indian victory would have been certain to cost him money, he wanted to discourage punters from backing them. Seconds later, he chirped: “There, you see: India 1.85 now on Betfair. We have moved the market.” And all this from a text message which simply read: “India 85”.
Unfortunately for cricket and the ICC’s Anti-Corruption and Security Unit, some fixes are almost impossible to prove. © AFP
Unfortunately for cricket and the ICC’s Anti-Corruption and Security Unit, some fixes are almost impossible to prove. © AFP
This, of course, is not corruption – just the sheer weight of (illegal) Indian money. Yet no matter what wagers are struck, the bookmaker and the syndicates are able to avoid losses by using betting exchanges to hedge their bets. For example, a bookie may have accepted a wager from any Tom, Dick or Hari of £10 on England to win at even money. This has the potential to cost the bookie £10. However, when England’s odds during the game drift to 6-4 (greater than even money) – either because momentum has shifted towards India, or because Vinay has manipulated the market from a hotel room in Bhopal – the bookie can lay off, or hedge, his bets. The original bet risks him £10. But by placing a wager himself on England at odds of 6-4 for £10, he stands to win £15 if he’s successful: £15 minus £10 is a guaranteed profit of £5. (In the case of an Indian win, Vinay would have hedged his position too, although – because of the amount of money wagered on India – he would be merely seeking to reduce his losses to a manageable level.) Now consider the potential when four or five figures are involved.
Hedging is not illegal, but it shows that corruption is not an exact science: there is more than one method and more than one protagonist. The assumption that it is largely bookmakers who fix matches would appear to be wrong. Vinay worries that punters close to players or officials do the fixing, costing him money. Yet there seems little doubt that the all-powerful syndicates have massive influence, as well as the funds and organisational ability, to fix elements of matches – or even the results themselves.
The bookies and the professional punter can be considered enemies, in the mould of the old-fashioned pork-pie-hat-wearing odds-maker and his traditional chancer customer. It is a war for inside information: who knows more? The only consistent loser is the less clued-up customer, who is in effect betting blind. The syndicate operates a subtle fix. By sending out false odds via their bookies, they tempt customers into taking them. Vinay gave the example of how, armed with prior knowledge that a well-known Test match in 2011 would not end in a draw – when a draw looked at one stage the only possible result – the odds were set so that more people would bet on the stalemate. This is a ruse that hundreds of thousands fall prey to, and the money tots up.
The professional punter can do likewise, but he is a simpler operator. His original way of making money from fixes, which would have been used in the days of Hansie Cronje – and before the betting exchanges were commonplace – is less sophisticated. It requires much poking and prodding of contacts up and down the country, hoping minions will then place the bets correctly. It is a system that primarily takes advantage of the sheer size of the industry: a few lakh in Mumbai (one lakh equals 100,000), a few more in Delhi, a few more somewhere else. Next week, mix it all up again in an attempt not to draw attention to the scale of the enterprise – and hope you don’t get found out.
“The punter will have his friends placing the bets all over,” said Vinay. “There is a big connection. Some punters are connected like the bookmakers are connected. If a punter has 50 friends, he can get 50 bets.” The aim of fragmenting his bets by placing many smaller ones instead of a couple of large ones is to prevent the bookmaker from suspecting inside knowledge. The subtle nature of the sting fuels the belief that a wide array of markets are available to bet on in India. But it is not because there is a betting market for fielding positions that a syndicate or punter has cajoled a captain into moving a fielder from third man (there is no such market). It is because, without a third man in the first ten overs of a one-day international, more runs are likely to be scored. This allows the syndicate to set false odds on a bracket, knowing that, if they offer runs in the first ten overs at, say, 70–75, most gamblers will bet under. Similarly, a punter who has a close friendship with a batsman might have arranged for him to score fewer than 25. This will give him an edge when it comes to the lambi, bracket and match odds. If it sounds like insider trading on the stock market, that is precisely what it amounts to.
Unfortunately for cricket and the ICC’s Anti-Corruption and Security Unit, it is almost impossible to prove. The fixes are so minute – at least in terms of the impact on the match result – as to be virtually undetectable. How, for example, could the ACSU prove in court that a batsman has scored deliberately slowly for just one over in a Twenty20 match to sate a syndicate or a punter playing the brackets?
But the ACSU do not help themselves by failing to grasp how the illegal market in India works. They were embarrassed when Ravi Sawani, their former boss, admitted in the Southwark trial he had not heard of the term “bracket”. They should also be pilloried for failing to grasp the nuances of spot-fixing, wrongly believing there are manifold markets for bookmakers or gamblers to exploit. Yet we should not simply criticise the governing body. Rarely are players, the collective, admonished. “It’s down to them to take ownership,” said an ACSU source. “A few players have said: ‘There should be more ACSU people.’ No, we should have 20 guys on the field naming the two who are at it.”
There is hope – but only a little. If India’s bookmakers were legalised, they would have to operate exactly like Ladbrokes or William Hill. That would mean an end to the credit system, where bookies accept customers on trust. Instead, they would need money in their account to wager. And to have an account, they would have to hand over their personal details. When accounts are kept and verified, you have a paper trail. If you have a paper trail, you have no rogue punters setting up fixes with their friends in cricket teams. At a stroke, the potential for corruption would be reduced by half.
Vinay is not convinced: “People say: ‘Legalise betting in India and fixing will stop.’ Yes. We are ready to pay tax. I’m tired of paying off the police. But it will not stop fixing. Never.”

Thursday 30 May 2013

The mathematics of spot-fixing

by Dilip D'Souza
Spot-fixing: suddenly on a whole lot of minds. Three young cricketers accused of doing it for no real reason I can fathom except greed. After all, they were already earning money legitimately far in excess of the great majority of their countrymen.
Still, I’m not here to pass judgement on these men. They are innocent until we find otherwise, and that finding will eventually come from a court. And anyway, who knows what motivates young men with lots of money? No, I’m here to discuss what makes spot-fixing possible; especially, some of the mathematics behind it all.
But let’s start with this: what makes a bet possible? Of course, I suspect it is almost human nature to want to gamble. But that desire is founded on probabilities. You consider an upcoming event, you estimate the probability of it turning out a certain way, and you choose to place a bet (or not) based on that estimate. There are fellows called bookies who will take your bet. Based on their own estimate of what’s going to happen, they will give you what’s called “odds” on the event.
For example: Imagine two cricket captains about to toss a coin. Both of them, and all of us, know the probability of it landing heads is 1/2. If you find a bookie willing to take a bet on this, it’s likely he’ll give you odds of 1:1; meaning, for every rupee you bet, you’ll get a rupee back if the coin does in fact land heads. A pretty stupid bet to make, you’ll agree. Because if you keep betting, you’ll lose your rupee half the time—when the coin lands tails. And when it lands heads, you simply get your rupee back.
But consider tossing a dice instead. The probability of a “1” is 1/6, and that opens up more apparently interesting betting possibilities. A bookie will likely offer odds of 5:1 on a “1”; that is, for every rupee you bet, you’ll get back five if the dice shows “1”. (If it shows anything else, you lose your rupee.) Sounds exciting, this chance to quintuple (wow!) your money? Would you take these odds and place a bet like this?
Yet here’s the thing, and this is why I used the word “apparently” above. Please don’t stop breathing at the mention of quintupling your money. For the mathematics says this is actually just as stupid a bet to make as with the coin. Again, if you keep betting, you’ll lose your rupee five out of every six times. (Put it another way: five of every six bettors who place such a bet will lose their money.) Only once—that sixth time—will you get your five-rupee windfall.
The reason bookies might offer such odds—1:1 for the coin, 5:1 for the dice—is that they know their probabilities as well as you do, and naturally they don’t want to lose money. In fact, they will likely tweak the odds they offer just enough so they actually make money. That is, after all, why they do what they do.
So if you find a bookie offering quite different odds than you expect, it’s likely he knows something you don’t. Consider how that might pan out. Let’s say the coin the captains use is actually a fake—it has tails on both sides. But let’s say only our devious bookie knows this. He says to you the avid bettor: “Ten times your money back if it comes up heads!” You think: “Wow! There’s an attractive proposition!” and you gamble Rs.1,000, for you’ve estimated that there’s a 50-50 chance you’re going to waltz home withRs.10,000.
Then you lose, as—face it—you were always likely to do. Bookie laughs all the way to the bank with yourRs.1,000.
All of which is essentially how spot-fixing must work.
So now imagine you are a fervent cricket-watcher. (Which I’m willing to bet you are, unless you’re Lady Gaga.) From years following the game, you know that bowler J bowls a no-ball about once in every six-ball over. Along comes bookie W to whisper in your ear: “Psst! Hundred times your money back if J bowls exactly one no-ball in his first over in the Siliguri Master Chefs game!” Your eyes widen and you fork out the Rs.10,000 you didn’t win when he offered you the coin bet, starry visions of a million-rupee payoff whirling through your head. Hundreds of other cricket fanatics like you do the same. (Rather silly cricket fanatics, but never mind.)
What you don’t know, of course, is that bookie W has instructed bowler J to bowl not just one, but two no-balls in that first over. For doing so, J will get a slice of all the money W has collected in bets.
So J bowls his two no-balls at the Master Chefs. You lose. Bookie W and bowler J laugh all the way to the bank. Simple.

Wednesday 7 November 2012

Hedge funds betting millions against Britain's high street


Hedge funds are betting there will be blood on the high-street this Christmas as Britain’s retail stocks dominate a list of big short positions that has been published for the first time.




The secretive financiers have bet millions of pounds that companies including WH Smith, Home Retail Group, Ocado, Sainsbury, Tesco and Dixons will fall in value, according to a list published under new rules by the Financial Services Authority (FSA).
Lansdowne Partners, one of London’s best known hedge funds, has short sold 0.63pc of the value of Tesco - a £163m bet that the supermarket’s shares will fall. The Mayfair-based group has a 2.51pc short position in WM Morrisons, worth £159.8m.
GMT Capital, an American group, has built up a 3.56pc short position in Carpetright - which is worth just £16.3m but is the third biggest position of the list relative to the size of the company.
Barrington Wilshire, another US fund, has a bet against Mothercare worth £8.24m or 3.18pc of the company’s market value. Two hedge funds have revealed big short positions in Marks & Spencer, whose shares rose 1.18pc yesterday despite revealing a 10pc slide in profits.
Jim Chanos, the famed US short-seller who runs Kynikos Associates, has a 2.52pc short position in Asos, the online fashion retailer. 
The biggest short position by percentage of market value is Greenlight Capital’s bet against Daily Mail & General Trust. The fund manager David Einhorn has built up a short position of 4.4pc of the company worth £80.7m.
But in terms of monetary value, Glencore has attracted among the biggest bearish bets. Och Ziff has a 0.82pc short stake worth £202m in the mining giant which is trying to merge with Xstrata. Elliot Management has a 0.71pc short stake in Glencore worth £175m.
The list, which is the most comprehensive view of bearish bets ever seen, follows the introduction of European rules that came into force on November 1. Under the regulations, all short positions worth more than 0.2pc of a company’s market capitalisation have to be revealed to the regulator. Positions of more than 0.5pc of the market value have to be published.
Hedge fund managers, who prove their worth by making money in markets that go down as well as up, are concerned that the disclosures could hamper their efforts.
Experts in London, where more than 80pc of Europe’s hedge funds are based, argue that short selling improves efficiencies in the markets. But European politicians have held the opaque trading practises responsible for volatility in the markets.
On Tuesday, fund managers said the rules unfairly penalise independent funds while allowing the big investment houses to keep their short positions secret.
Tim Steer, a fund manager at Artemis, said: “Under the rules, managers have to disclose a net short position so big asset management groups can hide their short positions because somewhere they will have a fund that has long-only positions which cancel them out. Pure hedge funds are being penalised because their short positions could antagonise companies.” Investment houses that have hedge funds as well as long-only funds are absent from the list, including Blackrock, JP Morgan Cazenove and Jupiter Asset Management.

Wednesday 20 June 2012

I am The Markets


I am The Markets and I'm sick of people telling me how I feel

People keep saying I'm 'concerned' and 'confused'. It's not like I'm the one to blame for everything going tits up
Traders at the stock exchange in Madrid
'I'm not the one who created a whole array of inherently flawed financial instruments that no one properly understood.' Photograph: Andrea Comas/Reuters
Two quotes from yesterday's Guardian got me. "Markets have become increasingly concerned that the austerity programmes in the eurozone are causing a vicious circle of recession", and "Markets were confused by mixed messages from European capitals". I have only one word of reply. Bollocks. Did anyone phone me to ask how I, The Markets, was feeling about these subjects? Did they hell?
So let me get things straight. I am not in the slightest bit concerned about the austerity programmes in the eurozone. I am entirely indifferent to whether Greece and Spain get bailed out, go bankrupt or both. Just as I'm not at all bothered if Germany gets any of its money back.
I existed long before someone invented the eurozone and I will be around long after it has ceased to exist. I'm not in the caring business. I'm a trader. Someone has something they want to sell, someone has something they want to buy. End of. Whether people are flogging something of value or billions of pounds of worthless debt is entirely irrelevant to me. I'm just a mechanism for other people's greed and inefficiency. Neither am I in any way confused. Quite the opposite. I see everything with a steely-eyed clarity. The confusion is all yours.
But while we're on the subject of me, let me tell you how I really am feeling. As you might have gathered, I am pretty damned pissed off. I am sick and tired of everyone making judgments about my emotional state of mind without making any effort to talk to me, think sensibly about me or hack my phone. It's both lazy and insulting, but I've rather got used to it as it goes with the territory. What annoys me most is the way all this talk of me being concerned and confused makes it sounds like I'm implicated in the business of everything going tits up.
I will not be the fall guy. I have done nothing wrong. I am merely the blank canvas for other people's incompetence. I'm not the one who created a whole array of inherently flawed financial instruments that no one properly understood. I'm not the idiot who decided property prices were going to go up for ever and ever and that every country could max out its credit card. I'm not the out-of-my-depth chancellor of the exchequer trying to convince both myself and the country that I have the situation in hand and that I know what I'm doing.
None of that is anything to do with me. If anyone had wanted to set up a more straightforward and fairer market, I would have been OK with that. So, a final word to the wise. Remember who the real culprits are. It's they who are concerned and confused. Though not on your behalf. What they are concerned and confused about is how to get you to pay for the decisions they shouldn't have made in the first place.
As told to John Crace