What am I missing?

twenty8

Ok - this seems to be too simple to me. However maybe someone here could help explain it to me.

In tournaments / events etc you can have some very large odds for some teams. Eg GAA championship. However - if they win a game or 2 their odds can drop quite considerably.

Can you make money by backing them early on and then laying them after they win (hopefully) their next game.

EG. Kildare and Louth are playing in the GAA back doors next weekend. Kildare are 200/1 and Louth are 250/1. Once one of them win and get into the next round their odds should drop quite a lot - may down to something close to 100 or 150/1.

If I buy the bet at 250/1 and then sell at 150 - am I not making a pretty low risk - high return bet??

In this example €10 would return €2,500 if Louth win and then if I sell at €150 I have to refund €1,500. A gain of €1,000 for a very low stake.

What am I missing??? I am conscious that I need to have a lot of funds in my account to cover this - but I would probably start at lower odds.

Collie D

twenty8 wrote:

If I buy the bet at 250/1 and then sell at 150 - am I not making a pretty low risk - high return bet??

In this example €10 would return €2,500 if Louth win and then if I sell at €150 I have to refund €1,500. A gain of €1,000 for a very low stake.

I assume that Euro sign was a typo? If you're laying €150 at 150/1 your potential loss would be a lot more than a grand and a half.

Basically, what you are saying is right ie potential earnings of 2500 which you can later lay off if

a) Kildare do make it to next round

b) They don't end up playing a "superpower" for want of a better word.

c) You are confident enough, people will back at the lower price

Imagine they progress to next round but are drawn against Galway. More than likely this is still gonna be a 250/1 shot to win the Championship.

Having said that, I'm not really a layer at all but as far as I can tell these are your potential risks. Input from someone with more expertise than me (ie any ) appreciated.

badbrian

What you are missing is that you only win €1,000 in your scenario should Louth and Kildare both win their qualifiers and then one goes on to win the All -Ireland.

And as Collie D says the market price might not contract. They might play terrible and scrape through. Their price may not drop.

Also you don't need big funds in your account. Take Kildare in your scenario. They are 250.0 now in your scenario. They win. Odds contract to 150.0.
You have backed them @250 to win €2,490. You can now lay them out of that potential profit to lose €1,490. Now you are sitting on a potential profit of €1k should Kildare go on to astound the country and win Sam.

And of course you lose your €10 should they not get through their qualifier.

twenty8

Thanks for that - but would I not win €1,000 regardless if they win. ie I will have 2 bets - one for Kildare to win at 250/1 and one for Kildare not to win at 1/150?

Robin1982

No no no.

Kildare to win C'ship: currently ~250/1

You bet €10 @ 251 => potential profit €2500, potential loss €10

Kildare win this weekend: expected C'ship odds ~150/1

You lay €10 @ 151 => potential profit €10, potential loss €1500

Potential Outcomes:

Kildare win C'ship: you win €1000 (odds of this happening: currently ~250/1 or 0.004%)

Kildare don't win C'ship: you win €0 (odds of this happening: currently ~1/250 or 99.996%)

You see?

If you want to guarantee yourself profit for Kildare not to win the C'ship (99.996% likely remember), in the 2nd part you could lay €16.66 @ 151 (2500/(151-1) = 16.66). You would win €6.66 if they didn't win the championship, and win ~€0 if they did.

And finally you may want to fully hedge and guarantee the same profit regardless of whether Kildare win the C'ship or not:

Lay €16.62 @ 151 (2510/151 = 16.62) and win €6.62 whatever happens.

Capiche?

EDIT: I modified the result to use Betfair style decimal odds instead of fractionals - easier to see. And the angry red face was unintentional.

badbrian

twenty8 wrote:

Thanks for that - but would I not win €1,000 regardless if they win. ie I will have 2 bets - one for Kildare to win at 250/1 and one for Kildare not to win at 1/150?

You're confusing yourself. All you will have done is back Kildare for €10 and lay Kildare for €10. You will only win the diffence in what you have backed and layed i.e. €10 x (250-150) = €1000. And ONLY if Kildare win Sam.

Any other team wins and your profit is zero because you haven't backed them to win.