The main stakeholders of the market so far have one issue at-hands: their interests are not aligned with the ones of their clients. The majority of betting houses profit from their clients’ losses. Sports betting experts who sell their service through their websites charge significant fees that prevent most people from subscribing their recommendations. Besides, it is very challenging to replicate their actions manually. Betmarkets scraped all upfront fees for a performance fee. You only pay if you are profiting from a given expert.
How does Betmarkets make money?
Betmarkets aims to achieve two main objectives:
- Turning sports betting into an investment.
- Opening this market to everyone, regardless of availability and means
We want to pursue all this while being completely aligned with the interests of our investors. Unlike other platforms – namely the betting houses – that profit from your losses, we’ll profit when you do. We will do this by taking a cut in your profits and by receiving a fee from the betting houses due to creating betting turnover to them.
Let’s start by displaying the business model of some other providers in the sector. We will also go through some of the problems that arise for clients. Afterwards, we shall compare their business model to ours and highlight how we are trying to solve some of the clients’ pain points.
Betting houses – or bookies – are the main providers of odds in the market. They run their own algorithms and have extensive teams of mathematicians, physicists and computer scientists to improve them. These quants try to devise the odds which are closest to the true probability of each outcome – and are correct most of the time. It is not uncommon, though, for different betting providers to display different odds for the same outcomes. This can be due to just different fees between them, but let’s ignore that for now. A model can weigh some criteria a bit more than other. That might lead to a certain outcome being seen as more/less probable. Thus, odds will fluctuate accordingly.
A serious bettor must then have a serious of betting accounts, one for each provider. He/she will always need to bet at the best available odds to have the best shot at becoming profitable – obtaining the highest Market Edge is a great step towards it. Doing so requires a substantial effort from the bettor. Not to talk about the time requirements in managing everything! One of the advantages of being a sports betting expert in Betmarkets is that all bets are placed through the platform’s engine. One doesn’t even have to have a single betting account, let alone a betting account in all providers.
Betting houses profit by applying a spread to the odds they offer to bettors. The lower the spread, the more competitive the provider. A very high spread of 7% would see betting houses – or bookies – pricing even outcomes at 1.86 instead of 2.00. This is rather common in traditional bookies where you play against the house. Large spreads prevent even the most skilful bettor to profit in the long-run, so it would be almost impossible for anyone to profit under these spreads.
Calculating the spread and real probabilities
The image below was sourced from Placard.pt at 5pm GMT on the 15th April. Placard.pt is one of the largest Portuguese online bookies. These are the odds they are selling for the Watford vs Arsenal match later that day:
The spread can be calculated by adding the inverse of all odds: (1/3.10)+(1/3.60)+(1/2.05)=108.82%. In this case, Placard.pt is charging a huge 8.82% spread. It is clearly impossible for any bettor to profit long-term through this provider.
From here, one can also calculate the true probabilities of each outcome. According to this provider, of course. One just needs to calculate the probabilities given from the true odds. Multiplying every odds by (1+Spread), we get: 3.37, 3.92, 2.23. The sum of these odds yields 100% – zero spread. Even if your bet – let’s say you bet on Watford winning – ends up being successful, the spread is chewing 27 cents of your equilibrium profits. It might not sound like much but multiply it by thousands of bets and you’ll see that its weight is sufficient to leave you underwater – in the red!
Simultaneously, one might use those odds to calculate the probabilities the house is weighing in each event: 29.64%, 25.53%, 44.83%. You should only bet if you think that the probabilities of a given outcome are above these ones. That strategy is the only way to beat the market in the long-term. It is usually defined as finding “value” bets. These bets are outcomes that are being overpriced by the betting house. If you are able to find a constant edge, you’ll tend to profit in the long-term. The experts we offer in Betmarkets have a performance that is well-sustained by their Market Edge – the advantage against the closing odds of the market.
Balancing the book
Another big reason for odds to differ among different bookmakers is that they will try to balance the book. As a business, they need to remove as much risk as possible from every game. As such, they’d rather win less money in each game, granting that, in case of a loss, they are shielded from sustaining a big one.
One way of doing this is trying to have the same pay-outs regardless of the outcome. For simplicity, let’s imagine that you have a tennis game where players are completely balanced. Including the fee, the houses will be pricing odds below 2.00 for each. 1.95, for example. If they manage to receive the same amount backing each player, they will be able to guarantee a profit. For every €1,000 of bets lost by bettors, they will only pay €950 to the winning bettors. They secured a riskless 2.5% profit on their turnover of bets – €50 profit from €2,000 placed (€1,000+€1,000).
If they do not manage to completely balance the book, they might lose in certain outcomes. In order to balance it, they will start moving the odds. If a player is being backed by the majority of bettors, his/her odds will be shortened. The other player will see his/her odds increase (drift). This fluctuation tries to shift some bettors to the other player, as his/her win will now be more profitable. Conversely, betting on the apparent “favourite” is now less attractive.
Soft and sharp bookmakers
An important distinction to be made in the market is the one between soft and sharp bookmakers. Soft bookmakers target the leisure bettor and sometimes have more attractive odds. Simultaneously, they severely limit the accounts of winning players – or even block them. Their odds do not adhere to the real probabilities of a game and do not change instantaneously as soon as a new piece of news comes out. Their spread is usually around 6-8%. They can afford to offer better odds because their clients tend to lose money – a result of their action towards profitable bettors, as well.
Sharp bookmakers have odds that better reflect the true probabilities of a match. These are being continuously updated by statistical models and real-time processing of news and sentiment. Their spread is a lot more competitive, being between 1.7-2.0%. They do not limit the accounts of any players – thus, “they welcome winners”. Their business model is then built around volume of bets: they accept large bets as they are more certain of their odds’ calculations. Despite making less money percentage-wise, they compensate via a larger amount being placed in each bet.
Normal providers and exchanges
Within sharp bookmakers, one can also distinguish between normal providers and exchanges. Normal providers in this category can be exemplified by Pinnacle and SBOBET. Exchanges are somewhat different as the house is a mere intermediary. In these, we should highlight Betfair and Matchbook. Bets are placed with customers on both sides – backing an outcome and laying it. That is, the house does not take a position in it, only a commission by acting as a marketplace. Odds are priced in those markets by the interaction between backers and layers – as with buyers and sellers in the usual markets. Whenever you win a bet there, it just means that someone else has lost it, not the house. Therefore, they don’t place any margin on the odds and don’t limit anyone. Their business is purely one of volume.
In Betmarkets, we only rely on sharp bookmakers to place the bets of our users. Betting in those assures that our accounts will never get limited or closed due to our winnings.
Sports betting experts are another key stakeholder in this market. These are individuals who have proven to have an edge against the market. They specialize in one or a few leagues within the same sport. Less common, but they can specialize in several sports, focusing instead in the same country or region. Before platforms such as Betmarkets appeared, they used to sell their picks through a monthly subscription to their services in their own website.
Subscribing these services is expensive and requires a tremendous effort from the user side to turn them into a profit. The following are the main difficulties one encounters when subscribing to sports betting experts:
Lack of trust
It’s extremely hard for investors to separate the few quality experts from scammers. Unfortunately, the latter abound in the market as it’s extremely easy to fake your way and fool unsuspecting potential clients with the promise of “easy money”. Always remember that you won’t get rich overnight through sports betting!
Match-fixing scams and “experts” who deliberately manipulate their track records or only publicize their winning bets are examples that immediately come to mind. It’s very important to know how to choose the best sports betting experts and to be aware of some of the pitfalls.
Multitude of betting accounts
Experts will always work with multiple betting houses to ensure they grab the highest odds every time. They advise clients (and correctly so) to do the same – otherwise their performance will be much lower. Managing all betting accounts in different providers is a significant burden. Not to talk about going through the KYC (compliance) processes in each of them…!
Some providers won’t be available in some geographies. For bets that are only available in those, the client will be paying for something they cannot take advantage off.
24/7 activity required and odds’ fluctuation
Experts can be located around the globe, so their recommendations will arrive from different time zones. This requires the clients’ constant attention to ensure a perfect replication as soon as the email arrives.
“Can’t the client just place their bets afterwards, at a convenient time for them?” you might ask. In theory, yes. However, odds fluctuate, and the client might not have the chance to grab the same bet at odds high enough to justify the risk of entering it. This issue is more significant when you are subscribing to services with a lot of clients. As soon as the email is sent, odds plunge in every provider, as there are many people placing those bets and providers must adjust. They are balancing the books, as we discussed above!
It is highly unlikely that you would be able to pick up the same odds if you are not among the first group of people placing the bet. We have been there and done that… Our estimation is that you have roughly 5 seconds to grab the bet at the recommended odds. Forget about dining comfortably with the family if you want your return to mimic the one of the expert!
Experts require significant upfront fees to be paid for their services. Thus, they receive the benefit (payment) before they pay-out anything through their performances. Additionally, they will keep the benefits regardless of upcoming months of below-par (or even negative) performance. It is more than fair for professionals not to be entirely tied to their performance – they need to eat, pay rent and save as any other of us. However, we believe that they should also have some “skin in the game” – and that hasn’t happened until now. At least strictly speaking, since a client can always drop out from the service if dissatisfied. The point is: clients’ and experts’ interests aren’t always aligned.
Their commissions also place a significant obstacle to the clients’ performance. Besides, they are already acting on top of the betting houses’ spread! Let’s jump onto some quick math. Under the assumption that one shouldn’t pay more than 2% of their total investment as commissions in a year – works in the financial markets, let’s assume it holds here – and that an expert charges €100/month for their services. Clients would be paying €1,200/year. Then, their bankroll should be at least €60,000 (1,200/0.02) to remain competitive. There are not a lot of individuals able to allocate that amount to sports betting.
To have a great performance, clients also need to diversify their investments. This is the best way to protect yourself against the downturns that inevitably happen. Focusing on sports betting alone, this means that you should follow several experts. We recommend 5+ for a diversified sports betting portfolio. If each one of them charges €100/month, the client is paying €6,000/year. This bumps the minimum amount to a whopping €300,000…!
We could step it up a notch. Think of your sports betting portfolio as one asset among many others. In fact, every portfolio should consist of stocks, bonds, cash and a few more alternative assets. Given the risk/return profile of sports betting, and its independence from the overall financial markets, it acts as a great complement to any portfolio. We advise you to limit its contribution to any overall portfolio to 5%. If you are very risk-averse, shrink it to 2% and use it only to capture some yield. Back to our example, your €300,000 sports betting portfolio would then be a small part of your overall €6,000,000 investments. It gets clear that this market does not allow anyone to be competitive. It’s time for it to change.
The driving force behind Betmarkets appeared from the struggles we experienced while trying to follow experts on our own. Long-story short, we had a few friends that wanted us to bet on their behalf. This was due to our great results in predicting tennis outcomes. All thanks to the knowledge we absorbed while binge-watching all major (and minor) tournaments and while playing the sport for a combined 37 years. We vehemently denied – friendships and money flows don’t tend to bode well – but we knew that some individuals provided that exact same service. And so, we informally made the connection between those experts and our friends and started placing their bets. We also started extracting detailed records of everything these experts did – for almost 3 years – and gained interesting insights about the way they grab an advantage against the market.
We had to stop doing it as it was very labour-intensive. We tried to find an automated solution, but nothing was available in the market. Betmarkets was built to fill that gap. For clients, there are a few advantages in using our platform:
- Pre-vetted list of sports betting experts
- Automatic replication of bets, all done instantaneously
- Pooling of bets in the provider with the best pay-out, without the need for any betting account
- Scraping off all upfront fees
To invest in the experts we have made available, one only needs to select the profiles he/she wants to follow and decide how much bankroll to allocate to each. Every time one of them places a bet, the same bet is placed in the user’s account.
Our fee structure
Our platform is entirely free-to-use. Users will only pay anything if experts are delivering a return to them. This way, we ensure that everyone’s interests keep themselves aligned throughout the whole duration of the relationship.
We have replaced all upfront fees for a performance-based one. Furthermore, we have designed it as a laddered one for operational simplicity. Every time an expert gives you a return of +5%, you’ll pay a cut of those profits, and nothing more. The expert and the platform divide the fee, with the former grabbing the lion’s share of it. The next threshold is computed based on the net return: you reach +5% with an expert, pay him ~1% (~20% of the profits generated) to a net 4% return; next threshold is +9%, and so on.
That calculation is independent from the returns you are grabbing from other experts. It is only respective to a client-expert relationship. The cut you pay is regressive depending on the amount you have invested in said expert:
Other sources of revenue
As with every business, we will also need to rely in a steadier source of revenue – experts’ performance is inherently unstable. We achieve it by striking affiliate deals with the betting providers we are working with. They will pay us a fee for the betting turnover we deliver to them. Remember that they are sharp bookmakers (mostly exchanges), so they do not limit winning accounts nor care significantly about their existence. By putting the cost on the provider’s side, we are able not to place any other fee on the end user!
You might be wondering about whether a conflict of interests could arise from this situation. Couldn’t we choose to place the bet in the betting provider that was paying us the most instead of the one with the best pay-out for the user? We thought about the same and decided to remove all discretion in the decision. Everything is done automatically, only considering the pay-outs – that is, the maximum odds available at that time.
Are you ready to become a sports betting investor?
If you are yet to register, feel free to do so while using the code BM252 to receive a €20 bonus to invest in our platform during our Beta version – no deposit required, and you get to keep all profits as credit towards future fees (eventual losses are all on us). The initial bonus will be removed from your account once the Beta version ends.