An insightful review of the risks of matched betting

[MITK]

Here comes an analysis of the risk v reward ratio in matched betting these days.
Any thoughts on this are appreciated.

Ponzi schemes in the age of matched betting
Six years ago a technique called matched betting made its appearance on sports betting forums and a relatively small number of online bettors started using it to make some extra money, taking advantage of the free bets offered by online bookmakers.
The competition amongst online bookmakers guaranteed they all offered free bets to attract new customers. Then the growing popularity of betting exchanges and online betting in general made possible for an increasing number of people to take on matched betting, often without having any interest in sports betting.

As some of the forums and message boards discussing best buy deals and money savings opportunities effectively turned into bonus offer linkfarms, matched betting became an everday activity of thousands of fans for whom the chance to make some steady money using a technique apparently foolproof was simply irresistible.
Soon enough a lot of "matched bettors" realized that bonuses and free bets could be extracted to guarantee a profit as many times as the number of friends each of them had. And a new version of the bonus whore that in the early 2000s created lots of problems to the pioneer online casinos and sports books was born.

But on the other side of the counter this time there were (and still are) underfunded and clueless (about bookmaking) operators that entered the online sports betting market thinking bookmakers cannot lose irrespective of what they offer and do.
Greed (on the player's side) and naivety (on the bookmaker's) made up for the rest of a combination that resulted in almost 20 online bookmakers in the last 3 years alone disappearing without paying their customers (in very few cases the players have eventually been bailed out by other site operators).
And a lot more are struggling to remain afloat as I write, while others just launched or will launch in the coming months offfering all sort of promotions. Apparently all had gone (and are still going) after the same customer demographics, the forum players, making the mistake of thinking that by offering them a free bet, they would try their services and eventually stick around as recreational customers.

The reality is that the online bookmakers that went belly up in recent years simply didn't have particular reserve of funds beside the money they had invested to get started. Most were counting on making the business pay by winning the money from the players rather that by managing the book.
And when making money from bonus whores (and forum players in general) turned out to be a mission impossible, the online bookmakers, without proper funding and unprepared to sustain large losses from their promotional activities, effectively became Ponzi schemes.

In the early 1920s Charles Ponzi offered extraordinary returns to investors in his postage stamp arbitrage system, only to end up diverting new members' funds to pay the promised interests to earlier investors.
Online bookmakers in the age of matched betting use generous bonuses to attract new player deposits to be able to pay old customers' winnings.

Ponzi used both his charm and a number of agents to attract new investors.
In the age of matched betting, gambling affiliates and online bettors themselves do most of the leg-work to promote new and unproven bookmakers.

In the late nineties and early 2000s when a new bookmaker appeared out of nowhere or an established site introduced a new bonus offer, discussions on specialized betting forums centered around "Are they reliable? Are they still OK?"
Now this type of discussions are few in between lots of others listing bonus offers and their terms. These days every time a new unproven bookmaker goes online with a free bet or sign-up bonus, links to the promotion are (within days) posted on all the message boards dedicated to betting bonuses.

Just like entering a Ponzi scheme early has its rational, taking on a bonus offer from a recently launched bookmaker may be worth it. But enter the scheme too late or open your account several months into the online bookmaker's launch and you may be left holding the bag.
And again: like certain Ponzi schemes manifestly built around non-sustainable business models made very clear to their initial investors that they had to recruit new participants to get paid their high returns, internet bookmakers know how to prey on forum players to promote their offers.

A question I've been asked before on forums goes: Are fellow players that post links to free bets from new or unproven bookmakers effectively soliciting new deposits to guarantee their withdrawals will be paid?
I personally don't think so, at least not for most of them.

Nevertheless, if we consider that the majority of customers who lost money in each and every bookmaker failure in recent years were forum players - matched bettors, bonus whores and arbers - many of whom have lost money in two or more occasions, it is kind of hard to imagine that nowadays those who are posting links are not aware of the risks.

While I always invite players to take their responsabilities in sending funds to new and low-rated bookmakers (as I don't know of anyone who has ever been forced to send his money to a bookmaker), I also understand how the mechanics of online communities make it easier for people to be influenced in their decisions.

So when you see a link to a new bookmaker or a new generous bonus posted on a forum by a fellow player and you can't say for sure whether he's just trying to be nice or he is making sure new deposits will come in to cover the payment he just asked yesterday, this is where risk vs reward must be considered.
How long has the bookmaker been around? And the bonus offer? Is the offer too good to be true?

Think before opening any account. Make an educated decision, not a guess.
Do not open an account just to follow others who are likely to be at least one step ahead of you. And the chances you will not be left holding the bag will improve notably.

Pierluigi Buccioli

Date published: 22 May 2010

[Andy]

It is fairly accurate in lots of ways. You pick holes in anything if you want to but there is no virtue in it here, overall its probably more right than it is wrong.

[musicbox]

Tbh, there's not too much to debate on Pierluigi's article since most is pretty obviously common sense and hopefully the main thrust doesn't shock anyone who has ventured outside of the most reputable books!

Beyond common sense, as long as you also realise you cannot see the dirty kitchen an apparently successful business is operating from then you'll understand that no matter the level of your research, you often never get close to seeing a full picture. This realisation is a good thing as believing you have an all seeing eye is as dangerous as jumping in eyes closed.

[MITK]

Beyond common sense, as long as you also realise you cannot see the dirty kitchen an apparently successful business is operating from then you'll understand that no matter the level of your research, you often never get close to seeing a full picture. This realisation is a good thing as believing you have an all seeing eye is as dangerous as jumping in eyes closed.

Thats very true. Its really hard to get a full picture to something remote in a third world country the other end of the world. No matter if you have contacts or not, are they trustworthy or not, there`s always a chance youre not picking the right signals. So this venture is more or less a gamble for you, always a chance that you`ll be left "holding the bag"

Thats common sense as you say, but for me the main point Pierluigi is putting up and I`m trying to make an issue of here at TGT too, is that so-called "forum books" are the ones one has to proceed with a lot of caution. The very fact a book comes and advertises to a forum with no recreational players, should trigger an imminent red light.

I mean facts speak for themselves, if we take TGT alone, all the books that promoted themselves here hit the sack - betjoint, heroes, bet911, and the latest forum book on the list bethorizon is in a two-month slow-pay mode.

[Andy]

The very fact a book comes and advertises to a forum with no recreational players

That is not the case though that there are no recreational players. Although its a trivial point I can see what you are saying, the vast majority are advantage players.

I mean facts speak for themselves, if we take TGT alone, all the books that promoted themselves here hit the sack - betjoint, heroes, bet911, and the latest forum book on the list bethorizon is in a two-month slow-pay mode.

Well thats a good point, and when you put it like that....

Although I dont think TGT itself was to blame for those sites going under (Despite what BetJoint said a lot of that was making us a scapegoat. The VAST majority of the players who were a problem had nothing to do with us).

This is why we have the reviews which everybody at TGT contributes to and any changes are reflected each month. The system is being improved to show any particular outstanding complaints too to give the very best real time reflection of every bookmaker there is. No reviews can predict the future but we would never leave a site we suspect is in trouble as highly rated, if a highly rated site deteriorates it is as much as a suprise to us as anybody else.

It is not a perfect system but it is the best we can do. If you have any suggestions on how to further improve it then they would definitely be listened to?

[musicbox]

... for me the main point Pierluigi is putting up and I`m trying to make an issue of here at TGT too, is that so-called "forum books" are the ones one has to proceed with a lot of caution. The very fact a book comes and advertises to a forum with no recreational players, should trigger an imminent red light.

I mean facts speak for themselves, if we take TGT alone, all the books that promoted themselves here hit the sack - betjoint, heroes, bet911, and the latest forum book on the list bethorizon is in a two-month slow-pay mode.

You can certainly point to some now defunct sites which advertised or had a presence on AP sites including this one. If people wish to use that as a basis for 'red lighting' any other book which posts on TGT or other forums then they are entitled to do so and I'm pretty sure the basis for their position is not one anyone would call a strange position to take even if they do not share that position.

At the same time though it should be remembered countless more books died yet had no such forum presence. Plus, if you're working on the basis that it's the type of clientele who brought down Bet911 for example, then wouldn't it be fair to say that even without Bet911 going on TGT/MSE that as soon as the offers had been posted, the eventual outcome may have been no different anyway?

Is posting at AP sites indicative of a poor business model? Is the fact that pretty much every bookmaker seems to affiliate link with some AP site, some odds comparison site etc a poor business model? Is the fact that my shop manager knows what I do but still takes all my bets a poor business model... in fact, why does she actually help me to do what I do by telling me to split up stakes and so on?!

These are all things we have to make up our own mind on but like anything AP, it is always somewhat clouded by the fact we're not simply looking for that one reliable book, we're looking for a whole host of opportunities, the vast majority of which will not be at places we would otherwise even consider playing at.

[MITK]

Although I dont think TGT itself was to blame for those sites going under (Despite what BetJoint said a lot of that was making us a scapegoat. The VAST majority of the players who were a problem had nothing to do with us).

No, of course TGT cannot be blamed for all those forum books going belly up, but in the wake of all that happening in the space of less than an year, we should all reflect upon it and for me the most important conclusion is that the very idea of a sportsbook advertising on a forum where the vast majority, as you righteously pointed out, are advantage players, is simpy put, plain wrong.

I mean, for sure they will do a bit of research and read up the forum to have the idea what sort of folks make this forum before they proceed with posting anything about their books.

And noone in this industry, in his right state of mind, would proactively invite and lure with all sorts of "carrots" such players to join his book. Unless he`s looking for short-term profits before he runs for the hills.

Mark Roberts needed as many active players as possible to sell his book to Bookmaker group and get a decent pph earnings from them. He succeeded in his endeavours one has to admit.

Sean Dillon was desperate for fresh cash after all his american casino customers withdrew their funds en masse in the wake of the software provider revoking their license. I still think Sean was trying his best to save Heroes, but he made the crucial mistake by refusing to pay that blackjack guy his winnings and then confronting the software provider and from there on odds were against him.
So in effect he used the forumers money only to prolong heroes agony for another 10 months and burned alot more money than he would have had if he had stopped once his casino license was revoked.

Bet911 was run by a bunch of tico guys who believed theyre so good at bookmaking that they will beat all advantage players hands down. In the end they began to realize the reality`s a bit different so they went on offering huge bonus offers Goldvictory-style trying to get as much sucked in before they throw the towel. Anyway there all so nice with me, except for Robert, who is having a character of his own, so its hard to say something really bad for them, they were more plain incompetent than vile or malicious or anything

So, I`m sorry I had to dig some skeletons out of the closet here, but as we say here in our small country :
"The road to hell is paved with good intentions"

And this article provides perfect opportunity to reflect upon how certain things work in this industry, draw your own conclusions, and move on, of course

[armyvet]

Haven't heard the name Mark Roberts lately! He took care of me quite well all the way back in the Bet Atlas days when he used to run that book. Where is Mark now? Working customer service at Bookmaker now?

[MITK]

Yeah he is a manager at Bookmaker nowadays.

[musicbox]

... the very idea of a sportsbook advertising on a forum where the vast majority, as you righteously pointed out, are advantage players, is simpy put, plain wrong.

Are you suggesting no bookmaker rep. should have the ability to post here?