SPORT/BET: Trading a cricket game

OK, so I did put the kiss of death on the sporting underdogs last weekend. FIGJAM has become FINGJAM. But the beauty of betting exchanges is you can be wrong and still make money. Let me explain.

The above chart is a graph of the odds for the first one day international between South Africa and New Zealand during the game. Right-click on the graph, save it to your computer and open it up in Picture Editor or similar, change the zoom to 200% and while it is a bit fuzzy, you can make out the important bits.

I have a program that logs prices to an excel spreadsheet every couple of seconds (thanks to shareware from Gary Russell), and from that I can make the above chart. It's interesting to review the price movements during a sporting event, as it helps you understand the market you're working in and more importantly will allow you to identify "wrong" prices in future.

Back to the game - New Zealand is always a little under-rated in one-day cricket, and the prices after the toss (which NZ won, and a reasonable toss to win given the dry nature of the pitch) of SAF 1.82 NZL 2.20 I felt were a little wrong. Reasonably even teams, one with the home advantage and the other with the best use of conditions; the prices should be close to evens (i.e. 2.00 both sides). Having laid SAF for 500 quid at 1.75 immediately after the 20/20 game, I was happy - it would be very unlikely that SAF would remain favourites for the whole course of the game and I would have opportunities to either get out of the shit if I thought SAF were going to win the game, or reach the desired position of making some money no matter who won (known in betting exchange parlance as "all green", representing the colour of the figures in your current profit/loss column).

10 years ago, when betting exchanges were not even a figment of someone's imagination, to bet on a sporting event like this would require me to take a view with no ability to do something during the game. In all likelihood, I would have backed NZL as their price was IMO value (the key to all betting activity), and today you would be reading a tirade about how Nathan Astle can't bat, catch or bowl.

However it is 2005, not 1995. How can I walk away from a game where for 85% of the time I thought NZL would win with pounds falling out of my pocket? Read on and keep referring to the graph (times are NZT and are consistent with the graph times):

9.13 p.m.: early wicket - Astle out. The classic over-reaction; SAF odds fall to 1.55. Does an early wicket mean SAF's chances of winning the game have gone from 57% to 65%? Not in my book. Another 400 quid laid at 1.55 (CP - current position: SAF -595; NZL +900). I could have waited, as chances are Vincent at No.3 is not going to set the world on fire ...

9.22 p.m.: and so it proved. Bye bye Lou. Your wicket was not worth the SAF odds falling down to 1.45. Chuck another chunk against SAF at around that price (CP: SAF -770; NZL +1288)

10.04 p.m.: a nice partnership between Fleming and Marshall has come to an end through a fine catch by Gibbs. During the last half an hour, I've nibbled at SAF as their odds slowly drifted, but this wicket brings their odds crashing down to 1.45 (from 1.65). Now this I can understand, as Fleming is a key wicket. And, at 70-3 with Fleming out, I'd admit that SAF's chances of winning the game have increased when compared to the start. However there is little downside in going against a strong odds-on favourite early in a sporting contest. A few minutes later, I lay SAF again at 1.42 (CP: SAF -784; NZL +1418). If you compare my current position with that of half an hour ago, basically the changes in odds have allowed me to get an extra 130 quid profit on NZL without incurring any significant liability on SAF.

11.34 p.m.: the first decent partnership of the game has come to an end with Oram run-out. NZL are 172-5 after 37.1 overs. With a reasonable middle/lower order, I believe in all probability NZL will get around 240, which I assess is a "par" score for the pitch. That means IMO both teams would have a roughly equal chance of winning the game, and translating that to odds, should mean both teams should be priced around 2.00. But the wicket sees SAF odds tumbling down from 1.75 to 1.60. Like a kid in a candy store (and because I have backed SAF a little bit during the partnership), I can't resist going in again (CP: SAF -775; NZL +1500)

Why are the odds wrong? In my experience, people (especially TV commentators) over-estimate what is a good score when batting first in an ODI. That's backed up by a cricket database I've purchased where I know historically how successful teams are chasing scores of 230, 250, 270, or 300. But as I've paid for that I'll keep it to myself!

12.35 a.m.: The New Zealand innings ends at 249-8. I think that's a reasonable effort, and even if I'm incorrect about what should be a "par" score, I'm convinced the market has got it wrong as they think it's sub-standard; the odds are now SAF 1.55 NZL 2.78 (compared to the start of the game SAF 1.82 NZL 2.20). CP: SAF -655; NZL +1400

1.26 a.m.: Thanks Shane (Bond). A wayward first over costs 17 runs. SAF odds go below 1.40. Another over-reaction. Like a kid in a candy store ... (CP: SAF -825; NZL +1900)

1.46 a.m.: Cricket is a funny, and unpredictable game. From 17-0 after 1 over, SAF are now 41-3 in the 8th over and for the first time in the game, NZL are favourites according to the odds (in the space of 20 minutes, NZL odds have gone from 3.65 to 1.65). Unfortunately, I backed SAF before the fall of the first wicket, and after the first and second wickets, so when Smith goes I curse loudly but at least now I can get into a position where I can win no matter what the outcome of the game. NZL is in the box seat and some people may wonder why I wouldn't ride out the game with a nice big win on the Kiwis. Read the first sentence of this paragraph again. (CP: SAF +500; NZL +650)

3.30 a.m.: After 35 overs, SAF are 135-5, requiring another 115 runs off 15 overs with 5 wickets in hand. Surely NZL can't lose from here? Read the first sentence of the previous paragraph again. You'll notice I haven't had a bet in the last 75 minutes - why should I? - I could go to bed and wake up in the morning with money for the groceries, but around this time NZL odds fall below 1.20 and while they probably represent a fair reflection of their chances of winning the game, they are a little skinny and you don't go broke very fast going against strong odds-on chances. I laid the Kiwis for 500 quid at 1.24 (CP: SAF +1000; NZL +530)

3.45 a.m.: GAME ON! Astle's sixth over goes 2-0-4-6-6-4; NZL's odds go from 1.3 to 2.5 in the blink of an eye. Another over-reaction; in hindsight I'm a bit quick in backing NZL at 1.8, 1.9 and 2.2 during the over (CP: SAF +600; NZL +900)

Boucher goes soon after, NZL odds go back below evens (1.8) and hit 1.43 around 3.55 a.m. With 20/20 hindsight, those odds were probably wrong, and as the papers tell us, so it proved. But even at this stage late in the game, I felt NZL were favourites to win, and there comes a point in a sporting contest where you just sit back and watch it. It's quite easy to f**k up a good position, and price movements late in a game which is reasonably close can sting you if you are on the wrong end of it. 10 minutes later, when Pollock and Kemp got going, both teams were 2.00 and in another couple of overs after a couple of boundaries SAF were (deservedly) 1.35.

About now, I realise SAF will probably win, but with their price at 1.35 I don't get involved. I don't need to; I've made money whatever the result and Murphy's Law dictates the moment you plonk some money on the team batting, a wicket will fall. While there can be some massive price swings late in a close game (as this game shows), they can just as easily go against you as for you, and I've learnt the hard way a couple of times if you've got a winning position, don't get greedy!!!

So 600 quid profit for a night's work when I thought NZL would win for 85% of the game is not a bad effort in my book. I'm not the world's best trader, I can identify a couple of things I did wrong last night but I think I can say ...

FIGJAM.