From bookmaking into prop trading

Chris Smith gives his view on the European bookmaking industry and the reasons behind his move into proprietary trading using quantitative data.

Categories: All Sports, Careers, The basics

In 2005, I entered the world of football betting and began working for William Hill in Leeds. At the time, their online business was struggling and was under performing compared to its potential.

I worked for William Hill for approximately two years before moving to a betting exchange but towards the end of my time with Hills, they were consulting with staff regarding a change program. This included the updating of its core technology (which was from the 1980s) and moving some staff to Gibraltar. I left not long after for London and the rest, as they say; is history.

In the past six years, the biggest change seems to be the extent to which European bookmakers have taken their strategic lead from the Asian Handicap markets for soccer. The exceptional rise and dominance of live betting has also brought significant change to the bookmaking landscape, especially the more ‘cumbersome’ high street and ‘old school’ books. Although the evolution towards the Asian model is correct to large degree, this has also created the problem of increased usage of automation and a general lack of skilled odds compilers who can develop unique strategies. Arguably, today’s bookmakers have become lean, mean marketing machines.

I have worked within a UK bookmaker, UK betting exchange, football data provider, Asian broker and bookmaker and the back to another UK bookmaker and I have a wide circle of friends and contact who speak openly about their work within traditional UK books. From both my own personal experience, as well as anecdotal evidence from my contacts, it seems to be that there is not enough quantitative and qualitative analysis of team performance within these ‘old school’, mostly Western European bookmakers.

This is due to the bookmakers becoming more product-orientated, focusing on what the marketing team can successfully roll out and deliver to the public. Bookmakers are forever chasing the retail losing money and will quickly turn off long-term winning or smart players. My personal feeling is that this is not a successful strategy for the long-term and that odds compilation should feature higher in the management agendas many of the European bookmakers. There is little real skill involved in these roles today and the role of a working at a European bookmaker is an unfulfilling one.

Having taken the decision to leave this area of the industry, I left my last job in July 2013 and began prop trading for myself.

The risk strategy for many such books is not forward-thinking, dynamic, revolutionary or even evolving to any great degree. Whilst winning customers are closed out or restricted to £20 bets, compulsive gamblers, sometimes with too much money, are actively encouraged to lose more money by increasing limits by up to ten times of new customer or up to 1000 times that of a shrewd player. For the UK high street bookmakers, their reliance on the four gaming machines in-store, which has been recently highly publicized, has done a lot to hide the underlying demise of many sportsbooks’ profitability at their core. So, can it be said that the modus operandi of many European bookmakers is a depressing one for the wider society?

Having taken the decision to leave this area of the industry, I left my last job in July 2013 and began prop trading for myself. I am determined to use data as the books should be doing, and I hope to derive significant profit from their not doing so. The basis of my work revolves around attack and defence ratings and I find it best to look at goal stats for the last 20 matches or so. Looking at the mean and standard deviation I can make a reasonable assumption about most teams’ attack and defensive strength.

The trick is to find teams who will regress and improve. Some of this comes down to shot analysis. For example, League Two teams so far this season are generally averaging around 10 shots in total for a home team and 8 for the away team. In League One it is around 12 and 10 respectively and Championship it is around 14 and 12. It becomes clear why League Two is so tight competitively. To find out if teams are open to improvement, I analyze conversation rates compared to shots and target/shots conceded.

I now need to do more work on measuring individual player performance and there are a few hurdles in the way, time being one of them. As with many groups I know who have started along this path, there is always a tradeoff between what time to invest in which areas of development. Therefore I am happy to connect with other individuals within Sports Trading Network, who would like to discuss finding edges for trading systems.

About Chris Smith

Chris Smith began his career working with William Hill in Leeds before moving to London to work for WBX, an online betting exchange. He also gained experience with Sportingbet, Samvo Sport Radar and Skybet, within a range on trading, operations and supervisory roles. In the summer of 2013 he took the decision to begin trading his own book and is successfully building his trading account.
2 Thoughts on From bookmaking into prop trading
    15 Nov 2013

    Hi Chris,

    An interesting post. I am happy to see you have anecdotal evidence of the possibility of developing largely quantitative solutions to sports betting. I myself am going down that path of developing models for betting on tennis and football and have been relatively successful although only over a short time. Be interested to know where you get all your data from. I find that the biggest problem.

    19 Nov 2013

    Really nice post Chris, I completely agree the way you explained how bookmakers are not keeping up with changing times, I mainly trade in Horse Racing on Betfair after my liability was reduced significantly by most of online bookmakers including hills, 365 and all that.

Leave A Comment