Given that most bookies do fairly nicely for themselves, it seems obvious to me that they must know more than we, the bettors, do. At least they must have better advice and more sources of information. What can bettors do to close the information gap with “the Bookmaker”?
There is so much possible information and misinformation available on any speculative event that we can be overwhelmed with data. It would be a full-time job trying to gather it, let alone sift, sort and process it properly.
Even then, at whatever level of data we accumulate for our own use, we would probably find that our data was compromised by our own biases.
Your area of inquiry parallels the efforts of previous year’s co-recipients of the Nobel Prize for Economics that I can’t recall at the moment. Each year, the Nobel committee recognizes an economist or economists who have made a breakthrough in the field. That year’s winners examined and theorized about “asymmetric information” or, in other words, information that is not balanced or equal but that is still used to arrive at a certain result. Of course, most human decisions are reached after examining a set of factors, none of which are equal in value to the others.
Traditional economic theory held that all sides had the same information, but because they held different preferences or influences their decision processes caused them to arrive at different conclusions. In the “real world,” however, we all know that one side often knows something the other side doesn’t. We would call this an asymmetrical information database.
A good example of an asymmetrical relationship regarding data can be seen in an examination of the relationship between an insurance company and one of its health insurance policy holders. The policy holder will probably know more about his health and his family’s health history than the insurance company will. The insurer, however, knows it is on the low-side in this data acquisition game and adjusts premiums to reflect this potential problem. If the insurer failed to make this assumption it would likely lose money. It’s the same thing when someone purchases a used car. The seller always knows more about the bucket of bolts than the buyer does. It is also true of many other economic relationships that one side has more or different information than the other side.
Sure, a pure symmetrical model based on quantifiable factors would be ideal, and many handicappers act as if their relationship to the odds and pointspreads is easily examined according to a set of factors common to both themselves and the creator of the odds and pointspreads. This situation, however, rarely exists in the “real world.”
Now, I don’t think the bookies have access to more, better or privileged information that the rest of us somehow miss. Remember, the bookie is not picking a side, he is “booking” the “action” of a diverse group of decision makers who often collectively cancel each other out. In other words, the bookmaker attempts to create a symmetrical pattern of wagers upon which he attaches a vigorish that will produce a profit.
The bookmaker, through the use of the pointspread or odds, controls the act of betting and can burden any wager with a negative pointspread or lay price on the money line. Using the spread or money line, he attempts to drive the bettors to symmetrical behavior producing a situation where half the money is wagered on one side and half on the other side. This scheme produces an effect in which the bookie has the bucks in his favor and is similar to the economist who tries to guide the pricing policies of the XYZ Corporation. Like the economist, the bookmaker knows that setting the wrong price (or pointspread or odds) can lead to a disastrous result.
Bettors, of course, are selecting a side and, unlike the bookmaker, are not making a decision based on collective decision-making processes. Bettors make their own singular decision based on their lone opinion. A bettor must know he is playing in game where the two sides have different goals based on different information that has come from different sources. Therefore, the bettor is forced to view his situation knowing that he gathers and processes information differently from his bookmaker. Given this, the bettor must hone his skills to acquire and manipulate information in a manner that produces good results. And that’s really the only measuring stick here — were more winners picked than losers and was a profit produced.
Once established, the probability or perceived chance of success is easily convertible to an odds line or pointspread. Therein, bettors look for a predetermined advantage over the “price” (pointspread or odds) and make their decisions accordingly.