Honest Illegal Gambling ?
Betting is not allowed in a lot of countries and in most states of the US, so by definition here only criminals supply betting facilities. The US states that allow gambling (most well know is Nevada) regulate the gambling industry very strictly. The sheer amount of money flowing through casinos itself makes them interesting for organized crime. But no more on money laundering in casino’s now.
The discussion on crime control in numerous areas, also in gambling, is between legalizing and regulating on one hand and banning and suppressing on the other. Alcohol, drugs and gambling all score differently on these 2 options.
But crime concerns also touch upon the regulated gambling industry. The NY Times published a story today on Betfair, a UK online gambling firm. Betfair is like ebay for gamblers. Users can set their odds and match their bets with other users. It operates in 80 countries and does a lot of bets a day. That is why Betfair has a lot of data to analyze gambling behavior. During the tennis match between Arguello (ranked 87) and Davydenko (seated 4) Betfair detected irregular bets. Davydenko’s odds got longer while leading the match. More and more money came in on Arguello. Davydenko resigned with an injury, leaving underdog Arguello as winner. Betfair reported the data to ATP. A subsequent report by ATP, “Review of Integrity in Professional Tennis” recommended an investigation on 45 other suspicious matches (the tip of the iceberg according to the report) and the endorsement of an anti-corruption body for sports.
Soccer games in Europe are known to have been infested by game fixing practices. Goalies, other players and referees are have been bought to lose games (never heard of someone being bought to win…). Add baseball, boxing, basketball, football, cricket; what is the grip of organized crime on sports ? If you imagine the amount of cash you can make by influencing major games, you would say this opportunity has been seized…
Experts estimate fixed games to be 1% of total. Over 2% of US Division I football players reported to have been asked to influence the outcome of games for gambling purposes. Illegal gambling in the US only is estimated at $150 billion a year according to the NY times.
The FBI has its own ‘sports bribery program’ and focuses on fixing sports games. In the course of time, all sports seem to have been infected by game rigging criminals. And without betting, fixing games is ofcourse not very interesting from a financial point of view.
Let’s compare with the financial markets. Although you don’t know all inside details on a company, you can get a lot of details on the price of options, stock and the supply and demand on the stock exchange. This will give an indication of how the market feels about the stock price. With a real time overview of the amount of bets being placed and their odds, you could detect information asymmetry, as you could detect insider knowledge in financial markets. This could enable you to take a bet (if you can legally gambling in the country you live at least) and follow the sentiment in the market and whatever is going on at the moment…. Good luck !
If honest legal gambling is more difficult than expected; let’s forget about honest illegal gambling. And don’t play poker with your friends; they will cheat as well : ).
http://www.nytimes.com/2008/05/25/sports/othersports/25betfair.html?_r=1&hp&oref=slogin
http://www.library.ca.gov/crb/97/03/Chapt11.html
http://www.betfair.com/
http://query.nytimes.com/gst/fullpage.html?res=9507E2DF153BF93BA25752C0A961958260
http://www.fbi.gov/hq/cid/orgcrime/lcn/sports.htm
