Present Day Arbitrage Ecosystem

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Lansky
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Present Day Arbitrage Ecosystem

Fri Sep 06, 2013 3:57 pm

I'm re-posting something I typed for another thread on here last month (but which no one responded too). The first two lines in red is a quote from another poster that I was replying too.

"From my point of view, these services are direct competitors to me.  Theoretically, the more there are, the less arb opportunities I can use for myself." (Talking about automated arbing services specifically and arb finding services in general.)

You're spot on with that. No arbitrage opportunity lasts forever. The present situation with sports arbitrage reminds me of arbitrage trade that existed in the Silver market for roughly a decade from 1971-81. It started around the time the US went off the Gold standard in August '71 and went through a golden period of great arbing opportunities for the few that realized the possibilities (in those old fashioned days there was often several times a day a one percent or greater difference in silver prices between the Chicago and New York exchanges not to mention London and Zurich or the new upstart Tokyo. That was also around the time that advanced telecommunications equipment was becoming affordable so in short endless opportunities for a few years there.) Then around 1978 word started getting out and trying to arb/scalp the silver market became increasingly popular drawing the Hunt Brothers and lots of newly rich Arabs. Second half of 1979 it ran up to higher and higher finally reaching that $50 pinnacle in January 1980 before crashing. Later that year a recession started and as inter-market technology had improved and because of so many competing market participants who weren't there in earlier years the arbitrage opportunities dried up completely in '80 and '81 with silver flat for years and years after.

I see the present sports arbitrage market to be like the silver one was towards the end. Lots of BS systems and out right scams and all kinds of people flooding in to force done the percentages on the opportunities that are still available.


What are the thoughts of others on this subject?
In Arbitrage, Percentages are Vanity and Turnover is Sanity.
pescu23
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Re: Present Day Arbitrage Ecosystem

Mon Sep 09, 2013 10:45 am

I think is very hard without a monitor.
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Bullajami
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Re: Present Day Arbitrage Ecosystem

Wed Sep 11, 2013 5:07 pm

I recall seeing this same argument presented 7 or 8 years ago.  Over-fishing and arb bots were going to kill arbing.  Perhaps we are getting closer to that point, but I keep finding opportunities.  (And I'm not even trying that hard.)
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Re: Present Day Arbitrage Ecosystem

Fri Sep 20, 2013 6:47 pm

The main point I want to make concerning the present betting ecosystem is that things are a changing. And that that change will pick up whenever the economy gets back in full drive mode. More consolidation and better use of technology by the books is what I see on the horizon.

Take Nevada as a case in point. Back in 2011 William Hill bought up 115 of the 183 sportsbooks in Nevada. Most of the rest were bought up by Cantor Gaming around the same time leaving less than ten independents (I think 6 the last time I looked). What a huge change. For decades the big syndicates employed guys full time to sit around at all the different books to watch the lines and call in changes, as well as teams of drivers and runners to race around Vegas and Reno with bags and bags of cash placing bets. No more. That evaporated between 2007-11.

What's more that outfit Cantor Gaming is a subsidiary of Cantor Fitzgerald LP one of the Wall Street firms that helped bring about stuff like algorithmic trading. They're quietly getting their hands into plenty of pies overseas too. Whenever they decide to show themselves and apply some of their muscle it's going to cause more than ripples.
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