People who inhabit betting markets agree to disagree and what they agree to disagree about is information and how to interpret it. Punters spend most of their time trying to be ahead of the game, without ever realising that they are actually part of it. The illusion of control leads them to believe that they are the only ones that know the true price of anything; when, in fact, the true price is something that is only ever revealed when an event has concluded. The example, of Third Wind (below) highlights the danger of a betting strategy in which the price itself is taken as being the singular most important source of information.
Augur Update: Fools Gold
It is notable that most of the sports betting markets on Augur, the crypto prediction market have attracted no liquidity whatsoever. So, as it stands, Augur is being used as a platform on which to hedge crypto and not much else. As of the evening of 14 January 2018 Augur Rep is down 9% at around $8.31 USD.
The only reason that the currency has any value at all is because of the significant holding of other cryptocurrencies held by the parent company Augur. In other words, Augur is the proverbial sleight of hand busted flush: the true value of the underlying business is 0 USD.
This is how much you would have lost had you bought the prediction market cryptocurrencies Augur and Gnosis at the top of the market. And yes, that is right, if you bought the Augur cryptocurrency at the top of the market you are now looking at a loss of 91! As I have repeatedly stated there is no intrinsic value in either of these companies: there valuation is disrectly linked to their holdings of Bitcoin and Ethereum. They are effectively shell companies. There is no reason whatsoever why anybody would hold these cryptocurrencies instead of Bitcoin and Ethereum. And indeed, any bounce that they do regsiter will come about only because of a recovery in these currencies.
|Companies||Year High||Current Price||Change (%)|
US Betting Market
It is becoming increasingly clear that the newly regulated US betting market will be fiercely competitive. As per usual, early forecasts of a bumper bonanza for UK and Ireland based betting companies have been pared back. This is not surprising when one considers that nobody has, or indeed, can have, any understanding of the structure of the environment that they are going to be trading in. Which states will permit sports betting in a retail environment and which states will permit only online sports betting? Fierce competition equates to increased marketing costs and ultimately to reduced profitability for everyone. Paddy Power Betfair stated as regards the US betting market in its Q3 2018 Trading Update:
"We currently expect US sports betting EBITDA losses to be around £25m in 2018, reflecting marketing and promotional investment in New Jersey."
UK Bookmaker shares unloved.
The UK’s beleagured gambling companies have voluntarily agreed to cease television advertising during live sports programmes. They are not however out of the woods yet, with a confluence of factors weighing heavily upon the sector. Issues such as a ban on credit card payments and a broader crackdown on online gambling remain very much on the table, and may well form part of Labour policy. They are also sensitive to growth generally and to a fall in sterling. 2018 was a disaster for investors in the UK gambling sector. Anybody, for example, that bought into GVC Holdings at the top of the market in 2018 is now facing a loss of 39%. It should be noted, however, that GVC Holdings was something of a stellar performer in the early weeks of 2019 - up over 6% at 727p. however, those that chased the stock higher have once again had their fingers burnt, as concerns over China, Brexit, a posible ban on the useage of credit cards for betting and the news that the US Department of Justice has revised its 2011 ruling on the Wire Act to state that it does actually prevent all forms of online gambling, have seen the stock once again fall back below the 700p mark. Those that bought shares in PADDY POWER BETFAIR at or near their 2018 high are now nursing a loss of around 30%..
The state of the UK Retail betting market was put under the spotlight when, on 17 January 2018, GVC Holding announced a post close trading update for the year to 31 December 2018. LFL NGR was 3% behind last year. LFL OTC NGR was 10% behind driven by LFL OTC gross win margin down 0.7pp and LFL OTC wagers 7% behind. LFL machines NGR was 3% ahead. This does not present a very good picture of what is going on out there in Brexit land vis a vis disposable income and consumer spending patterns. The results also clearly reveal the degree and extent to which the company relies upon machines. Expect any early bounce to be faded (Currently up 3.5% at 696p).
|Companies||2018 Year High||Current Price||Change (%)|
Betting markets have evolved significantly over the past twenty years, driven by new technologies, and the betting market itself has become more difficult to anticipate as traditional participants have been systematically replaced by punter-scalping algos. Accordingly, trying to predict the path of a betting market price over the short term is a mugs game and one that leads directly to the poor house.
Concern yourself with things before they come into existence. (Tao Te-Ching).
Source: N=All 25/05/2018. * = Stamina Dam Side