I have now written a couple of blogs about different aspects of betting, but I haven't really outlined my overall betting philosophy.
In the past, I have made contributions to various forums and I do run the risk of repeating myself here, but I think it would be nice to have my philosophy explained all in one place.
Whenever a bet is struck, there are two sides, the backer and the layer, whether betting on your desktop or via the app.
Very often the layer is a bookmaker and the backer is the punter, although nowadays with the advent of online betting exchanges this doesn't have to be the case.
I am going to use the example of a traditional bookmaker here, but this can easily be adapted to include an online bookmaker and even to an individual that lays bets on an exchange.
I mostly bet and study football but I think my opinions on those markets may well be interesting to people who bet on other markets as well.
The layer here is the bookie who decides first at what price he wants the bet to be struck.
The bookie will then put up signs in his shop, print out coupons, or otherwise make this price available to a punter who wants to bet on that particular event.
Hopefully, the punter will then consider whether or not to take the bet at the price, and then if the bet is to be struck he will do so.
If this process works as it should, then it should work as a market, the same way that the price for anything else is set. Two forces should push the price either side and to a point in the middle where they meet, the market price for any given outcome.
If a layer tries to lay a bet at too low a price, then the backer will not agree to it and the bet will not be struck. If the layer quotes too high a price, then backers will keep on taking the bet until the layer reduces the price.
Anyone who has studied economics at school will remember the concept of an equilibrium price; I believe that if the market for betting was perfect, then there would be an equilibrium price and this price would reflect exactly the probability of events happening.
If this was the case then it wouldn't be possible to gain an edge in betting and it wouldn't be able to consistently make a profit from betting as a punter or as a bookie.
I think everyone will agree that in practice this is not the case, it is certainly possible for the bookie to make money out of betting. Some people would probably argue over whether it is possible for a punter to consistently make money, but for the purposes of disproving the fact that there is a perfect market for betting, it isn't necessary to agree on this second point.
As long as you agree that it is possible for bookmakers to make money (as I think it demonstrably is), then by my logic you must agree that the market mustn't be perfect.
It is the lack of a perfect market that is the single thing that makes it possible to make a profit gambling in the long term.
My philosophy on gambling is based on discovering ways in which the market is imperfect and using these in order to make money.
In the next couple of blogs I plan to look at the process from the sides of the bookie and the punter and try to analyse what exactly goes on (or should go on), and how this means punters can make money.
This is the first in a series of blogs, read the