Article

Who is your counterparty?

Both parties can win (kinda)

By
John Shilling
February 23, 2024
3
min read
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Introduction

What is a "counterparty"? Think about betting like trading - your "counterparty" is whoever you trade with. They are the person, or entity that is taking the other side of your wager.

In trading, if you buy a stock, someone is selling that stock to you. In sports betting, if you bet the Chiefs +120 v. the Niners, someone is taking the Niners -120.

Why do you NEED to know about your counterparty?

Most amateur sports bettors don't think about their counterparty at all - which is a massive mistake. Coming from a poker background, I am programmed to think about my opponent. Why are they posting this number? Why are they taking a big bet from me? Why did/didn't they move when I bet?

The goal of everyone generally is "to make money" but it's not always on the same timeframe. As bettors, our timeframe is really short. We want to make money NOW. We need this bet to be +EV, or else we aren't making it.

The goal of your counterparty will not always be "to make money now". Think about DraftKings and FanDuel. When they entered the market, they threw $100 million+ at customer acquisition and ran a losing business for years. Their goal was money, but they saw the biggest pile of money at the end of acquiring market share.

This is a good spot to be. If a counterparty is focused on something else besides winning the bet you make with them at all costs - we like. There is a recent example of this going on right now with Sporttrade in golf.

Sporttrade makes a splash in the golf markets

Sporttrade is regularly offering $25k a side on golf head-to-heads w/ a very tight spread. To put that in perspective, the biggest widely available amount besides ST is $10k. And the spread on the $10k matchups is TWICE as wide. It's insanity!

So is the market maker at Sporttrade way sharper than the established golf market makers? How do we determine this? Can we run an analysis of their closing lines and compare to the results? Probably not - the amount of time it would take to reach an answer would be too long. Who knows how long ST will take these big clicks - we have to shortcut our way to a good guess.

The market maker at Sporttrade is SIG - a trading firm worth billions of dollars. They are better capitalized than ANY current sportsbook and it's not even remotely close. They are also an investor in Sporttrade (we learned this when founder Alex Kane was on the pod - great episode, link).

YouTube video by The Risk Takers Podcast

The FUTURE of Sports Betting

My partner and I were talking about how we should stack up the information we are getting from ST compared to the established golf MMs. He made the case that for SIG to make worthwhile money (to them, they’re rich) they need ST to succeed. So they are most likely in the market share game - willing to make a splash, lose a little, learn a little, etc...

Great - if someone is in the market share game, and you are in the money game: trade. They want to trade with you for the time being. They are willing to lose a little money to grow (at least they should be).

Parting Words

In poker, the "fish" (bad players) are usually way wealthier than the pros. They are playing for amounts of money that they don't care too much about - and their goal isn't to win at all costs. Their goal is to have fun. So this is a good "counterparty" for a professional poker player.

In gambling - always consider the counterparty. This isn't a single-player game!

What’s New?

GP Academy!!!

If you haven’t heard - I just launched a sports betting education community. It’s been months in the making - and will be absolute best in class. If you like the newsletter, it’s worth checking out (it’s for slightly more advanced bettors).

The special launch price of $77 is available for 4 more days: https://academy.goldenpants.com/

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