Sports: In Game Trading inefficiencies

In-game trading on sports games has become more and more popular. Several sports books now offer it, probably more than I know. Tradesports offers it on all games (although there isn't an active market maker in every game). World Sports Exchange has it nightly on the key games. Pinnacle has it once or twice a week on the most important games of the week.

In the last minute or so in the USC/Texas game, The score was USC 38 Texas 33. The total at that point was 71. Texas was threatening to take the lead and was marching down the field.

Tradesports had two markets that were interesting at that point:
Texas to win the game: the market was 55/60
Game to go over 71.5: the market was 45/50

In order for Texas to win the game, the total has to be over 71.5. Even if a person didn't have an opinion, a great combination of bets was to sell Texas at 55, and buy the Over 71.5 at 50.

Let's check the possible scenarios if you bought Over 71.5 at 50 and sold Texas at 55:

Texas scores and wins:
Over 71.5 goes to 100. You win 50
Texas goes to 100. You lose 45
Net: you win 5

Texas scores but USC comes back to win...or USC scores on a turnover:
Over 71.5 goes to 100. You win 50
Texas goes to 0. You win 55
Net: you win 105

Texas doesn't score and USC wins:
Over 71.5 goes to 0. You lose 50
Texas goes to 0. You win 55
Net: You win 5

You win in every scenario.

Another alternative is if you only wanted to get long Texas, to just buy the over and not sell the Texas side. This way you still get the Texas exposure, but for a cheaper price...and also if USC scores on a Turnover, you also win.

So that's what I did. With 500 contracts offered at 50, I put in my order and bought 480. Someone else beat me to the 20. This happens very quick, from the time the market was posted to my trade was probably less than 10 seconds. My guess is that if you aren't very familiar with Tradesports' system, you wouldn't have been quick enough to execute the trade quickly. The offers on TS doesn't stay there forever. Typically they are canceled right before the next play starts. This makes sense as no one wants to expose themselves to a bad trade after the fact. So one has a very small window to see the opportunity and then to execute it. Near the end of the game, I was paying a lot of attention to these markets. By that time, I was very long USC in the money line, but also very long Texas plus the points. So I was sitting pretty if Texas didn't score. I was actively looking for good opportunities to sell off my USC money line position at fair or better than fair prices (at that point in the game, it's a tough judgement call, as the market swings wildly after every play). If I wasn't paying that much attention to the game market, I may have completely missed the opportunity in the total.

This was a small inefficiency. Whoever put that market (the market was put up as 45/50 500-up) wasn't paying attention to the game market...or if they were, they didn't connect that the two were intricately related at that particular time in the game. Even though the in-game trading market is becoming more efficient and with less easy opportunities, there are still times when there are quality trades to make.

Some other information about in-game trading for those that aren't familiar with it:
Tradesports and WSEX provide bid/ask spreads in market terms. For both of them you can probably view them in terms of the old-fashioned money line or pointspread, but I find it easy to view them in terms of percentages, settling to 0 if the wager loses or settling to 100 if the wager wins. That may be due to my own background in the financial market.

Examples without taking into account the commissions or transaction costs (if any)
Example 1: if you buy Team A at 50, it means you are making an even money bet. Because if you lose, the 50 goes down to 0; while if you win, the 50 goes to 100. So you either win 50 or lose 50.

Example 2: if you buy Team B at 75, it means you are laying -300. If you win, you win 25, if you lose, you lose 75 (75/25 = 300%).

Example 3: if you sell Team C at 40, it means you are laying -150. If you win, you win 40, if you lose, you lose 60. Selling Team C at 40 is the same as buying their opponent at 60.

Frankly, I think it is the better way to think and view these things. When I see a moneyline, I automatically convert it into percentages anyway, so for the way my brain works, their market method is more intuitive for me. Pinnacle's lines are a bit different, as they have a moving pointspread line; and the betting is in the same format as typical money line or pointspread betting. But also, if you open a position, you can't close it out. In effect, you have to put on two separate positions. For example, if you take USC -150 in the money line for $150 to win $100...then you take Texas +150 in the money line a few minutes later for $100 to win $150....they won't know that you have no exposure and will still lock onto your $250 investment until the game is over and the bets are graded. This hurts a bit for those that are on a tight bankroll relative to the size of their wagers.