Wednesday, 23 April 2014

The prize/wage to liquidity ratio

I must preface this blog by saying I am not accusing any individual or sport of engaging in match-fixing, On occasion I have referenced very well documented stories.

There are many factors involved in match-fixing not least including personal attributes such as greed which cannot be estimated on a general basis. On any given fixture, the individual or team approached to fix or who have decided to a fix a sporting contest might be rich, poor, risk averse, risk-seeking, in a financial hole or being coerced. But whatever these factors, one thing is for certain and all experts agree on this – as the prize/wage to liquidity ratio grows inversely, the opportunity and the likelihood of match-fixing increases. It is an obvious statement but a footballer earning £300,000 a week might (in this example) in fact be open to match-fixing. But how much would he need to earn? A year’s salary? That would be £15.6 million though there are tax and agent fee considerations. Could someone earning such a wage a) place a minimum of £16 million on a particular market without detection and b) guarantee the fix on his own? The answer is no to both. Most agree a minimum of three players are needed. If they are players of the same earning level, £48 million need now be placed (at odds of 2.0 or higher). It is clear to see this situation is unrealistic and not conducive to match-fixing. So lesser paid people fix more – nothing new here. Maybe. But having a look at certain wages/prize money alongside liquidity, might shed some light on which sports are susceptible to match-fixing.
For the purpose of succinctness, I will focus on three sports: Horse Racing, Darts and Cricket.

Horse Racing

Before we start, match-fixing has always been rife in horse racing. Whether it be tales of incredible scams such as ‘Francasal’ (where one poor horse was switched with a speedy lookalike to win bets) or numerous recent reports of race fixing in England, we know fixing in racing is embedded in the history, culture and structure of the sport. Indeed, the very purpose of a jockey, trainer or owner is to win races. And yet, he/she or at least those around him/her is relatively free to bet on the horse to win. On the surface this seems fine – betting on your own horse to win cannot lead to fixing. But of course it does – a trainer or a jockey might intentionally fix previous races (even if no bets were placed) to achieve a better weight or better odds for when the money is truly down. This situation increases the temptation to fix races by ‘laying’ your horse to lose on the betting exchanges. Anyway, let’s examine the betting landscape and the earning potential of legitimate folk.

                 This blog is in no way speculating on whether this race was fixed

As I write this, the 14:25 at Ludlow, in Shropshire, England, has just finished. Prior to the race start, a total of £364,024 was matched on Betfair’s exchanges. And yet, the winner only receives £5,198. Worse still, the jockey will only typically receive 10% of that. By the time the winner crossed the line, some £537,862 was traded. And this was only on Betfair and on the win market. We have Betdaq, myriad of bookmakers where one can place ‘matchbets’, exchanges overseas, in addition to the spread betting markets. When we consider that the odds before the race ranged from 5.7 to 19 (average price 12.45) and we imagine that the liquidity is a) halved (due to half being matched by the bettor and the layer) and b) split evenly (not likely but for this example), we can make the following deduction: It is essentially possible for each jockey to lay their horse to lose (on average and as a rough example) up to £2,400 – approximately five times the prize money for the only winning jockey!

But race-fixing opportunities are, in reality, far more lucrative. On an above average quality race, millions of pounds are traded with the prize money still paling in comparison to the potential gains. There are wages to consider and career risk. But overall, the scales are in favour of fixing.


Whilst horse racing can only generally be fixed on the betting exchanges, two-man sports such as Darts can be fixed anywhere offering a market. This is because instead of ‘laying’ an individual (laying and darts players is not an image I’m comfortable with), one can simply bet the other player.

Thursday is an ordinary Premier League Darts night. ‘Duh duh duh duh, dunna nunna nuh nuh!!’ Five matches are scheduled on the betting exchanges which will each surpass £1,000,000 traded pre-match and live. In addition, you have likely over 50 bookmakers receiving bets on each match, pre-match and live, online, by phone and in some retail outlets. If we assign a max market turnover (just on who will win the match) at £5000 per bookmaker, we see an average turnover (using our betting exchanges halving) of £750,000. The prize money for the winner? £150,000 - in one of the best competitions of the Darting circuit. A player could make more than that by chucking one match of his 14 in the group stages. He could even still win the tournament!
I came across this and even without this blog, it’s worth sharing; but it illustrates what we’re dealing with here.


Naturally, the top 20 are earning good money. Although when factoring in taxes, agent fees and travelling costs, they still creep into the arena where the wages/prize money to liquidity ratio patrols, and tempts. Almost laughable, the bottom earners have received less than two cups of overpriced coffee in Starbucks. Imagine if one of these players received an invitation to play in a match whereby hundreds of thousands could be bet on any of his matches. Of course he could be a moral individual, as many are, and refuse the temptation/offer from a opportunistic match-fixer. But the threat is there. In fact, this is what happens in major sports such as soccer. Teams not normally offered for betting due to their low profile, find themselves in a competition whereby betting is available. On occasion, match-fixing ensues.


The chances of finding out the true liquidity of the cricket market are about the same as Tupac playing for Bangladesh in the 2015 Cricket World Cup. Many have tried and failed to estimate the true market size. There are stories of £100,000 bets being placed in a suitcase in an Indian restaurant, or over 4 Lakh Crore traded on the 2013 Indian Premier League. One Lakh Crore is 1 Trillion Rupees or £10 billion pounds. Sometimes I think people make these numbers up (maybe because they like saying Lakh or Crore). Other times, I think the numbers could be right. There are 1.27 billion people in India, 159 million in Bangladesh and 21.6 million in Sri Lanka. That works out as £6.90 per bet per person across the whole tournament. Seems reasonable. Or maybe it doesn’t. No one knows.


  One Lakh or is it a Crore. Or maybe a hemi-demi-semi Lakh Crore?

The point is that betting in cricket far exceeds wages, prize money or even advertising. And this is why bookmakers are synonymous with cricket. There have also been scandals involving extremely high level players (the opposite to football whereby the largest games can only be targeted through the floodlights such as ’96 or through referees) as cricket has the most worrying ratio. Even in darts, where the players earn pittance, the potential money from match-fixing is not life-changing. The risk might outweigh the reward as prison awaits and or another job is possible after Darts. But in cricket, the figures are so ludicrous, any player approached is no longer a professional. He is the man on the street being asked if he would possibly snort a line of cocaine for £1 million.

Match-fixing has happened before in regulated markets, illegal markets, big and small. But when the stakes are enormous when compared to the potential prizes and/or wages on offer, the risk is greater.

In other news, I am beginning my second book. Stay tuned and spread the word. 

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