Which Path Should You Choose in Betting/PMs & Golf Tick Size | Ep 150

In this episode we outline paths for people of all skill levels in the new betting/ predicting ecosystem. GP continues his twitter rant on deci-cent pricing in golf, and the boys answer the rest of the listener questions they missed last episode.

0:00 PM paths for bettors of all skill levels

38:45 News

55:20 Deci-cent Pricing in Golf

1:08:00 Q&A

Welcome to The Risk Takers Podcast, hosted by professional sports bettor John Shilling (GoldenPants13) and SportsProjections. This podcast is the best betting education available - PERIOD. And it's free - please share and subscribe if you like it.

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Transcript

SPEAKER_00 0:00

So I think it allows you to um, you know, beat somebody who might be like the best originator at that that sport from the old, you know, from our the old world of like everybody does pre-game, like they're not necessarily going to be the best live. Like the best live could crush them with like some semblance of uh like understanding the impacts of you know game state and stuff that's happened in the game. GPSP. It's the best week of the year, Master's Week. Um and uh we're coming at you with a hour, a tight hour 30.

SPEAKER_02 1:01

Maybe. Yeah, we're we're recording this and not at our usual time. You know, if uh to to pull back the curtain a bit, we usually record this in the evening. Um we had to adjust, so we're recording this in the morning. So I'm not sure if our energy is gonna be be there, but maybe that'll help us keep keep it um shorter.

SPEAKER_00 1:22

Yeah. Uh you know, the morning. We'll see. Let's see. This is a good A B test. Like maybe the morning, maybe uh maybe you have to quit your job and we have to record these in the morning. Yeah. Um, but yeah, the main topic was uh something SP suggested, which I I thought was was quite quite good, and it ties in with what we've been doing, which is what we would suggest to each type of better right now. Like obviously, the ecosystem has changed drastically in the last year. Like, that's probably even an understatement. So I think there's there's a lot of people who had you know had some a good thing going and are maybe at a crossroads. So this is we're we're kind of gonna go through and evaluate what the good options are. Um yeah. Is that how you thought of it, SP?

SPEAKER_02 2:21

Yeah, I think that's that's sort of how I was thinking about it. I think it was like a sort of a continuation of of our discussion um last week, where last week was very geared towards um, or two weeks ago, I guess, was like very geared towards first project, like brand new person to to um one of the prediction markets. Obviously, like we can go in different um directions than just uh prediction markets. I think it's gonna be the majority of mine, just spoiler. Um, just given that's where I believe I I would encourage people to go um at most levels these these days. But the way I broke it down is like the the the relatively newer, smaller bank role than like a more moderate and then um you know someone more experienced or whatever is when when I was doing this, I will say like as I was I was I was thinking about it, I was like probably the moderate and certainly like the advanced person probably doesn't need advice um from me, but this is just how I was but we're still gonna give it.

SPEAKER_00 3:21

Yeah, we're giving it either way. So that's exactly how I actually broke mine down. So that's uh I feel like that's a first for us. We usually like interpret it slightly differently and then connect in the middle. So this should be interesting. Um, do you want to go for the small bank role first so that I can give give my take?

SPEAKER_02 3:42

Why don't you go first?

SPEAKER_00 3:44

Okay. Okay, so for the small, small bank role, this is gonna be somebody who's coming from like no winning betting, or like just maybe started to to find some winning betting content. I still think doing the uh sports book bonus optimization game, maybe go to a different a couple different states or two is the way to go. Now I don't like for this side, what size bank rule, you know, this would be like sub 10,000 maybe, and without like a ton of uh without like a ton of winning betting experience. Uh if you even think about like the guests we have on, how many of them talked about like their start? I mean, if you even think about Alex last week, you know, his start was doing a lot of like casino and sports betting bonus optimization. I think it gets you uh familiar with the platforms. It is a really high, like it's a really high risk adjusted return, um, especially for bankers of of that size. And then you have like the the bonus of seeing the ball go the bonus of seeing the ball go through the hoop in a pretty easy way. Like you're gonna win if you do the bonus optimally, and you're you're not gonna go through like a big downswing right away. Like it's you'll just like you'll win. If you do like a month month of bonus optimization, like you'll come out of it ahead. So that's what I did for like the very beginners. I still think that's that's a good route.

SPEAKER_02 5:23

Yeah, so I think the way I I probably like our tiers are probably defined a little bit different in terms of like I I probably have a bigger swath of people in the uh you know the smaller bank role than you you probably defined as like true new. Um like because when I was thinking about like when I was thinking about this, the people I had in sort of like the the inexperience would have been like even people who who've sort of cleared that easy hurdle. I think that's it's really great to point out that that's that's always going to be like the best thing if you're if you're um you know like truly new new. Um but for me, the way I I sort of broke it down for the the more inexperienced or smaller bankroll person was I had like and I tried to do this in in all levels, is like uh account for the fact that people like bet differently and have different skills and and whatnot. Um so what I did was I broke it down into like originate, like people who who are like originated focused or want to build models or like want to like are interested in sports betting from that angle, and then um, you know, people who are less interested in that part of the, you know, like the maybe academic or like problem solving part of of sports betting. So for the let's start with like what I broadly said as like the top-down or like more trading style person. Um and like I preface, like basically all of my thoughts I think are gonna be around the the prediction markets, because just transparently, that's like if someone asked me where to be, that's that's where I would, I would, I would answer for almost everybody. Um so like for for top-down, what I would do is like just pick some market um or like a prop or sub market. Like if so, if you're thinking about like Calci, if you if you go on, you know, click a sporting event, there's always gonna be like usually the money line is like the main thing. Um, oftentimes there's like a main spread too. But like if you go to any event, there'll be all these drop downs where there's other markets and whatnot. Um, and so like all I would do if I wanted to like start a top-down-ish strategy on on Cal Show would like pick one subset of that. Um, like one, like so an example could be like tennis sets, like number of sets one or something. I was I was filtering through these, you know, last night. Um, and just just work on getting prices um posted for for like one event, one subset, um, and track what's happening. Post very small. And um, you can do it manually. You can work on through the API, like whatever. Um, but that's that's where I would start. I get this sense, and we actually had a comment in the in the Discord the other day, and I just want to read it because I think it's related to this. It said, I listened to the podcast today, I did the balance API thing John mentioned. Also, I've been able to use other APIs to price and put up orders. I just don't really see opportunities though. For example, on the upcoming college basketball games, the order book is already too full with other participants. And I think this was honestly like how I thought about it in the beginning. Like, I'm like, well, these are all like one cent spreads and um it's like super full, and like I there's no point in even posting up there. I think if once you actually like interact with it and like give prices up there and whatnot, you'll see that like any specific time, you like you might not be like top of cue or whatever if you're like being fairly conservative, but you still will get like some orders if you're posting reasonably wide and whatnot. So um that would be like my my you know for those people, like really making the problem small, and it's sort of what we talked about two weeks ago. Um for the more of like the originating people, this is you know, I maybe gonna shock you, maybe not. I after talking to some of the people we've talked to recently, I really think if I was like newer, I never built a model or a successful model or was trying to learn some of like the basic statistical concepts or whatever, or coding, like I think I would I would start with dimension markets. Um just because for two two two reasons. One, like I think I think you can actually have like it's you can actually have a much bigger bankroll than people might think and trade these things. Like we've had some of them on. Like I looked just because I knew we were gonna talk about this. Like, there is, I think at like halftime of the NCA championship, you know, last night, there was like half a million traded on it. Um, and so there's like a lot, just you know, that's not even like the biggest event. Obviously, like the Trump stuff is. And the reason I think this is good is because there's no sport market you're gonna go on to Calci and be able to like generate edge just by like looking at like frequency type stuff the way you can on probably like mentions right now, and that's like how people think about models, like that would be like how they intuit it. Because if you think about like if I asked someone who knew nothing about sports bank how to predict like rebounds, be like, go look at how many rebounds he said. If you think about mention, but like that's not gonna be good enough. But in mentions, it could be like look how often Trump says whatever, and like that's the level like the level it seems like you know, even the some of the biggest winners are at. And so it's just like a much easier on-ramp of like how to just think like probabilistically and price something. So I I think if your like long term is to goal is to try and like predict stuff happening, you know, whether sports or otherwise, like I actually think the dimensions are are really interesting for this.

SPEAKER_00 11:28

Yeah, I I I like it. I mean, I think I think that's a good yeah, I actually agree with that. I was thinking about it while you were saying sports does feel like like why would you there's just not really like a big mentions is new, like we always tell people to go to the new thing, right? So like if you're doing sports, you should be doing it because like you've already built up all this stuff for sports, you know, when sports betting was the thing, but like getting into it now does feel like swimming upstream a bit. Yeah.

SPEAKER_02 12:07

Yeah, and the other the other thing with mentions is like I think in in retrospect, it's gonna be insane that maybe this is wrong, but it's to me, it's it uh when I look at the mention markets, I think it's insane that a random mention market is trading the same width as like the Super Bowl basically. That is crazy, right? Like there's if you go you know 10 minutes before a mention market, it's like one cent wide on everything. Obviously, it's not super, it's it's not super deep. Um, you know, like at that, at that, like the Super Bowl would be or whatever. But like the idea that like if you just take a step back and you think, okay, you know, some some some book put up odds on this new market. They're the only one offering it. There's no data points to compare to, and um and it's like one cent wide, people would be like, of course you can find edges there, you know, like it wouldn't be, but like, you know, for whatever reason, I I think it's you know you lose that perspective in this situation. But that that's where I mean, honestly, like I'm I know I know we sort of talked about it, like it is interesting to me. Um, and I you know wish I had more time to do that.

SPEAKER_00 13:25

I just can't wait to see like you on like UPMT and Foster on a Trump speech stream just screaming about him not saying MOG or something.

SPEAKER_01 13:36

That's the move that's what I want for you. Like, that's the the career move.

SPEAKER_02 13:41

If you see me in like yeah, the YouTube comments, just please don't you know surface it. It's a it's an embarrassing time in my life.

SPEAKER_00 13:48

So um okay, so my second group, you know, I kind of came at this a little bit more from the sports angle. So I think this falls into kind of your first group, but people who've kind of cleared that that bonus stage. And what I would say is like if you're kind of in that part of sports betting, I would do top down, and I would do it with it has to be one side involving a PM. Like I would just stop kind of top-downing on with with just sports books. And what I mean by that is like you either want to be using the prediction markets information and betting it out, or you want to be finding spots where you think maybe the prediction, you know, the prediction market price is wrong compared to the other books and whatnot, and betting into them. But the whole goal of this is to get comfortable. I think you know, we we have the same underlying thesis of like you want you need to be moving in the direction of the prediction markets. Um, so this is like a good way to dip your toes in because you're gonna understand like if you're using a prediction market for price, right? Like there's a difference between it, it's there's a difference between something that's a cent wide and you know 200,000 contracts on both sides, and like three cents wide with 500 contracts. And you start to understand that, and you understand that leads to maybe being curious about how the order book works, and you start to see how prices react to the order book on a prediction market, and it just gets you like in the game without having to do anything uh technical or too technical. Obviously, there's ways to automate this, which is great for for PMs. And if you wanted to start to automate a top-down strategy using uh prediction markets, then that could certainly grow on the back of this and be an API project. But I think, like SP said, like you need to be going in this direction. And for me, this is an easy-ish way to make sure like you're connected to the prediction markets and using them every day and staying, you know, learning about them without having to do anything that seems like too crazy.

SPEAKER_02 16:23

Yeah. So for my my moderate, I think we shared like uh we shared one idea. And this is the one I guess where it would be like not betting directly on the uh the prediction markets is is I think the part I want to highlight is you're um using the prediction markets in some way, whether that's you know for the information and betting it out to others. I think that's like would be really I I see a lot of people who seems like they've been betting for a while doing stuff like that. I mean, we've talked about like the idea of the the odds jam sharp money tool and all this stuff. I'm not saying just like sign up and use that, but that type of like philosophy, I think, um, could be used, certainly. Um, so like that I think is a really good one. There's two obvious things in this that I'll just gloss over. Like, obviously, if you have like like if you're in the moderate tier, like if you have like a winning model or whatever, like you've been betting something on sportsbooks, like obviously porting that over. Like that probably goes without saying, um, is is something that should be being done. And then um, like for the the top-down people, like posting more markets, and I think because I gave a very narrow example in example one of just like focusing on one thing, obviously broadening that as you you automate further. But the two I wanted to actually talk about here that I think are interesting. Um if you're like a a you know a trader style better, um I honestly think like, you know, this this is maybe blasphemous, but I think like becoming the penny jumper is really interesting at this at this level. Um for this, it's a little bit challenging because like I have moderate and I have advanced, like are my two levels, and they're gonna sort of blend together depending on like what you're doing and how complicated and at scale it is, really, less less about the idea. But I think like trying to to make more like basically what I would call like pure making instead of like making with a with an anchored opinion, I think is really interesting. And if you're like a a problem solver who can who you know, and it's not rocket science, I don't think, like top-down betting or whatever. If you can navigate that, you could probably also like play the game of of being like the the penny jumper type person, um, and or other just like pure market making plays where you you just necessarily don't even have opinions. Um you know that's that's something that I think is interesting to me in some of the and I was actually tinkering around with in some of the mentioned market stuff, like trying to get him.

SPEAKER_00 19:10

We found him.

SPEAKER_02 19:12

You all, you know, if you you either uh what is it, live long enough to die a hero or something. I don't I don't know what the quote is, but yeah, I've I've clearly like out outlived that that stage and have become a penny jumper in some respects. Um, so that's that's one thing I think you could do. The other thing that I think is interesting, if you like more are like model-based or whatever that I think you can do that's interesting at this stage, would be like, I think there's never probably been like more of a premium on on um like having a live model specifically. And like I think a live model that like runs if you're like at the moderate stage, I don't think you're gonna like fire up a live model that can be up like a hundred percent of the time and like posting all the time. It's just like that's a that's a problem with latency and data feeds and whatnot, that's that's far more complicated. But what I think you could do is like have like something like the halftime model, and obviously those are like competitive, um, because those have been in around forever. But there's there's other sports and other breaks between sports where the markets are not nearly as competitive. So if you just took something like, I'll just use my uh beloved esports, like, and maybe this is more competitive on honestly. I I'm guessing it is, but like stuff like this, like after the first map or something, like the what should the fare be? And I think this is like a a good-sized modeling problem for people because you know, with any sort of like halftime, quarter, whatever, like you have a we talk, I think we talked about this on the podcast, like you have a baseline, meaning like the the full game line or full market line to sort of anchor to, and then you're just layering on what you've actually observed or what's important. Um, and that can make you, you know, be able to be top of cue on a side at a time where there's a lot of trading, a break in the the action, um, on a side that's on like the right side, basically. So I think that's that's also like interesting from a modeling or or whatever perspective of actually like building something live.

SPEAKER_00 21:24

I I love it. I actually I was thinking about this and uh interested to hear your thoughts on this because I think also a live model allows you to find outsized edge that you can't find anymore pre-game. So what I mean by this is like if I was to do an update to the golf model or I was like really like grinding it and I was I found something that maybe you know some kind of new feature or Or whatever. What are we what what are we officially calling them on this podcast? That's a variable.

SPEAKER_02 22:06

I don't know what Rufus approve. I don't know.

SPEAKER_00 22:10

We'll get back to we'll ask Rufus and we'll get back to you. But a new variable or whatever, a new column. Um, and whatever. It adds like a little bit, just anything. It's like, oh, that's that's so great. Um, and that takes a lot. Like, that's probably testing like five things that added nothing, and you know, whatever. So that takes a long time. But I was thinking about this at um, you know, just watching like some stuff trade live and stuff we're up with live, like reacting to the information that comes in the middle of the game moves the probability, like win probability or whatever, like so much more than finding anything uh like pregame in terms of like team strength or or whatever. Like if you can understand like the actual like impact of like SP said, like map one or something, like what you can find there, it's just so much more. Um there's such a bigger impact on the actual win probability than finding something pregame. So I think it allows you to um you know beat somebody who might be like the best originator at that that sport from the old, you know, from our the old world of like everybody does pre-game, like they're not necessarily going to be the best live. Like the best live could crush them with like some semblance of uh like understanding the impacts of you know game state and stuff that's happened in the game.

SPEAKER_02 23:46

Yeah, because you know, live really you can think of it as you have the person that the per whoever's the best pregame, in theory, you have their stuff because in theory that's like baked into the close, right? So um, as long as there's like not manipulation or whatever at the end. Um, but yeah, so you you basically have their stuff, and then it's like it's like starting, like obviously, if someone's really good at at modeling pregame, that probably tells you something just about their modeling actually. Right, the they could do a good stuff. Separately, it's it's like a it's basically a totally separate problem for I mean there's overlap, but there's it's it's very different, like the the problem, and it's really a blend of like pure modeling and um a little bit of like it, I think it blends more like top-down type stuff too, because you you like can incorporate like market information in I guess in a way you can do for pregame too, but it's just it's like you have an it's just a much easier entry modeling problem, is why I put it at like moderate instead of like the advanced. Like it it's very it would be very complicated and hard and challenging to like for someone to like spin up a model that's gonna like accurately um predict like you know football teams winning or whatever, like pregame. That's very hard. But like in-game, it's way it's just like a way easier problem to get like an approximately okay answer because you have like you know the pre-game expectation you can anchor to in a way that you can't necessarily pre-game without sort of totally watering down like your your model.

SPEAKER_00 25:34

Yeah, yeah. I I think this is this is a great, I think it's a good segue for me because my I have three tiers. So how I I mapped it was like the absolute kind of beginner to winning betting, the we started winning, but need to get into PMs, and then like kind of I have the next one as like the choose your fighter path in prediction markets, like which road are you gonna go down? Um and I have my three, and the way I see it is you can kind of go one of three ways. So I I call one PM rat, but it's not it's not derogatory. Rats are very like they're very they survive, they thrive, they can live anywhere. Um I'll get back to them, I'll name all the three, and then I'll get back to them. And then you have the what I would say like researcher slash big spot hunter. Um and then you have the garage band market maker. So to go back to the rats. So if you if you want to fall in like this, this is a this is probably the best category to be in because your risk adjusted is like so so good. So what are you doing if you're you know a PM rat? Fat finger traps, like you're you're posting stuff that's so off market that like will only get hit if somebody messes up. You know, you get early to a market and you post like you get to do like a one cent, you get to buy a golfer for no for one cent or whatever. Um you're you know, you're really fast to bond like impossible outcomes, as they uh as they say. So like you're you're fast in the 99s, um, you're there's potentially some rules rules cucking in there, although I think the rules cucking could probably go in the research category. And then you're court siding, like stuff where it's just like you can't, it can't be bad. Like you're just in there, there's all these like inefficiencies in how the market works, and you're only getting it in like super, super good, and you're figuring out ways that you can do that as new markets come up and and whatnot. So I think this is like potentially the best way to go. I put penny jumpers in the garage band market maker. Um, I think there's different I think like you could put penny jumpers or some like some like basic penny jumping in this category, and then a more like um a more like robust HFTE strategy in the Garage Man Market Makers that does kind of rely on a lot of penny jumping and dancing quotes. Um I think maybe that's how you'd split it up. But yeah, I don't know. What's your how do you feel about you know that being a a path for people?

SPEAKER_02 28:46

Yeah, I honestly I think yeah, I like your breakdown of it better because I think it captures more of the swath than even I was thinking about. I probably was you know myopic on just the broadly like the garage band market maker group as you uh framed it, but certainly there's that's just like informed by my experience and whatnot, but certainly there's more. And I think especially the the big sort of spot like researcher, I think there's there's definitely a a spot for that at scale, just given some of the the volume. I do wonder, and this is just you know like a blind spot of me, like how it depends like what you're doing, right? Like I think court siding or whatever, like if you have a serious operation that could obviously scale. I think some of the other I'm I'm always curious, like what the people who who like post like off market and you know, mistakes, like what they're like are they getting filled like once a uh month, once a quarter, once a day.

SPEAKER_00 29:47

I don't honestly that that's a good point. I thought that that too. Like that one probably doesn't scale as as nicely.

SPEAKER_02 29:54

Yeah, so I think some of the stuff you you know in that category might be like, and this is where it's sort of like a gray area, be might be more in like that middle tier, but like to like really be like top of the volume, whatever leaderboard, it's that that stuff's gonna be like hard to scale. Um, I mean, what what I broadly said was to go from like you know, moderate whatever to like true crusher or whatever, I think you need to do something hard on and whatever like to because you want to get the of you want to get flow that a lot of like the moderate people are are unwilling to take. Um, because that's just where there's gonna be a lot of opportunity. So whatever hard thing that is, um, the two that we've talked about most on the podcast would be like being live all the time instead of like live at breaks and stuff in the moderate. Um so like constant uptime and figuring out like ways to to capture as much of that in a in a you know low EV or you know break-even or whatever type of way. Um or you know, some of the you could probably do some of the basic RFQ stuff in like the moderate, but like the actual RFQ stuff is also like a hard problem, um, you know, relative to just like, you know, like anybody can can spin up and say, like, I want, you know, every leg's got to be independent from different games and whatnot, and and you know, small size. Um and obviously like there's there's tools and stuff to do some of this, but like the the actual SGP and and stuff like that, like I think is a hard problem that other people don't want to take. Like I know, you know, first day of baseball, um, you know, there I was I was poking around, like the prices were really bad that you were getting offered, I think, pretty quickly. Um just because like nobody was really spun up, I don't think totally ready to go for baseball. So if like you were ready to go and you could offer something, um you probably got like really good flow. So like you just gotta do something like that's hard and and that makes it less uh competitive. So um, but again, these people probably don't need you know my my two cents, they could probably figure it out.

SPEAKER_00 32:15

No, these are these people, these are our future guests. So you have to say something that they disagree with and then they come on the show. That's the real pluck.

SPEAKER_02 32:27

Well, yeah, I mean maybe maybe the thing that that that I don't know if this is a hot take or not, but like the the R of Q when I was when I was writing this down, like, and we've talked a little bit about it, like I don't I think there's like you know, the you know, people see the parlay stuff and just see like a pile of money in their you know their eyes. I think unless you're like taking it very, very seriously, it's there's just like probably better opportunities for you. Like I don't think if you're gonna like like I think you can sort of like half-ass your way into some of the things we talked about in the earlier stages and be fine. I I just don't think it's like uh and I could be wrong in this. This you know the the great thing about a podcast is when I say something dumb, like everybody will, you know, come and correct me and then I learn something new, like the uh the account priming is uh astrology or whatever. Like I, you know, then we had six guests tell me that account priming is the most important part of their operation. So that's that's what the good part of this uh podcast is. But I don't know. I think if you're not if you're not taking like like if it's not the main thing, um, I think it would be would be hard.

SPEAKER_00 33:37

So I think I agree. I think RFQ is is there's a lot of money to be made by people who are whole assing it, you know. I don't yeah, but they're gonna be they're gonna be very competitive at at every point of it. There's not gonna be like a a spot where you're like they're because it's all automated, so there's not gonna be a spot where like they're kind of blind to it, but you're not. So, you know, I think there's gonna be the RFQ game, I feel like will consolidate a lot. Um a lot, a lot. Um, okay, well, I want to hit my other two kind of quickly. The big spot hunter, I don't I don't want to go over this too much because I think like Alex from last episode was a really good example of this. Um, someone who's finds novel markets that have a lot of volume, a lot of liquidity, and reads the rules, does a ton of research. Um, you know, I think if you go back and listen to his episode, I he gives good examples of watching every dunk before the dunk contest, you know, going through this rabbit hole of like the guy's brother was on a YouTube video, and that's why people were betting it. Like, this is like it's not easy, and you really have to to pour a lot into it, but the returns, I think, can be can be quite high because prediction markets surface these novel or you know, uh what I would call just like new high-volume markets all the time. So the person who can kind of I think Domer is an example of of this as well, um, who's kind of like the OG PM goat, who's you know, I mean, I heard him on Risk of Ruin talking about like the Pope market and stuff like that, but it's just like there's gonna be these new markets that pop up, do you know 20 to 50 million contracts in volume, and like nobody's ever traded or bet them before, which is kind of it's different than sports, like that just doesn't happen a lot. So uh there's that avenue is kind of opened up in prediction markets compared to I would say like sports betting. And then the garage band MM. Um, I'd say like sophisticated penny jumpers fall into this. Um, market making either like using your own numbers, like market making with an opinion, um, or going and trying to be uh opinion agnostic and market making a lot of uh different sports, you know, it all kind of falls in here. But the thing with this category is this is the one where there's no there's no getting around the tech requirement. This is this poses a significant um technical uh hurdle for people to clear. So I think when you're choosing, you know, you kind of wanna think about like what you wanna what your strengths are and what you want to spend your time doing. Like for this category, the strength is like your trading software, and you're gonna spend a lot of time working on it, and that's kind of the thing. So um that's kind of that that's the one uh I would say like the one thing you should really consider is like do you feel like you will have a technical advantage or not, and spend most of your time building your training software. If not, like if you're a penny, like if you're a sophisticated penny jumper, like it's it's extremely like I know we kind of like rip on them or whatever, but that's like a really hard technical problem to solve. Like being a good, profitable penny jumper, like that's very difficult. And it's it's all like software and trading based. And the people who are really good at it are going to be the people who came from or work at jump, sig, all of these places, because that's you know, that's where most of the core principles of that style um kind of lie right now. It's like with the big uh you know, high frequency, you know, hedge funds and you know, the trading firms basically. So I would I would be wary of trying to go that route if you don't have like a clear path towards um like good software.

SPEAKER_02 38:17

Yeah, especially in like competitive markets. Like I think um one thing you know I've talked about is like the width of the market, and I think you could like do more of that stuff and it's more forgiving if the you know it's less competitive, wider markets, like but certainly like sports is not like that. So um yeah, I think I think that covers it.

SPEAKER_00 38:39

Should we hit the news?

SPEAKER_02 38:41

Yeah, we can we can I think there's you know a couple of these that we probably will talk about a little longer, some of them smaller that I just thought were interesting. So maybe I'll do the first one. The first one I had jotted down was the NFL sent letters to uh prediction market operators asking them to refrain from events that can be manipulated or known in advance. My my my take on this, and I'm curious yours is um, you know, like obviously the the Calcies of the world have like are really leaning into like, you know, we play by the rules these days, which I think is good and a good strategy. Um but like this for this one, I actually think there's maybe a hot take. Like the NFL will for sure it was like stuff like draft markets and maybe coach to be fired, hired, or something like that. I didn't exactly see. But like the if the NFL can make more money and have more people interested and whatever, like they will just cave immediately and do and be fine with it. So I think like Calchi just needs to make that case to them. I mean, it's effectively what happened with sports betting, right? Like the leagues were extremely against sports betting, but then they're like, oh wait, we actually will make money from this. And now you see, you know, DraftKings and FanDuel and whatever, like in the end zone and on everybody's, you know, all the advertising and whatnot. So I think if you just can just sell, like at the end of the day, that's all they probably really care about, um, is like the business and making sure it doesn't have an appearance of like you know, manipulation or whatever. But if you can, you know, clear that hurdle and you have more people watching the draft or whatever and like being really into it, then uh I think the NFL will will uh will fold.

SPEAKER_00 40:28

Yeah, I I I completely agree. And it it's it's interesting because it's like refrain from events that are you know easy to manipulate, but like basically everything is kind of easy to, you know, like a player can if they really want to manipulate that manipulate basically anything, like a quarterback at least. Um but as far as like the I think kind of what they're saying is like the markets where there's like a known, the outcomes like known beforehand, and then it becomes like an information um issue with people who like know it, betting on it or whatnot. I do think that's always gonna be um, yeah, I don't know. I think we talked about this with the the game shows, like maybe there needs to be more um tighter, like some kind of like tighter security around who knows what for certain things. And like you don't just do these like information asymmetry markets on everything, but you do them like the NFL draft feels like something that you could kind of police. It's like a big like the NFL has the incentive, like SP said, to want to bring more viewers to the draft. So if the NFL enforces like really strict rules around it and makes it known like that this is not like an acceptable thing, like they can't you can't see like like if the call she market jumps on somebody that your team's like about to select, like your whole team's getting dragged in and like interrogated. And if it brings more viewers to the draft or whatnot, like that is a net positive. But I think it's when like you do markets with ASIM, yeah. I think like the the halftime markets where like everybody involved knew certain things, like people who are making like$18 an hour to be a backup dancer, very hard to police, but like this feels like relatively easy to police and could be a could be a good, I don't know. It's a good, I think it's a good opportunity for the NFL to work with the PMs and to price um certain a few markets that are non-traditional for sportsbooks, but like would be interesting to viewers, like draft, I think.

SPEAKER_02 42:49

And the draft has the benefit of like you're not arbitrary, you're not just like slapping on insider trading. We've talked about this of like inside you can't just like make a market and then be, you know, force insider trading rules on people who like did not agree to it. So like the the draft is good because there's a natural incentive to like not to want to talk about like publicly, like even without markets, there would be like an insert there's an incentive to not share what you know exactly you're thinking and and whatnot. So that that is a good you know part of it. Like the opposite, just to give an example, would be like, you know, I I I spoke highly of the mentioned markets, but like if Sunday night foot, if some you know graphic designer on Sunday night football is really, you know, like jazzed up about his his graphic package that he you know he has planned. Um and now he can't tell his you know like buddies about like that is totally like imposed on him in a way he did not agree to um to like talk about what's coming on Sunday night football for like mentions or whatever. So I think I think leaning into the ones where they're is like a reason to not uh look in stuff it was is is good right i i think it's like a good like there is gonna be this crossroads where like you need to there needs to be some communication between like the pe the underlying event and like the exchanges and this is a good opportunity I think to have that dialogue uh you want to talk uh fanatic squad bets yeah this can be really short I actually just thought this was was was cool I don't think that it's it's I think it's very rare that I think you know what any of these you know sports books like marketing or anything is is cool um but I actually thought this was this was a cool product I think the the idea if you didn't see it or at least the idea I got of it is it's like a same game parlay but it's all together meaning you would be you you could bet like six people let's say NBA points or something you bet on like six people and it would be like over um 180 total points or something. And so I actually think this is like a really good blend of what people like about like fantasy sports and same game parlays and um not like the reason I think it it has some benefits over like the SGP stuff is like people are constantly tilting about like losing by one leg or whatever. And this is a type of bet that has a similar you know obviously like many things going on. So you have like a great sweat across a whole day like if you were doing this NFL football or whatever you could have like a 1 p.m game or a couple players from 1 p.m 4 p.m 8 pm and then or whatever and people would like that. And you're never dead right like if you bet all the overs it's like ah I just need you know my you know the night game this guy to have whatever 600 yards and I'm I'm still there you know so I I actually think it's it's really cool. It's like a blend a little bit of blend between like daily fantasy and and sports betting.

SPEAKER_00 46:01

Yeah I I 100% agree. And when I was looking into us I was like this is probably the best idea that's come out of sports books in the last year at least like right whoever came up with this at Fanatics like let's get that guy a raise or gal. And uh it's just it's like for everything every reason that you said I think it's great. And then you're in a I think it's doubly great because you're in a period where you you kind of need to do stuff like this where a sports book can do it but it's not necessarily as easy for a PM just to roll it out. Um so you're you're in a time where you need to use the sports betting license to kind of innovate and do stuff like this because you're likely to win um on this novelty aspect but actually have it be something that people want to do where like the PMs have to be a little more um yeah it it's it's a lot harder for them to do something like this.

SPEAKER_02 47:06

Yeah I I I agree with all that polyfees yeah I mean we sort of talked about the polyfees last time so you could probably you know skip it.

SPEAKER_00 47:16

I mean obviously like I think what we said last time was you know amazing a business needs to to actually I don't know if you had anything else no I thought your your business break you know business wants to make money yeah then no nothing else like obviously they needed to have fees and you know okay um osb handled down year over year for Q1 is this uh I guess the question is is this prediction markets or no yeah I mean I I only saw a tweet I didn't I don't know if there's like an actual report or whatnot.

SPEAKER_02 47:52

I think they were still waiting on like official Arizona numbers is the tweet I saw but that that you know Q1 this year is lower than Q1 last year is how I interpreted the tweet. I mean I think it could be like a million things. I think the obvious narrative that like is going to get spun by some people who it benefits would be like look at the the prediction markets are like killing you know your tax dollars and all this stuff like that if I was you know a casino lobbyist like that would obviously be my messaging um but like it could be a million different things I'm sure that's a part of it. I'm guessing it's you know that combined with just like a natural ebb and flow of sports betting. Like I think if you would have asked me before sports betting was legal is it going to be like just continual up obviously like in my head that's not possible. Like obviously it was going to be like really big deal when it came out and then it would reach some like equilibrium point wherever that is when promotional dollars sort of have run out in most states and are much lower which is general churn consumers getting more educated. There's probably some people who when you know legalization happened knew nothing about sports betting you know and now they've lost for five years they you know have a a wife and kid and they're like that is just a losing proposition there's probably some like natural parts of that kids are getting you know our uh friend of the pot Isaac Rose Berman is doing the the work of getting into those high schools and and I didn't the other option is is this because of Isaac or is it because of prediction markets? No I mean I just think in like in as an industry gets more mature like people my opinion in general deal with it like more responsibly and like in a in a more sensible way and like realize it's a losing game for them more you know more over time. Like think like my guess is in the UK or whatever. Look and I don't the you know it's always talked about like UK bet size is way smaller and all this stuff and it's like not the same like betting culture. I wonder how much of that is you know just difference in culture or whatever to it's just been around a lot longer and like would we eventually get to a similar place where people don't really like treat it as a way to get rich you know like it's sort of treated like online and whatnot like will the eventually like the the um the touts and stuff just be sort of like totally laughed at as unserious people by by people I think over time more and more will understand that.

SPEAKER_00 50:32

So yeah yeah I mean I I think that yeah the easy narrative is not necessarily correct. I I think I'm probably more inclined to go with the maturing of the market like makes slightly more sense but I mean like handle going down year over year certainly will be used regardless of what it what it actually represents like that's a that's gonna be a talking point. But speaking of talking points we've never been more back just when it was doom and gloom two episodes ago we couldn't be more back callshe comes out of the New Jersey courts uh victor in a huge battle that's that's uh I guess is important legally this is always funny I just have to like try and interpret from who's saying what like how important this victory is but this one does feel pretty significant yeah so for anybody who missed it it seemed like Calchi like won um a uh a decision in New Jersey and it was like my understanding was like the first um court decision at this level that actually got decided so like it's it's it's only been in the lower courts prior to this I believe and so this was like a higher level of of court um I have no idea if that's accurate.

SPEAKER_02 52:07

I have no idea if that's like how predictive that is of like what um the ultimate Supreme Court would decide if it goes to that um but uh yeah I mean obviously that's that's I'm trying to think what was it was it all the there was these bills introduced to ban this is that what was happening two weeks ago yeah exactly we had the we had the the two we had the uh cross the aisle effort to ban breaching rights that's right okay yes this is this is obviously um you know really really good for anybody who's who's participating in these prediction markets um so yeah hopefully it it continues this way I mean I think good the reason I was thinking back is you know you wonder wouldn't it be like the ultimate um bad beat to to get through maybe it wouldn't be a bad beat to get through like to you go to the Supreme Court it gets approved like that this is a a federal issue or whatever and then and then Congress just like the next week is like we actually just ban this because I don't think right like without without a law it's sort of like up to interpretation but if there's an actual law I I don't think the Supreme Court really has it because that has is you know it's like a federal thing. So that would be that would be a really rough beat I don't think I don't so I I think this is like good for the court side of it is like sort of my read on it but like it doesn't necessarily impact like what was happening on two weeks ago but I've not heard like any and I've been thinking about this more like I don't think I I think even in a different you know like different uh party makeup and whatnot this is gonna be hard like Cal she is I don't know if you saw they hired like they've been hiring a bunch of Democrat like people too smart. Yeah right so they're they have two years and I hope they listen you know what I said uh two weeks ago about like you got two years you got to lock in and get your tentacles into to you know everybody.

SPEAKER_00 54:09

Yeah um I think I'm more optimistic with you know how they've they've the the pivot they've sort of made in their branding and marketing um it's sort of cringe obviously but I think it's gonna work so um yeah yeah yeah I agree I've I guess this just makes me more optimistic that they for sure will get the two years or the two whatever what is it it's like two and a half years right now or yeah yeah something like that but um yeah I think that this makes sure that they'll get that that time uh and that's great let's go let's go you know honestly like shout out to Call she for fighting the legal battles like they've kind of put this they've gone out gotten punched in the face and really put put the uh legal side on their back so you know if you're uh if you you know I'm sure that there's people who don't like certain things about Caulchi and whatever but like this has definitely been a big net positive for the industry like what they've done legally. Speaking of things that maybe like certain people on this show might have been upset with that they've done um recently but has no bearing on my overall view of them as you know being great positive uh net for the industry is they introduced uh decimal pricing in golf for the first round leader market yesterday I had a uh kind of you know I say I save uh you know I'll get mad at I'll I save my Twitter fits for big spots that's something that uh like I would recommend so this felt like a big spot so I kind of disagreed with this and it you know Rufus disagreed with me and everybody had an opinion I one one thing about like why I wanted to post on Twitter I don't think like my initial post was that crazy like it wasn't like I think I was like they would have done more volume if they hadn't done the switch um pre-masters and I forget what the second half of it like I understand wanting to be decisant like above 98 but like they're gonna lose a lot of live volume below or like in the like low 90s or something. I don't think that that I I wanted to like throw that out as an initial tweet because I actually want to like you said about like saying something on this podcast like if you throw this is something I believe but like I don't know if I'm right so I wanted to put it out on Twitter and like if everybody was like it's actually like you're so wrong because of XYZ like I would like to know.

SPEAKER_02 57:11

So I kind of threw it out there on Twitter and seemed split I would say is that how you how you saw it as far as like what people thought I think one of our I think I think in general we the way we both have talked about the based on what I saw yeah and I was I didn't you know go through every reply and you know probably the people who agree don't don't don't respond as much but I I think we are probably like we've we've alienated the sharp you know the we we want to bring in the sharp the sharp takers back into the podcast. So maybe just to to to to to get my bearings straight did so is it it's descent across the whole whole thing or or to 90 to 90.

SPEAKER_00 57:58

But like in golf so from so from it's like 90.1 90.2 exactly okay so it's all descent but it goes to 90 and I'll say this for like people not familiar with golf like so much of the volume trades in that like 90 to 95 range. Like I think people overestimate how much trades in the 99 and everyone's like oh it'll trade more if it's like descent like I no not really like no one really no one's coming to Colchi to bet on like you know VJ Singh to win the masters because he's like 700 to one instead of 100 to 1. Like the vault the real volume is done on like the 20 players everybody knows who are like 96 or better. So I think it's like yeah I I think it's kind of a straw man to talk too much about the 99 plus but descent what where my issue is is like live in like that 90 to 96.

SPEAKER_02 59:00

Yeah so I mean I think the reality is probably this conversation is challenging to have over Twitter because I think everybody could agree that there's like a point like if you just level set everybody would agree there's a point where the tick size could be too wide like if it was 10% bands that would be ridiculous everybody would agree that's ridiculous. And if it was you know infinitesimally small like you know 10 decimal places everybody could also agree that would be ridiculous for for reasons. So I think it's like if we if we just start with that it's just a a matter of opinion of where like the optimal point is. And I think most people understand that at the tails it needs to be um smaller because like just for I know we talk about this all the time I just wanted to give like the clarification of why for people like listening who if they've you know never really thought about this is like going from 50% to 51% is like a people think of that as oh that's an increase of one percent of probability. But the way you have to do it is like view the probability increase relative to the the probability you're at. So like 50 to 51 is like a 2% increase but going from like one to two percent is at a hundred percent increase. Exactly so it's just very hard to to um to give like accurate close prices at the tails if you if you're bounded by like these one cent jumps. So I think it's just like I don't know if anybody actually knows like what the optimal size is everywhere but like here I I gave it a thought like what what would you what would you think of this? So one percent ticks for the middle 80% of the distribution. So um meaning from 10% to 90% 1% everywhere then from like something like 10% down to say like 5% it's half half a percent and then something down to 1% is like a quarter of a percent and then in the 99 it's like a tenth of a percent.

SPEAKER_00 1:01:05

That's exactly it's funny because like Rufus and I talked like I think if you just saw it on Twitter you think like we were maybe like in a feud but we talked about this not on Twitter. And like I think we kind of agree and had that exact structure I think if I if I remember correctly our messages as like what would be optimal um so yeah I I I think that's that is kind of the the issue with with Twitter as you said because I think like Rufus and I could be like opposed like you know on something but we're actually not opposed on it. Because like if we sat down and like built a structure out like the actual nuts and bolts of it would be basically the the same thing. And I think like what why it's important to do something like that like two things like if you want like if you want some kind of like origination advantage you you do want the level to like mean something and to make jumping be like very scary and um uncertain for people who are just like who have no fair price and who are really good at like order book um games and dancing. So if it's like 90 or 90.5 you know I can be very confident you know in my numbers being like okay if I have something and it says like this guy is like 89.9 I'm happy to sell at you know 90.5 but like I'm not happy to sell at 90. Like I don't think anyone is like it's it's it's really hard to know like at that point if that like you your margin for error grows. And then above the other thing that's interesting is like think about it think how big the taker fee is in terms of ticks once you get to 90. Like that's like five ticks taker. I think the taker fee is like five ticks basically instead of like maybe one and a half. So the the people who are who are just like penny jumping and like the HFT um strats are completely protected. Like they have no they have they're not worried at all because like the taker fee is so big compared to the order book size like they are not really worried about getting taken and they get to kind of basically like jump around with with impunity. So I think like thinking about it in terms of taker fee like as far as tick sizes go is also something that wasn't really discussed but is important. Yeah.

SPEAKER_02 1:03:59

Yeah I mean the way I would sort of think about it like the the origination point is like if you had a scale that measured down to the you know tenth of a pound and I had a scale that only measured to the pound, you would want to be in a competition where like we had to guess the the weight of whatever you know fruit or whatever we're doing like down to the tenth of a pound, right? Because you have a better scale it'd be like if so if you think you have so I understand that point but the part I sort of disagree with is like long term the thinner the the ticks are just naturally the smaller the gap between the profitable and the unprofitable people becomes like over the long long term. So like if you if you did like a thought experiment where the tick sizes were like you know approximately like infinitesimally small the edges would would like over the long term like compress to effectively zero. Yeah I think I think we're agreeing I think no that I my I guess I was more disagreeing like when I read Rufus's tweet was like this is this is great for originators. And I I agree with that generally in the like short term. In the long term though you know who it's actually like the to me the thinner the tick size the better like the the every the winners and the losers they they converge yeah and then who it's generally good for is unless you think you're like the best you know like the originator and the best like at the sort of the high frequency stuff you to you talk about, like that's what I actually think gets rewarded the thinner the tick size is. Because like I could have like a great like if if the you know tick size is like I said like just imagine like 10 decimal places. I could have like a great model and the price And you see this on some of the exchanges, like the sweepstakes to some extent. Like it's really hard to actually get filled with those. Right? Because they have thin small tick sizes and like the jumping and stuff is just like hard to manage unless you're trying really hard at that. So I don't I don't necessarily agree with like that framing in his tweet that is just like net good for the originators. I think it's not good for people who play games in the order book.

SPEAKER_00 1:06:31

Yeah, it's not good for sig. Yeah, not good for jump.

SPEAKER_02 1:06:35

Exactly.

SPEAKER_00 1:06:36

Is jump named because they like the penny jump. That's just their last name. We'll have to uh figure that out. But but yeah, it it's it's obviously good for for sig and jump and whatnot. And that's why I like want to push back. And I think like some kind of I like there needs to be some like the reason why it's funny because like it's actually really hard for like sig and jump to compete right now with us at golf because we'll have a number before anything opens, and we can immediately go post, and they can't get cue on us. So like right now, origination is actually a big edge in golf, like having your number first and put and posting right away, and they can't do anything about it because they're not gonna jump us. So, and that that's pre-market, and then in market, like you know, there's a whole nother dynamic. But like right now, originating is like really, really valuable, and the the smaller the tick sizes get, the less valuable originating gets. So, um, you know, I I agree with you, and I think like you do you can't it's short-sighted to think that this is gonna be a game that is won that isn't gonna be won by the people who win these games at every market across you know finance, right?

SPEAKER_02 1:08:00

And and basically the smiley tech, the the more options they have to win that game, basically.

SPEAKER_00 1:08:06

Exactly. Exactly. Like the yeah, they get to play the more tools they have. Um okay, we should we should hit the cues.

SPEAKER_02 1:08:15

Yep, let's do it.

SPEAKER_00 1:08:17

Uh we got Clay. Uh, do large institutional market makers on Call Should get break back? I assume that's what allows them to post massive liquidity with one cent spreads. Feels unfair without making it a blanket program for all market makers above X size. Um, Call She has a market making program. I think you can apply to it or you know, talk to them. I don't think there's anything um stopping people from doing so, and you would just need to, you know, meet the requirements of of the program. But this is not like this is common across every exchange, you know, like to market making programs usually have some stipulations, and if you meet them, you get something from meeting them, and it's basically to solve the bootstrapping like liquidity problem. Um so yeah, they they along with other pretty much every exchange right now and PMs like have a market making program.

SPEAKER_02 1:09:19

Yeah, I maybe I would just echo that. I would you get the idea is you give something, you get something. I think what you're giving is is you know, uptime, increased liquidity, tighter spreads is probably, you know, I have no inside knowledge here, but like that's probab that's I'm guessing what the exchange wants. And what you get back is probably some form of you know fee, break back, whatever. Like, because otherwise, why would you do it? So you're getting something back. Um so yeah, yeah, I would, I would think almost certainly.

SPEAKER_00 1:09:51

Right. And that and that's why why live is important, like because if you like, I think one thing it could go to a earlier topic of like where you want to kind of go in the advanced camp. It's like thinking about what's valuable to exchanges because it's it's a situation where like you can get rewarded for doing something that like exchanges value a lot, and for and like just to tack on to the live point, like live is where 80% of the volume trades. Um, live is the thing that exchanges want the most. So if that's a good reason to to tackle that. Um we have MLS Homer. How do you track model profitabilities across different model versions? Do you track separately after milestones or just have continuous tracking? Um the milestones I I wasn't like I save all my versions. I have like a like I have a version like comparison table. So like each time I do a new run or like tweak a parameter or whatever, like it's saved down. Um I don't know what milestones do you kind of get the second half of the question?

SPEAKER_02 1:11:10

I guess I think you I think the the question is like, you know, you you have some model, you fix something, and it you made this better. And then like how do you how do you track like I made this fix and now these months I actually am on model version 1.6 and then you know previously is 1.5 or whatever is how I how I took it.

SPEAKER_00 1:11:33

Yeah. So I I guess like what I it's funny because I I think like you almost just try make you know, you just make as much money as you can. And like the model tracking, if you're like differentiating the model, I actually kind of like like separating it from the bedding. So like you can say, like, okay, like we switched from version this to that, and we so now like after February, like we're doing this much better. But you're gonna make so many tweaks, especially in the early going, that it's just gonna start to like it's just gonna start to get like in c the samples are gonna get cut down, you know, you're gonna have a month on this version, a month on that version. So I think like doing it in like the testing environment is a good way to do it. Like I think of it like you build your model, you test it, you know, whatever, and then like you decide that week like which version you're gonna run out, but you can compare the versions um in your back tests or whatnot.

SPEAKER_02 1:12:41

Yeah, I mean to me, this I I was just trying to think like how like if I were I don't really do this like at all. Basically, my philosophy is generally do your you do your best at the the point of time you're in and look forward primarily, not backwards. Um, obviously like attract you know certain stuff, but primarily looking like like just trying to make the best decision at the time. Um, maybe that's a leak of mine. But I was trying to I was trying to think like how you would actually use this. I mean, this seems like more part of the reason I probably don't do it is this seems like more of a thing that like like you'd need to do in like the real business world, um, of like I need to go to my boss and talk about how I made this model better and like show that like you know, I jumped from this to this and you know, profitability improved and like I'm I'm adding value or whatever. Um like in betting, I just you know, maybe there's a good use case for doing something like this, but you know, beyond sort of what you talked about of uh like evaluating different different models and and whatnot, like when you're actually making the change, like I just don't know why why it necessarily matters, unless it would be something like you'd want to revert back to the old or something. Uh maybe you don't know it's better or not, but then in in in that case, like I don't think that should be done based on results necessarily, right? Like later that should be done, like at the time. So um yeah, that's sort of how how I think about it.

SPEAKER_00 1:14:12

Okay, we got a golf question from Matt. Um, thoughts on Culture settling the two win markets and pre-tournament withdrawals as no. Scotty Scheffler, so this was like kind of a big deal because Scotty withdrew from the Houston Open because he had a second kid um last two weeks ago. And Scotty's a you know, A, he obviously the favorite, but B, he changes everybody else's prices. So that was kind of a big uh deal in Call Street because if you had posted, let's say you wanted to buy Scotty for at the Houston Open, let's say he's plus 400. Let's say he's 20 cents. Um, yeah, let's say he's 20 cents, I think is probably about right. And so you have a bid up and you're trying to buy Scotty for 20 cents, and then he with withdraws, and someone comes and hits you, you automatically lose. Um, so it makes posting bidding to buy golfers to win really risky, especially on the um withdraw days. Uh and yeah, I mean it certainly changes how we price like like you don't I mean we just don't want to post yeses until like we feel confident that they're there. You know, I kind of know the cadence of withdrawals on the PGA tour, so it's like a little less scary. And we've certainly like um found good spots when people withdraw, but yeah, it's it's it makes posting bidding passively to buy a golfer to win, like kind of uh it the EV goes way down, but you can you could get a good price. So that's one of those situations where people might be afraid to be in there. But if you think a golfer is gonna play and the order books, you know, kind of thin, you could post a good price. That's pretty good. But you know, people who come in and take no are usually quite sharp, is the flip side.

SPEAKER_02 1:16:23

Yeah, I mean that that phenomenon exists in like lots of markets where one side can basically be like destroyed immediately, but the other side can't win immediately. Um, like that could happen in in something like any racing sport, like where they crash. That could happen in something like mentioned markets where something could be mentioned and immediately one side is like cratered where, you know. So yeah, I think I think posting on like the unpopular side, I think I like what you said, like that's a hard thing. And if you can do that well, you could probably get reasonably good prices, assuming there's like liquidity on that. Um so I I think it's I I like them, I guess to the actual question. Like, I like Kalchi doing this though, because even if the market's like different than like what the experiences on sportsbooks or whatever, like this, I'm guessing this is like a void on sports book. Is that true?

SPEAKER_00 1:17:19

Yeah, it's a it's a void. And that's what I was gonna ask. Like, what you think is the the better.

SPEAKER_02 1:17:26

Assuming they're unwilling to void. Obviously, void is a better user experience, but like they they seem to believe it's impossible to to void. And I I understand with the trading like intuitively. I think eventually someone's gonna figure this out, and and I would want, I would be trying to figure this out as a hard problem if I were them. I've I've not given it more than five seconds of thought. Um, but void is clearly a better user experience. But um the worst user experience is like this last traded price garbage.

SPEAKER_00 1:17:57

Then let me tell you this, because I don't know if you you you know this or not, but some of the golf markets settle on a withdrawal to fair price, which is even worse than last year. Which which one would do that? Top 10, top five, top twenty.

SPEAKER_02 1:18:15

Um, that's like a nightmare. Is it just like did the different markets have different rules? Yes. Okay, yeah. I mean, that's that's a nightmare. Obviously, you don't want that because that's confusing. Like a golf better is a golf better, they're gonna expect the same, same type of thing. In my opinion, like I think I've said it before, you just want every market, basically, like you want as many markets as possible to resolve yes or no. You do not want things to do this like last settled price. That's like a horrible, horrible experience for most things. I mean, golf, honestly, like if I'm just being honest, like golf, honestly, probably like pre pre-match withdrawals actually probably wouldn't be that bad because the price is probably like very sticky at a level, and like you're not gonna be off that much. Like, if someone bought a 20%, it's not like it's gonna be determined that is like a 10 cents, very likely. Um it's insane on stuff like you know, like the the Iranian leader, like what the like in the active, you know, airstrike, what the actual percentage is. Like that's actually insane.

SPEAKER_00 1:19:23

Yeah, because it's like what was the last traded price before anybody knew the or you know, like when yeah, exactly.

SPEAKER_02 1:19:31

It's the it's it's worse on on spots where the last traded price is gonna move a lot, you know, like and it's more subjective, but uh yeah, I mean it's just not good. I don't, I generally don't think I mean it's like sort of a void, it would be sort of a void in golf, I would think.

SPEAKER_00 1:19:49

So maybe it's not close to a void, but like it's really I think the subjectivity of it is really confusing. Like, because a void, like the the real benefit of a void is like no matter where what price you got it, it's just void. So like you're not gaming, you're not getting gamed, like you just the golfer didn't play, whatever it's it's void, your account's what it was before this. I think it's like I think a void is like the best way to do it per personally for golf, um, or for a lot of stuff. But you know, I understand there's there's rules, and I I don't know. The last trade, I know last trade price is trying to like approximate a void, but I don't when you leave the market open after the last traded price, then it's not the last trade price. So like it to me it's nonsensical.

SPEAKER_02 1:20:53

Yeah, I I agree with that.

SPEAKER_00 1:20:56

Um Elliot, how do you think about platform risk with money sitting on call she? Um to market make, you probably need to keep a decent amount of money on there. Uh it's probably extreme tail risk, but it's something you think about at all. Uh, I don't really think I'm not really worried about call she um could be famous last words, but like you know, they have a lot, they clearly have a lot of money, they make a lot of money, and my amount of money compared to their amount of money is so so small that I feel like pretty comfortable with them. I don't really think there's much counterparty risk there. What about USB?

SPEAKER_02 1:21:41

No, I mean they they seem like they have enough like backing and whatnot that they wouldn't just like get up and and leave um disappear like overnight with the money.

SPEAKER_00 1:21:53

So but crazier things have happened, so maybe, but yeah, I think it's it's like so small, I don't think it's worth like if you were to be like, oh, I'm only gonna keep 50 grand on there because of you know counterparty risk, when instead like you would be willing, like your optimal like bankroll size to put on there would be like 200. I think it's a really big mistake to just put the 50 because of how much more you can do with the 200 in cash, especially since there's no like as of now, there's no way to get leverage. Like cash is like really valuable on Call Shi. So I would say like if this changes your decision of like how much to put on, you're making a mistake. Um, this is not financial advice, and if you know we're not have no affiliation with Call Shi or whatever, but I think just from a trading perspective, it's a mistake to be overly cautious here. Um is what I would say. And then Elliot had another question. Would you rather get filled at the top of an order book on a random NFL game on Call Shi, close to post, or have that same amount be put on a random side on FanDuel or Pinnacle? I guess it's really like it's hard to say without knowing what the prices are.

SPEAKER_02 1:23:17

Yeah, what I what I said was get filled on Calci because like of the anti-selection, the opposite of anti-selection aspect going on with like fees and whatnot. Like I it I would think it would be pretty unlikely that top of book Calci, the person taking that, is getting a better price than they could get elsewhere. So they're probably like not getting best price in market.

SPEAKER_00 1:23:49

I think that's a good answer. I'll just go with that. Um, we have Braided in. What's a solid ROI for picking off opening lines? And how much should that lower when your bank roll grows and you're betting more when limits go up? Um I don't know. What like openers I'm trying to think about like just I I don't have a good, you know, I really have basically one perspective on this, which is golf, but like I would say openers are you should probably be doing like two to two and a half X better than clothes. I don't know. I really don't know for like the main sports.

SPEAKER_02 1:24:33

That's what I was gonna ask. Like, obviously, the absolute numbers probably don't matter, but like the compression between. So that's that's interesting. Um yeah, I mean it's impossible to actually answer this question without more information because like are you betting one game a week? Are you betting 30 games a week? That matters a lot um of what like a solid ROI is like if you're only picking off like the true mistakes or whatever where you think someone's gonna, you know, you mentioned NBA, like where someone's gonna be ruled out, like then it could be very high. Um so you know, your ROI is just a function of how picky you sort of are, or it should be a function of that. Um so yeah, I I don't necessarily know, you know, specific numbers, but I but it's obviously gonna be a function of of not only like opening versus closing lines of which one you're betting, but also like what criteria you're you're choosing to determine a bet.

SPEAKER_00 1:25:30

Yeah. So I don't know, like five percent. Um UFC wager bet size for SGP is where correlation exists, but isn't quantifiable. Well I mean vibes.

SPEAKER_02 1:25:45

I like our I like what what Alex said last week. You know, he uh he said he said do do the worst case scenario assumption. So like whatever the worst case scenario of what the correlation is. Then he said he made a conservative bank row assumption. And then I think he said, I don't remember if he said for the half Kelly, but uh it was I mean that's probably too far. I I mean, but but that can get you that I the way I would answer this is like sensitivity tests, and maybe that's like the lowest bound of what you'd be willing to bet. Like and that's how he sort of framed it's like if you're not willing to bet this, um, you know, you can't look at yourself in the mirror, whatever, you know, whatever he said. Respect yourself or something. Yeah, yeah, even better. So I I I would honestly I mean that's honestly how I sort of think about it is I I try and put floor and cap on like what I'd be willing to bet on this, and then just sort of do what feels right somewhere in between, you know, by sensitivity testing those assumptions.

SPEAKER_00 1:26:41

Yeah, I I agree. Like it's always that that's like the refrain. It's like how bad can it be? We always say that. Like, so actually figure out like how what the floor is, how bad it could be, and then yeah, side kind of size there. I like that. Um, promo cactus. Do you guys ever own sportsbook stock? I don't think so. I think maybe at one point I bought DraftKings stock a while ago, but no, I don't think I own any.

SPEAKER_02 1:27:13

I guess like indirectly, we probably both do, like through funds or whatever, right?

SPEAKER_00 1:27:18

Right, right. Yeah, I guess I guess like is DraftKings in in the spider, you know, like are they one of the 500? Maybe.

SPEAKER_02 1:27:28

I honestly don't know. Um, I I assume they are, but maybe they're not. Yeah, probably makes sense. I assume indirectly we uh we own some. Um, but no, I I'm I'm like uh you know an index fund fish. So for sure. Yeah, I don't I don't own any directly. I don't I don't play in that game.

SPEAKER_00 1:27:48

Um yeah, I agree. Who cares? Who don't don't trade, don't don't pick stocks. Pick predict don't pick. Um we got bush drive. Johnson, when first betting a bottom-up sim that you know has calibration issues in some areas, how do you decide which edges are real or fake in areas/slash markets? And then the second question I think is really good and uh clarification. How does proximity of your mainline price to market dictate your willingness to stake a lower liquidity market like props? I was gonna say like that that's almost how I feel. Like you want to get if you're close to the main line, that's kind of the that's important, and it makes me feel more confident about the other markets. So, like, or the main line, you're like you're close to the line that has the most liquidity. Um and then like that should give you some confidence in like your ability to price the other stuff. Uh, if you know it has calibration issues, I guess I would wonder like how extreme they are or what you know it it it's like it's gonna be one of those like not easy to give like a blanket answer here, but like I think what you touch on uh Bush and the second question is kind of the key for thinking about the first question. Like, are you really tight on the main markets? And then maybe there's a calibration issue, but like how close of a derivative is the new market to the main market? So something like halves and quarters and and stuff, you know, could be a very good derivative for or could be not as good, you know. I think SP talks about like how the distributions are a little different. Um but maybe like a team total could be like a really good derivative, um, clean like a team total over the whole game. So I think it's just like if you're close on the main, how how tightly does the derivative mirror the main? And then like what do you seem to be seem to think could be the issues, and then what could not be? Like it's hard to say without knowing like the particular issues, but you know, you want to make sure you're getting like your player minutes right. I think that can't really be an issue if you're trying to like do the player props, but it yeah, I don't know. I just rambled.

SPEAKER_02 1:30:25

No, I think you hit on a lot of what I was gonna say. The I think we talked about this in the simulation episode. I think if you want to go back and listen to that one, if you've not, I think there's a lot of aspects where we talked about that while back. Um, I'll answer your second question first because that's sort of what you started with. And I think you were hitting on where I was gonna go, is it really depends on the degree in which the main line is related to the prop you're betting. So like let's say I simmed, let's say I simmed a entire basketball game. I you know wrote, you know, had had one of the AI tools write this entire big long thing to simulate a whole basketball game. And my goal was to bet player points. Well, if my total, you know, like let's say I'm projecting 210 points in the game, if the actual market's 230, I'm gonna be really hesitant to bet on player points because I know my total points in the game is like way off from the market. I would be more willing to bet something like blocks. I'm still not gonna feel great about it, but if it's like something that's unrel like more unrelated, I'd be more willing to bet it. Um like similarly, like I could bet from a sim, I could bet even odd, like the final score, even odd, even if like a lot of things are probably wrong. Because there's there's probably as long as assuming like my my sort of scoring distributions are working right, then I could bet that. Um, but I wouldn't want to bet like a halftime spread or whatever, like you were saying. So that that's sort of my response to that question. In terms of how to decide what edges are real or fake when you have some calibration issues, like what I would do is I would just go upstream of the sim or whatever far enough until you don't have calibration issues and bet at that level only. So, like an example, um when I was doing like I built stuff for MMA before, mostly for DFS, but like one of the things you're trying to build that is like playing out how a fight is gonna go. And I, you know, it was it was for primarily DFS, so there were shortcuts and whatnot that were taken. So I had stuff like where are these predicting like interactions between like you know, strikes and all these things, but I knew I wasn't capturing like takedowns and control time and all these other aspects, like perfectly right and how they correlate and and whatnot. Um, so I just like basically went upstream of that and focused on the stuff that I thought was interacting well and I had a good line of sight, whether it's you know, like strikes or stuff like that, correlating to who wins and stuff. So um that's that's what I would do and and just continue to try and fix like from the point it goes off the rails. Um, but just if you have a sim, there's probably like at each step stuff you can be betting, and I would just go upstream until like I feel pretty good about it and bet there.

SPEAKER_00 1:33:21

I think that's a great answer. That's a great answer. Um, okay, should we hit I have a biz I have a Bayesian update for this week that I I'm pretty excited to share.

SPEAKER_02 1:33:30

Oh, if you're excited, I have a very one that I'm not that excited about that I thought about like five minutes ago, or yeah, like legitimately 30 seconds ago.

SPEAKER_00 1:33:37

This will be a kick. So um my so my wife comes to me the other day and she says, like, you're not gonna believe this. And I'm like, okay, what? And she's like, my boss just emailed me and he said, I'm hearing about this betting site called Polymarket. I think it could be good. So my wife works in like a data analytics role for a um like a uh kind of big corporate, and he her boss basically said, like, I think it could be good for understanding like the uh like forgetting numbers on the future or something like this, something just like so fishy, right? But like, you know, it's now so this is my belief, like in that I'm now bullish, I'm now officially bullish now that I have one anecdotal story. Um, that I'm bullish on on their staying power, at least in in non-sports. Uh, and it obviously I'm tainted by the news of the courts and whatever recency bias, but like it broke contain and it came into my wife's like normal world. So I'm I'm updating my belief as to like there are some people in corporations who are like at least maybe uh either drinking the Kool-Aid, you know, buying what they're selling as far as like the data being useful. I did say like if there's like a a get, if there's like a number on on a like polymarket that was like, like if you were looking to put a number for like I don't know, like number of you know for jobs or like inflation or something, uh like I'd be like, okay, like whatever polymarkets at is like pretty good. Like you could use that. I don't I like I'm not saying it's bad to use, but like the fact that like it's actually kind of broke contain and somebody's like seeing this as an actual they're literally saying the thing that everybody like that the the PM maxis have been pushing all along, it's the messaging has gotten through, is what I want to tell everybody.

SPEAKER_02 1:35:42

So anyway, we just this is this is better than whatever I was gonna go. So we we can just riff on this for another couple minutes. I mean, I I think my update, I have a couple updated beliefs. One, you know, stock up on polymarket, you know, for that being the the and I think they've they have probably like even still the best brand uh name recognition. I've had like some people outside of you know, like just normal people in my life who brought up polymarket too, um not calci or whatever. So like stock up on them. So that's that's fascinating. The other thing is um I I you it it's sounding more and more like eventually my uh my food vendor tweets are gonna become like not trolls, you know. So if I just lean into it for long enough that eventually they will become serious. I you know, we I quoted something about an ice cream stand um that's ice cream sales this week, and and flipped asked, is this is this person trolling or serious? You know, we're getting closer to the point where it's it's totally indecipherable, is what I'm hearing. And so this is this is good news for for me and my uh my online persona.

SPEAKER_00 1:36:53

Yeah, I mean I I could see in the not not too distant future, like the Wall Street Journal reaching out about your ice cream stand and or your food vendor outside of uh uh outside of the pack. You know how outside of Lambuff.

SPEAKER_02 1:37:08

You know how they had that like prediction market, uh, like all the mention, not the mention trade. It was some of the mention traders, but then it was like Domer and some of those those people like the people like these the age of the new prediction market quant. Like, do you know how like my life would be complete if it was like these people are at the intersection of you know predict the truth and you know, food, food quality or something? Like, and it's a front page picture made out of you.

SPEAKER_00 1:37:36

I mean, what we would have to do is we would have to like set you up a whole like business, like we would have to get you like the hot just so they could come interview and there'd be shell companies.

SPEAKER_02 1:37:45

We I I would I'd be working day and night if like if someone actually reached out to me to I make them believe this is true 100%.

SPEAKER_00 1:37:54

Yeah, we would we would probably raise we could you could probably raise a good amount of money just to troll um on this too. So yeah, but anyway, I thought that was that was pretty wild. I've I I was like I I was uh I was impressed by by uh the PM's breaking through to the to the mainstream businesses.

SPEAKER_02 1:38:16

Good, it's working.

SPEAKER_00 1:38:17

It's it's working. Um did you uh yeah, we'll we'll we'll end on that. We'll save your your update, I guess, for for next week. And uh yeah, thanks everybody for listening, and we will see everybody on the next episode.