Blog 53 Gaming

What software does a sportsbook trader need to manage risk?

08 July 2019

Oddschecker horse racing

Our previous blog talked about how bookmakers set odds and manage risk. It was a basic overview to give you an idea of what they do in the background. Their day-to-day trading activities can be more complex, depending on different sports. Because there are so many options and a lot of ever-changing data, they rely on software to manage everything from setting up markets, prices and odds.

In this blog, we’ll take a look at the software needed by a trading team to manage the risk of a sportsbook and why it’s so important to pick the right platform.

What does a good trading interface look like?

Bookmakers manage all the data and content in the back office of a sportsbook platform via a trading interface. It covers all sports, tournaments, events and selections you would expect to be offered in a modern-day sportsbook, such as horse racing, football and other less popular sports like boxing and table tennis.

The primary purpose of the trading interface is to allow a trader to quickly respond to market forces, the number of bets and money staked, and the money running onto each selection in every event in the system to manage risk/liability.

Simplicity to navigate at speed to relevant information is key here and needs to be done by a search functionality or filtering to a specific market via a tree structure of markets within the system, e.g. Football>Premier League>Match>Market>Selection - much like a customer would find it on the bookmaker’s app or website.

sportsbook field sheets

Viewing liabilities through the Field Sheets

In trading software, the interface where bookmakers manage information is called Field Sheets. It’s a market view of liabilities updated in real-time every time either a price changes, a bet is placed or an event results in a potential pay out of every selection that is relative to the change. This data needs to be updated as quickly as possible to display the most up to date position of risk. Whenever certain parameters are reached, the bookmaker needs to be alerted by the system.

There are limitations in some systems that do not highlight bets with the same selections and only deal with the liabilities at event and selection level. For example, when a customer places a 10p Lucky 15, all prices are at 20/1 which would return roughly £25K. This bet would never be brought to the trader’s attention and the bet on its own does not need any input to manage risk. Yet, if 100 customers placed the same bet on the same selections, then suddenly, the trader could have a combined risk of £2.5 million. This is how Barney Curley, one of the most successful professional punters, has bypassed the system on more than one occasion.

What makes a good Field Sheet?

A good Field Sheet must contain the following information and be configurable to hide/show information to the trader’s requirements:

  • Selection Name
  • Price (Configurable, Fractional, decimal, US)
  • Price in % format
  • Total stake as a % of total staked from the event
  • Amount of money staked on each selection from single bets
  • Liability from singles
  • Amount of money running onto selections from all individual bets that a multiple bet comprises. For example, a Lucky 15 comprises 15 bets, an individual selection is involved in 8 of those 15 bets. As the selections run, this will change until the bet has completed.
  • Liabilities from run on multiples split into first leg, middle leg and last leg
  • Total bets that the selection is included in
  • Breakdown of all multiple bets by each separate bet within the bet type being dissected and the combined risk with other identical selections highlighted
  • Total book percentage

The bookmaker also needs a filter tab in the Field Sheets to be able to customise them, for example to include and exclude columns. They should also be configurable to display data in a certain order, such as price, alphabetical, liability etc. Field Sheets need to take into account bonuses and best odds guaranteed too. Ideally, the system would also have the capability to merge antepost into the day of the race field sheets. All in all, the system needs to provide a flexible way of viewing the content so the trader could customise field sheets to their preferences.

How do bookmakers keep track of all open bets?

Bookmakers keep track of open bets as they come into the system through a Bet Ticker. The Bet Ticker is a list of all bets placed in the system that allows the trader to watch over all the players’ wagers in real-time. It is essential to have the functionality to filter the bets that appear on the ticker to the trader’s requirements. Otherwise, the high volume of bets hitting the ticker would not allow the trader to review any of the bets at all. The filter needs to include the following attributes as a minimum: Customer, Sport, Events, Bet types, Stakes, Potential returns, Price, In-running, Pre-event, Risk Factor or any combination of the aforementioned.

How do you create trading rules?

Most simple bets are automatically accepted and processed within the sportsbook. However, bets that exceed certain parameters (e.g. extra high stake or payout) need to be reviewed by a trader to manage risk. The Bet Attendant is a list of bets that have met certain pre-set criteria and need reviewing by the trader, usually within a certain time frame to be either accepted or declined. For this, the process is as follows:

1. Customer places bet.
2. Bet meets predefined criteria set by traders (usually some kind of limit hit).
3. Customer receives a message that the bet has been referred to a trader for consideration or that the bet has breached certain limits and has been declined.
4. Bet hits the Bet Attendant system.
5. Bets hitting the Bet Attendant queue to be dealt with.
6. The trader reviews the bet, usually by checking either or all of the following (in a very limited timeframe):
a. Another bookmaker’s odds/Betfair/Oddschecker
b. Client’s account history.
c. Client’s trading notes.
d. Field sheet for the event.
7. The trader then decides to do either of the following:
a. Accept the bet.
b. Accept a part of the bet.
c. Reject the bet.
8. If the trader doesn’t decide within a predefined amount of time, the bet is rejected by default and a relevant message is pushed to the customer’s betslip.
9. If the trader either accepts a part of the bet or rejects the bet, a relevant message is pushed to the customer’s betslip.

How do bookmakers keep track of all the high risk bets and liabilities?

Bookmakers need to be notified as soon as they appear in order to resolve them quickly. When a potential liability exceeds pre-set limits, an alert is generated and the sport/event/market/selection is highlighted to the trader. This allows them to immediately see the potential damaging liabilities and the opportunity to make important trading decisions and changes.

Once a bookmaker is aware of a potentially damaging bet or multiple bets, they may choose to “hedge” it,  which means to place a bet on the remaining number of selections in the bet to cover all or partial potential winnings of the bet placed.

For example, when a customer places a £10 Lucky 15 and the first two selections win at 10/1, the two remaining selections on the bet are also 10/1, making the potential returns if all four selections win £200K. Once the bookmaker is aware of the bet, they may choose to “hedge“ and place £1,650 double on the remaining two selections which would also return £200K, thus covering the potential payout to the customer.

Managing Risk by Profiling your Customers

With a number of different regulations and the requirement to provide additional support to customers to prevent problem gambling, bookmakers monitor their customers and use different profiles to tailor their services to them.

When a new customer registers with an online gambling operator, they are given a 'new user' status by the system. Shortly afterwards, usually within 14 to 28 days, traders begin to analyse the customer’s gambling activities, add comments to their dashboard and communicate findings to Risk Managers. Based on the trader’s input, Risk Managers allocate a category to each new user to create a profile.

Every player is different and over time, the trader builds a better understanding of their customers’ playing habits. Using their profiling system, they can amend player settings to manage the customers’ potential risk to the business or themselves by reducing or increasing their allowed bet size relevant to specific markets. This is done by allocating a “factoring value” to each customer. For example, if the generic maximum bet allowed for an event is £1,000 and a customer receives a factoring of 50%, then the new maximum bet is £1,000*50% = £500

A customer factoring setting needs the functionality to be set for individual sportsbook attributes (sports/in-running/pre-match etc). To review a customer’s potential lifetime value (LTV) and risk, it’s imperative to quantify how many times and to what extent they are beating the final price or starting price (SP) when analysing the customer’s bets.

What does the future for sportsbook trading look like?

If you imagine running an entire sportsbook with international sporting events taking place all day, particularly during a Premier League or World Cup season, there’s no way a bookmaker could keep track of all the bets. They wouldn’t be able to make any trading decisions at the same time and it would end up in information overload. However, artificial intelligence (AI) is a great way of tackling this challenge. Given the increased number of betting markets and sports coverage on offer by bookmakers throughout the year, AI is a great tool.

Online gambling is another industry that accumulates masses of real-time data. If managed correctly, this data can feed machine learning algorithms and power the automation of many current manual risk trading processes.

Successful risk management is a key driver of margins, but it’s a manual, costly and often subjective process. Whilst B2B providers offering pricing and content have been around for some time, until now, there hasn't been much noise about automated risk management.

Utilising AI capabilities could allow segmenting risk categories to adjust prices based on profile, weight of money and predicted market movement. Automation in this area would cut out the need for so many eyes on bet tickers and field sheets where traders are trying to intercept key customer behaviour and use their own expertise to manage prices. Retrospective analysis on customer behaviour would also be reduced with all bets analysed in real-time and used to build a player’s profile and ensure an accurate risk category is applied.

Using a robust risk management platform can help traders monitor all outstanding bets and mitigate risk very easily. A system that allows them to customise Field Sheets and bet parameters according to their preference helps to track all activities and accept or reject bets in-real time. While some trading is done manually, AI is a great tool for automating this process and making trader’s lives simpler by managing the majority of the ongoing bets for them. Traders can focus on managing higher liabilities and those bets flagged up by the system. Similarly, an efficient, automated platform can help keep track of any fraudulent activities and ensure the operator is providing security measures for responsible gambling.

If you’d like to find out more about building a sportsbook management software and its benefits for traders, get in touch with us below.

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