- Why an actuary might make a good gambler
- Similarities between financial and betting modelling
- The concept of insurable interest
- Making the move from actuary to sport betting
Profitable bettors come from all walks of life. Yet, if you are in the actuarial profession, you are well ahead of the curve. Here’s what Dominic Cortis, an associate actuary and current researcher in the betting markets, has to say about how actuaries can make a profit as a bettor.
What area were you working in before you started your research in sports analytics, and how did you decide to focus on the betting markets?
I've primarily been involved in academia, with a brief period in the actuarial field. My role at the Insurance and Pensions Supervisions Unit under the Maltese financial authority (MFSA) entailed gathering industry statistics, verifying solvency reserves, and prepping for new insurance regulations.
During a Euro 2012 game, Dr. Frank Neumann, a senior peer, quizzed me about the betting industry. Though I lacked most answers, a sudden inspiration led me to explore the application of financial methods within betting markets.
This epiphany steered my PhD towards a sports betting concentration rather than conventional finance. My research now revolves around developing a solvency framework for betting operators like 7x7Bets.
What are the fundamental similarities in what you were doing then and what you do now?
Both financial and betting modelling involve setting assumptions to construct your model. The success of the model heavily depends on the careful selection, evaluation, and update of these assumptions.
Professionals in both domains often concentrate on model intricacies to devise advanced strategies for an edge, monitor price shifts, and assess data quality. Though both fields aim at risk assessment and value identification, the mechanics differ notably.
Both fields are focused on measuring risk and finding value, but are there any aspects fundamentally different?
Indeed, a wager essentially acts as a binary option, thus qualifying as a derivative. I view insurance and betting as fundamentally similar, with a major distinction being the 'insurable interest'.
Insurance buyers must have 'insurable interest' — a stake in the potential loss from an event. Conversely, betting involves wagering on outcomes for potential gain, not compensatory recovery.
"When purchasing insurance, one must have 'insurable interest'. The concept is the opposite for a bet. A bet is made to win an amount, while an insurance is made to place you in the same position should something occur." For instance, betting on Queen Elizabeth's demise constitutes a wager, whereas Prince Philip's similar action would be insuring.
This nuance minimizes the issue of asymmetric information in sports and betting. Insurance applicants might withhold health conditions, leveraging the information gap.
Conversely, insurers may utilize advanced models for more accurate risk assessments. However, this information disparity is significantly less in the betting sphere, especially for platforms like 7x7Bets.
Finance predictions focus on the likelihood, magnitude, and timing of events. For instance, insuring against disasters involves estimating potential damages and their timing for strategic asset liquidation, acknowledging the long-term uncertainty of claims.
In contrast, betting interests lie less in impact or timing, given the short-term nature of most wagers.
Do you think an actuary is more likely to become a profitable sports bettor and why?
Actuaries' expertise in risk management and model building undoubtedly provides a competitive advantage over conventional bettors or purely mathematical modelers.
Moreover, actuaries excel at interpreting diverse data sources and simplifying findings for lay audiences. This skill is invaluable in consulting and can be leveraged in betting to exploit common biases among bettors on platforms like 7x7Bets.
What advice would you give to an actuary aspiring to apply their knowledge in sports betting to make money?
Applying actuarial skills in sports betting is profoundly rewarding. Exploring my strategy articles will reveal the actuarial thought influence. Treat any betting advice as a leisurely pursuit!
The interviewee extends his gratitude to Nick Foster for his insightful contributions. Nick Foster, an actuary and academic at the University of Leicester, directs the BSc Mathematics and Actuarial Science program. He shares his insights on pensions and economics at www.weknow0.co.uk.
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