High limits, top odds and a ‘winners are welcome’ policy makes the business model of Pinnacle unlike anything you see amongst Australian corporate bookmakers.
So how do they survive when so many other bookies are quick to cut anyone with a clue?
Pinnacle’s trading director Marco Blume recently shared some great insights on their Pinnacle Podcast. His role is to manage a team of traders who are responsible for their entire risk portfolio. There were plenty of punting lessons to be learned from someone with so much sports betting experience, so let’s look at the major takeaways:
Marco believes there’s a strong correlation in skill-sets between online gaming and online betting. That includes uncertainty, variance and making good decisions under time pressure and with incomplete information. He believes gamers are fast learners and people who enjoy adapting to new challenges, can perform under pressure and have resilience to pain.
Becoming very good at a game shows you have dedication and drive to compete with other people. Those are similar skills to what’s required in trading as a bookmaker, because you’re competing with others. It’s a game of trader versus bettor and Pinnacle are dealing with the sharpest punters in the world, so they try not to be too exposed on any one outcome.
For those looking to become a trader at Pinnacle or another bookie, Marco doesn’t actually consider it to be helpful to know sports. In fact in some ways he actually considers it a hindrance. It’s more important to have experience in data science and modelling. Very few of the Pinnacle traders actually bet, but that’s partly because they can’t find other bookies with odds as good as Pinnacle. They hate the idea of taking lower odds at other bookies and losing value.
Marco mentioned that in-play sports betting is between 66% to 80% of their total betting volume. That’s a massive percentage and one that has grown consistently over the last decade. Obviously the market share of in play in Australia would be far lower due to our antiquated legislation.
The quality of sports betting articles and information has increased dramatically over the last few years. Many feature sophisticated statistical analysis and prediction forecasts. The free programming language ‘R’ is used extensively. Data is becoming more widely available and there are plenty of good datasets out there, albeit expensive in some cases.
Marco believes that punters can still find an edge from intuitive handicapping. He said that the models are right on average, but not always correct in specific situations. Some punters are able to watch keenly and understand the flow of the game and why it might diverge from the average.
Edges are easier to find in smaller leagues and markets. The odds aren’t as efficient as they are in bigger leagues.
Everything gets faster and sharper over time. Everyone is trying to find an angle that others haven’t found yet. For example there was a period a few years back when first access to team line-ups gave some punters an edge. But that doesn’t last.
The Pinnacle Model
The Pinnacle bookmaking model is low margin and high volume – they’re like a supermarket that offers products at the lowest possible price. It’s a ‘no-thrill’ feeling with no bonuses or inflated odds. Because Pinnacle run on low margins, volume is essential, especially offset money which is the opposite side to the sharpest action.
Pinnacle clients are more sophisticated types. They want good quality odds and to get paid.
There are many different types of bettors. Some like to originate the line, some are market driven, others want to oppose the market. Some are recreational and others dedicate their life to betting on a particular sport.
The ‘wisdom of crowds’ effect means that they come to a very efficient line that represents the truth of a betting event. If you don’t beat the closing line you’re probably not going to be a winning bettor. Pinnacle’s closing line is the most efficient out there.
Pinnacle have skin in the game so if they’re getting beaten they simply need to get better. They can’t just stop taking bets from a punter like other bookies may do.
Some of the betting syndicates they deal with have hundreds of employees.
Most other bookies don’t really employ many traders. They just outsource it. Bwin are a big European bookie who in their annual report said – ‘we don’t operate in the sports betting industry, we are in the entertainment industry. Our competitors are cinemas and bowling alleys’.
Stay The Course
Marco has seen all kinds of winning and losing runs. A few months really is nothing – you need to see thousands of bets to know for sure whether a punter is a long-term winner or not.
Betting volume on esports has grown rapidly over the decade they’ve offered it. Pinnacle have 5 figure limits on some esports matches and even $100,000 on a big event. Marco expects esports betting volume to continue to grow, especially amongst 18-24 year-olds. It is currently their 4th most popular sport, behind soccer, tennis and basketball.
How do bettors win? Simply by being smarter than Pinnacle. The weakness of the bookmaker is that they have to price up all the markets, so the job of the punter is to find markets where Pinnacle are weak. Find mistakes and exploit them.
For winning players, multi’s (aka parlays) are a smart strategy and actually a decent way of getting money down. As a multiplier of odds they are just neutral EV (expected value). But if you’re a winning bettor then multi’s are a bookies nightmare as you’re multiplying your positive EV.
Marco mentioned that Pinnacle regularly has to pay out big money on winning multi’s. But one thing to remember is (in the example of a 3 leg multi) that if you have a sequence where wager 1 happens before wager 2 which is before wager 3, ultimately you’re having a lot of money on the 3rd leg.
Whether it’s US sports, jumps racing in the UK or thoroughbred racing in Western Australia, we’ve got you covered.
Start winning on the punt today.