Arbitrage in the BC.

[philcski]

Just some recordkeeping...

This is not arbitrage. Arbitrage is when you can buy something for a set price and sell it at the same price somewhere else at the same time. This is information exploitation.

[Indian Charlie]

Originally Posted by philcski

Just some recordkeeping...

This is not arbitrage. Arbitrage is when you can buy something for a set price and sell it at the same price somewhere else at the same time. This is information exploitation.

YUP

[Dunbar]

Originally Posted by philcski

Just some recordkeeping...

This is not arbitrage. Arbitrage is when you can buy something for a set price and sell it at the same price somewhere else at the same time. This is information exploitation.

Originally Posted by Indian Charlie

YUP

philcski,

First, you didn't state that correctly even though I know you understand it. There wouldn't be much point in buying something and selling it "at the same price somewhere else at the same time." You meant to write 'sell it at a higher price somewhere else...'

Second, arbitrage can mean any simultaneous transactions (or bets) where a risk-free profit is guaranteed. When you have different pools offering different ways to make win bets, it's certainly theoretically possible for there to be arbitrage opportunities. The simplest example would be if there was an extremely underbet horse in the Exacta Pool. It's fairly straight forward to construct an equivalent win bet from a series of exacta bets with your chosen horse as the 1st horse in the exacta. If the discrepancy of the implied win odds from the Exacta Pool compared to the win odds in the Win Pool is great enough, than an arbitrage could be created by betting every other horse to win in the Win Pool. Betting every other horse to win is equivalent to betting the one horse to lose, ie 'selling', thus satisfying the arbitrage definition. So you'd be simultaneously betting the same horse to win and lose.

I agree that the vast majority of what's done with the preferential last-second data access is not arbitrage, but the search for price discrepancies is similar.

[philcski]

Originally Posted by Dunbar

philcski,

First, you didn't state that correctly even though I know you understand it. There wouldn't be much point in buying something and selling it "at the same price somewhere else at the same time." You meant to write 'sell it at a higher price somewhere else...'

Second, arbitrage can mean any simultaneous transactions (or bets) where a risk-free profit is guaranteed. When you have different pools offering different ways to make win bets, it's certainly theoretically possible for there to be arbitrage opportunities. The simplest example would be if there was an extremely underbet horse in the Exacta Pool. It's fairly straight forward to construct an equivalent win bet from a series of exacta bets with your chosen horse as the 1st horse in the exacta. If the discrepancy of the implied win odds from the Exacta Pool compared to the win odds in the Win Pool is great enough, than an arbitrage could be created by betting every other horse to win in the Win Pool. Betting every other horse to win is equivalent to betting the one horse to lose, ie 'selling', thus satisfying the arbitrage definition. So you'd be simultaneously betting the same horse to win and lose.

I agree that the vast majority of what's done with the preferential last-second data access is not arbitrage, but the search for price discrepancies is similar.

You can negative arbitrage yourself, not that I'd recommend that

The availability of these opportunities is really limited, no? Not saying they aren't there, but the liquidity would be too low to make the kind of money they need, right?