Comment by slg
15 hours ago
It's interesting that this is explicitly for non-sports markets because I see no reason why this would be less applicable there. Sports betters have long talked about that the winning strategy is usually to bet the under (i.e. the no) on most bets. The over (i.e. the yes) is generally a more exciting and fun outcome which causes it to attract more betters which in turns makes that side overpriced.
Like with this bot, I have no idea if that will still lead to actual positive returns. This might just be a remnant from a time when these betting lines were set less intelligently. But all things being equal, it seems logical that "boring" bets would have a better return in the long run than "exciting" bets as long as some betters are at least partially motivated by entertainment.
There's probably a lot of knowledge like this that sports betters have built up over decades that could apply to these new forms of non-sports gambling.
it avoids sports bets because "Who will win game 6 of XYZ" is formatted on the polymarket backend as a Yes/No bet. There's a lot of markets with Yes/No plumbing even though you wouldn't interpret them as such
Fair enough, I assumed the exclusion of sports with a deliberate decision rather than one forced on the project due to the technical details of the platform.
Strategies like this can easily be positive EV until enough people discover it and that actually is the driving force behind efficient pricing.
Here's how the mechanism works: I find that something is statistically worth $0.70 but I am able to buy it for $0.60 and statistically sell it for $0.70 (in the average). I make $0.10 each trade on average. Until you come along, copy my strategy and change $0.60 to $0.61 to frontrun my trades. Then someone else does it for $0.62. Until the market finally reprices to $0.70 where it should be. The guy who tries $0.71 loses money and stops, and then it goes back to $0.70. It's a stable feedback loop.
There are lots of positive EV strategies lying around in these inefficient markets that Citadel hasn't (yet) descended upon. The best advice I can give is if you find one, trade the hell out of it and don't open source it or tell anyone about it, because as soon as more people run it, it will cease to be positive EV and then after that it becomes an infrastructure game.
If it's popular on Github it probably doesn't work.
If you found something that works and is paying your rent, don't put it on Github. My 2 cents.
This all really depends on the efficiency of the market. I think these prediction markets would claim that is their goal, but even Wall Street isn't perfectly efficient. I would also guess that sports betting sites like DraftKings or FanDuel would be even less efficient and less likely to be swayed by a popular GitHub repo. Once again, it goes back to the share of the market that is participating for entertainment purposes. That's a lot more common for sports betting than it is for will the US bomb a certain country.
> I would also guess that sports betting sites like DraftKings or FanDuel would be even less efficient
Your strategy doesn't work on sportbooks to begin with, because bookmakers don't move the odds with the action.
That is, there is no such phenomenon as "the over is exciting therefore overpriced". Bookmakers price purely based on facts and statistics. Their pricing isn't affected by excitement nor by how many people are betting a certain way.
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> but even Wall Street isn't perfectly efficient.
Yes, you can find positive EV trades on Wall Street as well. I've been diving into this a lot lately, all I can say is it's 10X harder to find strategies that work on Wall Street than prediction markets.
With one exception.
The one easy long-lasting anomaly to exploit on Wall Street which actually does NOT exist on prediction markets: "American stocks go up most of the time". This is actually a massively exploitable structural anomaly (you just buy and hold forever and effectively reap the rewards of a biased coin) and the source of the anomaly is mostly US monetary policy, US foreign policy, and US tech expertise put together. However, it still is an anomaly. The thesis that SPY will continue going up forever is also predicated on these things continuing to work the way they have in the past.
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