Gambling, unconventionally

Betting is not inherently wrong. All betting does is redistribute wealth.

gambling chips of various colours on green table Artwork by Annie Zhang

Many university students know they should work hard and save for their future, but most students don’t bet their way to wealth. I do, and I think all university students should be betting.

A few years back I was researching ways to make extra money and came  across matched betting — a method of exploiting bookmaker promotions to make guaranteed money.

Three years later I was working in a management consulting style role. The days were long, and I was dissatisfied with my boss. It was a coincidence that I came across an article about sports betting hedge funds like Primoha Capital. Matched betting methods in mind and with the Australian Open’s bookmaker promotions rife for the picking, I set out to raise money.

I didn’t have a business plan, marketing plan, sales script or anything. I reached out to friends first. Some invested their own capital, and we split all the profits.

At its heart, matched betting is simple. Bookmakers run generous promotions costing them millions of dollars to lure customers in to bet and then lose money. Bonuses are a loss leader for bookmakers. The trick with matched betting is that you only bet on promotions, and you hedge your position so you can’t lose.

Here’s an example. The classic offer to a new customer is that if you deposit $500 you’ll get $500 in bonus bets. Now, you just find a game or race. Let’s say there’s a soccer match between Arsenal and Chelsea. Most people would say there are three outcomes – Arsenal wins, Chelsea wins, or it’s a draw. Backing one of the three results to win is a classic punt and normally doomed to lose money in the long run because the bookmaker always prices in an edge in their odds to win over time.

But there’s only ever two results on a bet. The bet wins or it does not. Either Arsenal wins or it does not. Either Chelsea wins or it does not. Betting on a winner is a back bet. Betting on something not winning is a lay bet.

And if you place one bet on an event occurring and another on it not occurring, you are guaranteed to win on one bet. Of course, if you’re using your own funds, you’ll still lose money because of the bookmaker’s edge in the odds. However, unlike a regular bet, you won’t lose all of your money. Rather, you’ll lock in a small, mathematically guaranteed loss. This is matched betting.

But, unlike a supermarket promotion, bookmaker bonuses can generate profit. With the $500 deposited, a punter can back and lay Arsenal to win. This locks in a few dollars loss because of the bookmaker’s edge, but over 95% of the $500 stake is retained. Then the punter can back another team using the bonus bet and lay with their own money. Like usual, one bet is guaranteed to win and the punter gets the winnings. But this time the punter bets with the bookie’s own money.

The exact return on the bonus bet depends on the odds you bet at, but a 70% return is easily achievable. That means a $500 sign-up bonus is worth $350. That means the $3000 in bonus bets available for signing up to bookmakers in NSW is an easy $2100. Not bad for a few hours work.

And just like any supermarket, bookies don’t stop offering promotions. For a university student, matched betting is a great side job. There’s no bar to entry, and you can make 15k a year tax free with just a few hours of work a week easily enough. That’s enough to make a real difference for students struggling to get by.

Right now, Australians lose $920 million a year through betting. But, if even 3% of the 2.1 million Australians between 18-24 years of age joined me in matched betting, these losses would be eliminated, and that’s based on conservative historical matched betting profits.

Betting is not inherently wrong. All betting does is redistribute wealth. For me, taking money from bookmakers to support friends, family, social causes, and strangers which need help is noble. In my eyes, I’m countering corporate bookmakers who make morally questionable profits by incentivising problem gambling.