Newspaper article describes how Paddy power "fix" odds

  • https://www.thetimes.co.uk/article/bookmaker-fixes-race-odds-l77zwmbrd

    “Paddy Power secretly manipulates the odds of on-course bookmakers in horse races to deny customers thousands of euros in winnings, The Times has learnt.

    Representatives of the company are instructed by traders at head office to place bets at racecourses designed to collapse “starting price” (SP) odds, according to three people with knowledge of the practice.

    Paddy Power merged with Betfair in 2015 to form a company with a market capitalisation of €7.7 billion. Bookmakers in Ireland are largely unregulated and a gambling control bill drawn up to modernise oversight of the industry has not progressed since 2013.

    SP is supposed to be set independently. It is calculated by a third party using a random sample of odds from on-course bookmakers to find a fair…

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    SP is supposed to be set independently. It is calculated by a third party using a random sample of odds from on-course bookmakers to find a fair price for a horse. The SP is not determined until the race starts, so it is regarded as reflective of the true market on a race.

    However, large bookmakers can interfere if they believe it will help them save money. A trader at headquarters calls an agent at the course and instructs them to place a large bet in the final moments before a race starts. This artificially lowers the SP and reduces the payout to customers who put their stake on the SP if their horse wins.

    The practice is not illegal and was said to be industry-wide. The Times has spoken to people with direct knowledge of its use at Paddy Power.

    One said that the method was often used if a customer had an accumulator that looked likely to pay out. Paddy Power will collapse the SP on the final race, reducing its loss, it was claimed.

    The practice protects Paddy Power, because the company offers “best odds guaranteed”. This means that if the SP is higher than the price set by its traders, it will pay out on the SP — further motivation to manipulate the price.

    A former trader at Paddy Power said that although bookmakers were entitled to protect themselves by hedging bets with other companies, it was a “sharp practice” to collapse SP odds.

    Kevin Blake, an analyst at the television channel At The Races, said that big bookmakers frequently exploited the fact that on-course betting rings have taken in less money since the rise of online betting.

    “They have a situation where the betting ring is very weak and is easily manipulated, so they’re just doing it as a matter of routine to keep their books that bit greener,” he said.

    “There’s no regulation, there’s no representative body . . . The big companies like Paddy Power think they have an absolute free run at these things, so they do what they like.”

    The identities of on-course bookmakers used for the SP calculation are not supposed to be public, Mr Blake said, but big bookmakers know of them and use the information to manipulate the price. “The vibe at the courses is that the big firms, one way or another, find out and then punt with them to get whatever result they want with the SP.”

    He said the practice had once been confined to smaller tracks and less popular meetings but is now evident at the biggest events, including the Galway Races. There had been “glaring examples”, he said, of SP being manipulated in comparison with the odds on an online exchange, which allows punters to bet against each other.

    A former Paddy Power trader said that evidence of manipulation could be seen when the on-course SP was compared with exchanges such as Betfair.

    “There’s a total disconnect in the Betfair market, where there could be €5 million of bets matched on a horse,” they said. “It could be a favourite at 11-4 but all of a sudden it’s 6-4 at the on-course SP, and people are wondering where they are getting such tight odds.

    “Obviously someone was shovelling a load of money onto the SP just before the race went off to drive it down.”

    Another source at Paddy Power confirmed that SP manipulation was routine to cut losses. A drop in odds from 11-4 to 6-4 could save Paddy Power Betfair tens of thousands of euros in a single race.

    A spokesman for Paddy Power said that the company was entitled to protect itself from losses. “As with any bookmaker, we will hedge to control our liabilities,” he said. “This hedging could be done via our Betfair Exchange, through other off-course bookmakers, or through on-track bookmakers.”

    Hedging is accepted to mean placing bets on several outcomes or with other bookmakers, to ensure that some money is returned regardless of the winner. The spokesman declined to comment further when asked if SP manipulation was distinct from hedging because it was designed only to undermine customers’ winnings.

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    Alvin 6

    Thanks for sharing, very interesting!

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