So, they’ve done it again. Paddy Powers have paid out on all bets on Barack Obama to be elected President of the United States, meaning that a lot of punters who would otherwise have had a nervous few days can now sit back and relax, knowing that their bet is a winner, regardless of who ends up sitting in the Oval Office for the next four years.
If you’re here on BetPreviews, chances are you’re familiar with the thinking behind this process. Paddy Powers have been all over the world’s media for the past couple of days, and unless Mitt Romney pulls off a massive upset and turns things around at the last minute, the whole exercise will have cost them precisely nothing, barring the amount they paid to run large print advertisements in some national newspapers. That’s the critical aspect here – the press release may claim that over €400,000 will be paid out to punters, but that’s just money that would have been paid out anyway. Thus right now, the exercise is costing them (€400,000 multiplied by the % chance of a Romney victory) and since a Republican success is now a 20% chance by the odds and even less if most recent polls are to be believed, this actually will cost the firm €80,000, technically. Based on the amount of coverage they’ve received, that’s money well spent.
However rather than belittling what Powers have done, let’s not look a gift horse in the mouth. This is a freebie for punters, and what’s more, it’s something that they are in the habit of doing, and since we’re here to steer punters the right way, that’s all good news. Last year they did the same on Celtic in the Scottish Premier League and Sebastian Vettel in the drivers’ championship. So, as we’re here to make a profit, we have to ask the question – how do we make money from this?
Doing so is a two step process. First we have to identify where an early payout is likely, then we must time the strike well. If it turns out that Powers don’t pay out and your bet remains live, then it’s possibly no harm to be open to the idea of hedging out on a betting exchange, thus minimizing losses. After all, the crucial thing to remember here is that we’re not trying to pick winners – we’re trying to pick payouts. So here are the criteria that Powers would use to determine where and when to strike with one of their early payouts.
(1) A Big Antepost Event
This may go without saying, but remember the key goal here is column inches. The Premier League, Golf Majors, elections, Heineken Cup, Super Bowl, X Factor – these are all big name events where an early payout would catch the eye of the world’s media. There’s no point paying out early on the winner of the Rabodirect Pro 12 or the National Hurling League – this simply won’t gain the media traction required to make it worth while.
(2) Odds on, but not crazily short
If Powers were to pay out on an outcome that had less than a 50% probability, that would make no sense and punters would smell a rat. On the other hand, there’s no point doing this when the selection in question is nearly past the post already, say 1/5. It would be seen as cheap opportunism and the natural cynicism in people would lead to responses like “they’re not taking too many chances there.” Such an attitude is incredible when we consider that an early payout is essentially getting something for nothing, however there’s nowt as queer as folk, as they say, and Powers know this all too well.
(3) A popular selection
This is for two reasons – Powers want to pay out when there will be a large number of beneficiaries, rather than paying out large sums to a small few people. An early payout on a popular team like Manchester United or Liverpool winning the Premiership makes great sense for this reason, as those who collect will be casual supporters who placed small bets for interest. A club like Manchester City would not be as suitable because they don’t have the support base outside of their home city and Powers would be catering for value seekers rather than casual punters – not nearly as popular a demographic with the bookmaking community.
Again, to maximize coverage, it makes sense to do this at a time when things are changing and when the event in question is in the eye of the media. For example, if one team was to surge clear at the top of the Premiership and move into a price of 1/2 or 4/9 by mid-March, chances are that the announcement would not be made until the following month. With International fixtures due to be played on the 22nd and 26th of March, the fortunes of the respective national teams would be the big news around then, so club football would take a back seat at that time.
Of course if it was a simple as saying that (selection X) is going to be paid out in the near future, then there would be no need to work for a living at all ! However all we will say is that the X Factor market is bubbling up nicely. There are two clear front runners now and a long way still to go, but if one candidate moves into 1/2 in the last fortnight of the competition, then there could be worse back to lay options out there….