Bookmakers and Obvious Errors

Everyone has certain gripes about how the bookmakers operate. For me, the aspect that particularly frustrates me is the handling of what the bookmakers refer to as ‘Palpable Errors’ or ‘Obvious Errors’. Formerly known as palpable errors, the wording of bookmaker rules were changed to refer to obvious errors in an attempt to clarify the issue.

As former IBAS Chief Executive stated in 2008, “the industry needs to remove the term ‘palpable error’, or its equivalent, from their rules. It has become a mere device lacking true definition.” In 2014, the vast majority of the bookmakers now refer to these issues as ‘Obvious Errors’.

So, what exactly is the wording of this rule concerning these so-called errors? Bet365 state:

Prior to the start of an event, in-play or after the event, where an Obvious Error is identified, any bets will stand and be settled at the bet365 revised price.

In my view, there are a number of problems with this rule, which I shall discuss. The first involves the identification of an obvious error, the second involves the revision of the price and the third concerns the timing of the identification.

Let us consider an event where the market, based on a standard 8% overround, prices Team 1 at 1/6 and Team 2 at 7/2. With the market prices determined across the board, if a bookmaker opens their prices at Team 1 being 7/2 and Team 2 being 1/6, then I am happy to accept this being an ‘Obvious Error’. In this situation, it is quite clear that the prices have simply been entered the wrong way around. A careless mistake for sure, but it is clearly an obvious error.

Pre-event, the determination of what constitutes an obvious error is easier. However, in-play, it becomes more difficult. Different traders will view matches as progressing in a different manner. If a trader is not concentrating on a tennis match properly and misses a break of serve, or a football match and misses a goal, should any bets that are placed by the punter in good faith be classed as an obvious error, or does it become an error made by the trader?

Thirdly, once the results of an event are determined, the identification of what are now errors in pricing are easier to spot. Using the example of the Aston Villa against Norwich match today, it could be argued that the final score of 4-1 to Aston Villa makes the price of 4/1 on Aston Villa to win the match after 20 minutes look like an error. Clearly it is not – the price of 4/1 was justified on Villa at 1-0 down, but knowing the final result makes it easier to class something as an error.

As you may have guessed, this article has been provoked by an incident that happened today, which to me, calls into question all three of the issues that I have raised above.

The bet in question was during the Kuurne-Bruxelles-Kuurne cycling race that took place this afternoon. The situation was that there was a breakaway group of 10 riders, including Stijn Vandenbergh. They had approximately a 60 second lead over the chasing group with just under 25km remaining. Bet365 were offering the race match-bet between Vandenbergh and his teammate, Niki Terpstra with Vandenbergh at 23/20 and Terpstra at 13/20.

Amazingly, Bet365 did not even change the odds in their results area

At the prices, I felt, as did a number of other cycling experts on Twitter, that the odds on Vandenbergh were value, given the strength of the leading group and the reasonable chance that the break might stay away. As a bit of background, a common accepted adage in cycling is that the peloton is usually able to close a gap of around one minute for every 10km remaining. In a situation such as this, with a strong leading group and a chasing pack that was poorly organised, the chances of the break being brought back were less than in a standard sprint stage, but it was far from guaranteed.

Was the 23/20 an error? Quite probably – the real odds should probably have been shorter. Was it obvious enough an error to class it as an Obvious Error? Highly debatable.

The second aspect is the revision of the price. As I have just stated, the price was almost certainly too big. There is a reasonable argument to suggest that the prices could have been the opposite way around with Vandenbergh at 13/20 and Terpstra at 23/20. Had the break been caught, Vandenbergh would almost certainly have been dropped out the back and Terpstra would have won this match bet. In effect, it was a bet as to whether the break would stay away.

When I received a message stating that the odds had been changed, I was disgusted to see that the odds had been changed to 1/10. There is virtually no argument that I can see to convince me that, at the moment that I placed the bet with 25km remaining, odds of 1/10 on Vandenbergh were the correct odds. Had Bet365 offered the match bet with Vandenbergh at 1/10 and Terpstra at 5/1, I imagine they would have seen plenty of money on Terpstra at the 5/1.

This ties in with the time of the timing of the change. Despite the fact that the bet was placed with 25km remaining, which works out at approximately 30 minutes of cycling, the bet was not changed until 20 minutes after the race had finished, at which point is was clear that Vandenbergh had beaten Terpstra.

As the point was made earlier, it is easy to conclude after the event that Vandenbergh and the break would stay clear of the chasing pack, in which case, it is possible to conclude that it might have been a 1/10 shot at the time. However, decisions on price changes should surely not be made after the result is known? It is only natural that the final outcome will significantly bias the retrospective opinion of the chances at the time of the bet placement.

Having approached Bet365, the only reasoning for why it was classified as an ‘Obvious Error’ was “Our Trading team are aware that the original odds offered were incorrect so resettled the bets at the correct odds.” When I asked again as to what specifically caused it to be classed as an ‘Obvious Error’, I was told that they “don't have any further information.” In other words, they do not have any information as to why the odds might have been wrong. For something that was clear enough to be re-priced as an ‘Obvious Error’, this seems crazy.

They were also unable to provide any information as to why they determined that the correct odds at the time should have been 1/10 as opposed to any other odds. Again, it was simply a trading decision.

To make the situation more complicated, I was informed by several people on Twitter that they had placed the same bet, but at the odds of 7/5 only moments before I placed my bet at 23/20. In other words, Bet365 had seen money coming in at 7/5 and changed the odds to 23/20 to reflect this. It makes you wonder that, if it were such an obvious error at the time, why the trader only changed the odds from 7/5 to 23/20, if they have determined that the correct odds at the time were 1/10. It begs the question of what the trader was doing if he only dropped the odds to 23/20? It also begs the question of whether it was the same trader that later decided, once the race was finished, that it was an ‘Obvious Error’.

This is not something that is particularly aimed at Bet365 – all bookmakers are guilty of using this ‘Obvious Errors’ clause to their advantage. In my opinion, it is something that really needs to be more strictly regulated and more clearly documented. Otherwise, it is simply something that the bookmakers can use to adjust their books after the event has finished by changing some of the bets placed at bigger odds to whatever odds they fancy.

If they were able to provide a valid explanation as to why they felt it was such an obvious error and as to why they felt that 1/10 was the correct price, then I may well have been able to accept it, even if I still disagreed with it. However, the fact that they were unable to provide any information is simply disgraceful, given that their actions concerning the price moves in-play did nothing to suggest that the prices were incorrect.