Slaves, Stocks and Sports

I had an interesting chat with a lawyer at a party this weekend. We chatted about various topics, such as console modding, copyright infringement and Pump and Dump scams. One of the topics was the possibility of Pump and Dump in the Sports betting world. I made a mental note to myself to search through our spam database when I was back at work.

At the same time, I did some quick research on Pump and Dump and was surprised at how long it had been in history.

Click to link of wikipedia image

The above picture is one of “night singer of shares” who sold stock on the streets during the South Sea Bubble at Amsterdam in the 1720s (see wikipedia reference). Back in the days of slave trading in the 17th century the management of the South Sea Company had pumped positive rumours about the company, inflating the value of their stock, before selling leaving other investors stranded with worthless stocks.

Back to the current days, unfortunately I couldn’t reveal any data in our spam systems relevant to sports Pump and Dump after a quick search. This is probably because Pump and Dump for sports betting through email spamming is inefficient. It would have to work by influencing the expectations of those betting, and hence the odds of bookmakers. This would be a slow, indirect process involving thousands of bookmakers around the world. It is very inefficient compare to stock market which is influenced directly by market forces.

The next logical step is to utilise various “Internet betting exchanges“. In these, odds are influenced directly by the supply and demand of bets. Most of these “Internet betting exchange” also provide forums for their communities. Perfect! Excellent potential for targeted spam messages to influence gamblers within the same exchange.

screenshot is taken from one of the forum as a semi-spammy post

Spam exists in these forums but I couldn’t find any evidence that they are related to Pump and Dump scheme. For those interested, to make an (almost) risk free profit via Pump and Dump, one could hypothetically:

  1. Bet amount M on result A (e.g. betting on a horse would win) at odds X
  2. On the “free” tipster sites promote result A (the “pump”)
  3. Now people would bet on result A, leading to odds for results A to shorten to Y (i.e. Y < X)
  4. Now you would lay against the result A (i.e. betting on that the same horse would not win) at odds Y with amount M (the “dump”), possibly matching bets against the people that you advise on the tipster site

Now, if result A occurs, the scammer would gain (M*(X-Y)), while if A didn’t happen, the scammer won’t lose any money (since as a the scammer pays M towards the layer at step 1 and receives M from the better – step 4). Note that if you are reasonable good at predicting the result A, this is a sustainable scheme – people who joined the scheme would earn – but taking more risk.

There are variations where you lay more than you bet to create a win-win situation also. This is analogous to the stocks version – only the commodity traded here is bets rather than stock. And so the ancient monster of Pump and Dump reincarnates happily in various forms to feast on the greed of our civilisation.