Why Exchanges / Prediction Markets Can Be Useful

I backed Sweden each way at 150/1 to win the world cup last year before the qualifiers started. Pretty confident that they’d qualify automatically I figured the price would shorten up significantly heading to the finals.

Well, they’ve qualified but not quite how I envisaged. The group campaign was an absolute disaster, the manager left and hopes of qualifying were in tatters. Then came the rescue package. A route through via the Nations League which rewarded them for having been not very good previously. An away game against Ukraine in Spain followed by a home match in the play-off final and World Cup here we come.

I’m way less optimistic about their chances than when I placed the bet. Isak is still out and Kulusevski’s injury goes on and on – big names unlikely to make an impact. I can’t stress how poor they were in the qualifying group which leads me to believe it wasn’t just a footballing issue. Star players can be way bigger than the rest of the team which often creates an imbalance or a manager can find he doesn’t have the players’ backing.

They’ve improved enough to beat Ukraine and Poland, so long may that improvement continue.

Meanwhile, a heavy weight in Italy has been dispatched from the tournament. Or have they? Look on the exchanges. Much as somebody wants to back Man City at 40 to be relegated, there’s an order up for Italy at around 500 to win the world cup. Any one of us could let somebody else back Italy at around 500/1 to win the World Cup. Just updated to 220.

There are several reasons I wouldn’t consider this. One is that if I’m laying the bet I’d have to put the money up. To lay £10 at 500 would mean accepting 4900 liability.  Simply not worth it. Add in the fact that, for some strange reason, a particular exchange decides that by laying that bet you’ve just lost 4900 and will restrict your account on some spurious basis, and I’ll be steering well clear.

As usual, I’m digressing. The point is this. The market is telling us something. It’s telling us that it’s not out of the question that Italy will be competing in the World Cup this summer. There are many things that can happen in the next three months and presumably one of those is that Iran might not be competing. Nothing for sure but it’s a flag, so if you’re looking at the competition and how things might pan out, bear this in mind.

The market gives us little indicators. Unlikely events can sometimes give you an edge.