In the special case of all-or-nothing bets, we have a different outcome space than in trading and can model things differently. Introductory: Zvi Mowshowitz on Kelly bets. People often think about this for sports, but we could also imagine betting in the broader context of prediction markets.

Bookies marooned in Albion park after a storm, via Library of Queensland


Bitedge explains betting exchange mechanics and bet arbitrage and offers reviews. e.g. here they test the customer support for betbtc. is another one I see around.

Khythe on details of Market making:

Making markets doesn’t only work on binary propositions, it also works on quantities. For quantities you quote a market as well as a conversion factor for the contract’s pay-out, for example “I’m 8 at 30 for the number of people who show up to my talk, $2 per person”. That would mean I’m willing to buy a contract that pays out $2 for everyone who comes to my talk for $16 (8 people times 2 dollars/person) and sell such a contract for $60 (30 times 2). If I sold such a contract, and then 34 people came to my talk, I’d need to pay out $8 on net.

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