Revealed: how bookies clamp down on successful gamblers and exploit the rest – The Guardian

On any given Saturday, Rory would spend several hours glued to a screen flickering with hundreds of football and horse racing bets placed by customers of the Irish bookmaker Paddy Power.

One of multiple insiders from firms including Paddy Power Betfair, Ladbrokes and William Hill who spoke on condition of anonymity, Rory was part of an obscure corner of the gambling industry that exists to maximise profits by clamping down on successful punters.

The volume of customers they had, you could afford to get rid of anyone you thought wasnt going to be profitable, he said.

Punters know the house usually wins, but most have no idea that bookies sharpen their edge via something called stake factoring, the process by which winning customers are dialled down, while losers are allowed to bet more.

It works like this: when a customer opens an account, they might be given a stake factor of 1, meaning they can bet 100% of the normal maximum stake, for example 500.

As soon as people start winning or losing, that gets adjusted, said Cameron, formerly of William Hill. It starts with 50% and if they keep doing it [beating the bookie], itll keep going down. At William Hill it went down to 25% to 10% and eventually down to 1%.

Sometimes, such decisions are determined by other factors.

Wed make judgments based on what job you do, who youre friends with on Facebook, said Steve, who works as an odds trader at a well-known betting website.

Its particularly true of any account with a female name, he said, explaining this was often someone who had had their stake factor reduced on their own account and was posing as a spouse, sister or friend.

A manual, handed out to employees of Paddy Power within the past six years and seen by the Guardian, offers further insight.

It advises staff to restrict customers who look like bad business and to increase stake factors for all customers that are regularly hitting their max [maximum bet]. Those customers with a stake factor above 1 can wager more than 100% of the normal maximum figure.

The guide also suggests traits that supposedly indicate someone is likely to be bad business, including eastern European customers, apparently based on concerns about locations in which past suspicious betting patterns have been identified.

For the bookies, stake factoring is seen as a legitimate way of levelling the pitch against punters who they argue are resorting to unfair methods.

One former trader at William Hill explained how the firm would be targeted by latency cheats, people who exploit the small delay between events at a match and the bookies TV pictures, either by accessing a faster feed or attending the event.

You see a bet come through from a brand-new account on a certain cricketer to score less than 25 runs, and theyve put on as much as they can. You look up at the TV and hes out that ball.

There is, too, always the risk of the stablehand or kit man with inside knowledge of a lame horse or a star striker with a tummy bug. Other areas, though, are less clear cut.

Some insiders complain of bonus abusers: people who milk the offers that companies send out to lure in new gamblers.

Much more common are the arbers or arbitrage gamblers, who scour gambling websites for obviously wrong odds. By identifying an event where the odds are clearly priced wrongly, arbers can place a conflicting bet with another operator and make a return regardless of the result.

The practice can even be automated by using bots to place multiple small wagers, flying under the radar of systems designed to spot the practice.

However, some traders fear that bookies have become trigger-happy, targeting not just cheats but canny operators, known in the trade as warm or shrewd punters, or simply as bad business.

It tends to happen now that everyone that beats the price gets put under the arber banner, which is unfair, said Fintan, who has worked at multiple operators including Ladbrokes. Id say its probably 65%-70% of punters that get factored where its definitely the right decision.

One ex-Paddy Power employee showed the Guardian a menu of stake factors that suggest the company was more than happy to restrict people who were simply canny. New customers were set at 1.0, the document said, unprofitable customers at 0.3, and warm customers at 0.1.

The people running these businesses are answering to shareholders, said Connor, who works in the gambling industry. The guys in the trading room didnt want to be answering on a Monday morning why they didnt close an account that was winning.

One gambler, Bernard Henry, shared the results of a demand sent to Coral to see what data it held on him, known as a subject access request.

It showed he had won just 38 over four years but had been prevented from placing sports bets after the bookie realised he had beaten their odds 73% of the time. He was still allowed to bet on casino products where the house never loses over time.

Henry believes bookmakers shared data about him with other operators, via software that companies are permitted to use which is intended to prevent fraud but might also be used to shut down a smart better.

Everyone the Guardian spoke to said accounts were rarely closed completely, for good reason.

According to Paddy Powers manual, warm customers are of use to us as marks, meaning they are worth monitoring to assess if your prices are wrong. Even arbers, seen as cheats in the industry, would be set at a factor of 0.01.

One former employee of Betfair believes this is about satisfying City investors, who see customer numbers as one measurement of success. If they close all the bad customers, you go from 50,000 active users to 10,000, he said.

The flipside of factoring down winners is that losers have, over the years, been given more leeway to place ever bigger bets.

The biggest stake factor Rory recalled a customer being allotted was 40. Hes allowed to lose 40 times what anyone else was and it was astronomical what he was punting. There was no conscience to it.

In response, Paddy Power said its safer gambling checks would always override stake-factoring decisions.

All of the sources who spoke to the Guardian said stake factoring was increasingly automated at the more tech-savvy companies. This, they said, meant there should be fewer arbitrary decisions made by bookies playing it safe.

But Brian Chappell, founder of Justice for Punters, said he did not trust the industry to do right by its customers and feared unintended consequences.

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Following intrusive, secretive profiling, only losing customers are allowed to choose how much they bet, he said. This is facilitating an unsafe and unfair UK sports betting market where unprofitable customers are more likely to consider the black market.

A spokesperson for Paddy Power owner Flutter said stake factoring was common practice across the industry but that it did not wish to restrict customers unfairly. They said the practice was also critical in protecting the integrity of sporting events where we believe a customer placing bets has inside information.

None of the other gambling companies contacted by the Guardian returned a request for comment.

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Revealed: how bookies clamp down on successful gamblers and exploit the rest - The Guardian