What happens to Betfair trading if cheap AGI becomes available?

[sudek]

I’ve traded horse racing markets on Betfair for over ten years, and lately I’ve started thinking more seriously about where AI could eventually take this.

I know AI and machine learning have already been discussed here, but I mean something well beyond the tools we have today. Imagine genuinely capable AGI becoming available for perhaps £100–500 a month. It could analyse years of Betfair data, TPD and video, understand market behaviour, come up with its own ideas, test them, code the bots and keep adapting them with very little human input – all at least as well as a very good trader.

What happens when hundreds or thousands of people can point something like that at every Betfair market, including the small, low-liquidity ones? Would new opportunities keep appearing, or would the competition eventually squeeze most edges down to the point where an independent trader could no longer make a living, unless they had better data, faster execution or some kind of exclusive access?

I’m asking because I keep seeing more forecasts suggesting AGI could arrive before 2030. They could obviously be wrong, but it no longer feels like something from the distant future. I’d be interested to hear what people running serious automated or ML systems think about it.

[Euler]

People tend to overcook both the impact of AI and the threat from it. There are clearly things that are going to change, and I am already using machine learning and other tools to extract more information from data. But it has not fundamentally changed what I do.

I also read a lot of academic papers to understand what people are thinking and to see whether there is anything genuinely useful in them. The problem is that many academic papers are simply wrong when they try to describe how people actually participate in markets, whether those are financial markets or betting markets. There is often a very large gap between analysing a market from the outside and actually operating successfully inside one.

That is an important distinction.

I have been active in markets for such a long time that the data being used to train models already contains my activity. If somebody builds a machine learning model from years of market behaviour, then in some small way it is learning from me and from thousands of other experienced participants who have already shaped those markets.

So when people say that AI is suddenly going to arrive and discover how markets work, there is a slightly circular element to that argument. Much of what it is learning from is the behaviour of people who already know how to operate in those markets.

That is why I think some of the discussion around AGI is overdone.

I have very little doubt that AI will be enormously transformative for the wider economy. But I suspect the effects at an individual level will be much more nuanced than the dramatic predictions suggest.

You might find a better way to design a product, package it, manufacture it, route it through a distribution network or manage the inventory behind it. Across an economy, improvements like that can create enormous gains.

But at the end of the process, somebody still has to make the product, put it in a box and ship it.

AI can radically improve the process. It does not necessarily remove the process.

[Euler]

Also, I should add I don't think that AGI or True AGI is going to be particularly cheap, and that there will be a massive incentive for organisations to retain it themselves.

But the existing models are getting better and better all the time. I'm currently running two models, and each month or quarter I can seem to do more and more with them. My impression is that there's a skill in using them. I've worked with somebody who really struggled to get any utility out of them, but it's because they're not thinking about it in the right way.

[ShaunWhite]

I’ve traded horse racing markets on Betfair for over ten years, and lately I’ve started thinking more seriously about where AI could eventually take this.

I know AI and machine learning have already been discussed here, but I mean something well beyond the tools we have today. Imagine genuinely capable AGI becoming available for perhaps £100–500 a month. It could analyse years of Betfair data, TPD and video, understand market behaviour, come up with its own ideas, test them, code the bots and keep adapting them with very little human input – all at least as well as a very good trader.

What happens when hundreds or thousands of people can point something like that at every Betfair market, including the small, low-liquidity ones? Would new opportunities keep appearing, or would the competition eventually squeeze most edges down to the point where an independent trader could no longer make a living, unless they had better data, faster execution or some kind of exclusive access?

I’m asking because I keep seeing more forecasts suggesting AGI could arrive before 2030. They could obviously be wrong, but it no longer feels like something from the distant future. I’d be interested to hear what people running serious automated or ML systems think about it.

AGI won't fundamentally give you predictive information that sophisticated ML can't already extract, although it may make doing it vastly easier. ML has been used in betting markets for years; I use TFT modelling myself.

But it depends what you're trying to do. If you're trading price movement, that's always going to exist. Horses aren't machines and their precise odds are unknowable. Different models will arrive at different prices and, as they compete for what they see as value, that creates the very push and pull a trader can exploit. They're also news-driven markets. If a horse is refusing to load, you can see that just as well as an AI can.

The interesting implication is actually that more competing AGIs might make prices more efficient without making prices static. Those aren't the same thing and for a trader, that distinction matters.

[Trader724]

I suspect the real edge gradually moves away from intelligence itself towards whatever remains scarce. Data, faster feeds and execution, lower costs, capital, queue position.
Being a few hundred milliseconds earlier may matter more than having a slightly better model.