Friday, 17 May 2013

The economics of spot fixing


Yeah Yeah, I am that sort of a nerd. While much of India is agog with the spot fixing scandal that broke yesterday, this blogger ruminates on the economics of it. Yes, he is a weirdo !

Having got that out of the way, a few words on the scandal, for the 3 million non Indian readers this blog gets :)  There is a nonsensical game (anybody who suggests the word cricket in this connection will be personally bashed up by me) in which there is a cash machine called the Indian Premier League. Yesterday three players were caught, allegedly  hand in glove with bookies, manipulating results. That's all you really need to know.

What is baffling me is the economics of it. There are all sorts of reports, but I think it is safe to say that at least Rs 20 lakhs (some $40,000) was allegedly paid to the players to give away a minimum number of runs in an over. Let us say, for this to be profitable to the crooks who are betting on it, they must wager at least an equivalent amount at odds of say 5:1, otherwise its not worth it.  For this sort of betting to be accepted by the bookies and to remain valid, there must have been others betting at least 5 times this amount. So all in all some Rs 1.2 crores ($ Quarter a million) must have been bet.

All this simply on one over !!!!  An over, for the uninitiated, is of 6 balls and takes 3 minutes or so to complete. The way this scam seemed to have operated, there was about 2 or 3 minutes notice to the crooks that it was going to be fixed in that over.

What I want to know is who are these blokes who are prepared to gamble quarter a million dollars in 3 minutes on something as arcane as the number of runs given away in an over in an inconsequential match. And there are 40 such overs in one match and there are some 70 or so matches. The arithmetic is mind boggling.

Who are these jokers ? What do they look like and which planet do they come from ?

PS. Just for the record, the GDP per capita of India is $1,492.

14 comments:

  1. You are not into movies, Ramesh ... at least for this one, I wish you would watch Casablanca, and watch the scene where Captain Renault says "I am shocked, shocked, to find that gambling's going on here"
    http://www.youtube.com/watch?v=nM_A4Skusro

    It is yet another instance of "Say it ain't so, Joe" if you prefer that I restrict myself to sports comparisons.

    Face it: humans love gambling, whether in cricket or on Wall Street ... Back when our ancestors were tossing boulders across in competitions in Tanzania, a couple of dudes were placing bets on the side and tempting a contestant to swing the match their way with some grilled deer as compensation ... I bet you this is a true story; how about $50 on it? ;)

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  2. @sriram - Oh , there's no doubt that gambling is one of the base human instincts and that it will always be there everywhere. What is baffling me is the amount of money involved and the absolute irrelevant stuff on which spot bets are placed.

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  3. Just heard that the IPL betting syndicate is about 8.5B USD (roughly 5% of NZ GDP). Going by your logic (70 matches x 40 overs to a match x 6 balls to an over), each ball bowled is about half a million bucks!! Damn, that is one helluva expensive cricket ball!

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  4. @Kiwi - One helluva expensive cricket ball indeed. Can't we go back to the days when we played with a cork ball !!!!

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  5. Money follows Money. Everyone , who's who in cricket wants to make money. The funny things is retired players wants to make their retirement money out of IPL. Nowhere in the t20 you will find so many retired players...

    I thought the players concerned wanted to retire with the betting money :) ... Now of course they did get to their objective but without the money ....

    I feel for these blokes...but rest assured this is not the last of it.... This is only the tip of the iceberg. The real masterminds will never get caught....

    Forget hawala... this is a better way to launder money and put it to better use...

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  6. @Sanjay - All true of course. Most people would do anything for money. And yes, this is probably the tip of the iceberg and all sorts of dodgy characters are likely involved. God; what has happened to the glorious game.

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  7. Ramesh
    I think cricket was never a gentleman's game. It was what the British claimed to be. It was a kind of a timepass for royals and govt officials which perhaps became a widely accepted sport among the commonwealth..
    Sadly the slaves began to play better than their masters....

    Fire In Bablyon is a documentary of the fearsome West Indies team and how and why they became so...

    The link below....

    http://www.youtube.com/watch?v=1pGENRCEKjk

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  8. "the tip of the iceberg" takes me back to our school days when we learnt about specific gravity .... life was simpler then. cricket was mostly played in ways that made true the expression "that's not cricket" to refer to something that was not ok.

    now, cricket means money. they have become synonyms ...

    we can trace the IPL development of today all the way back to, ahem, Kerry Packer. There, I said it!

    Until Packer's (awful) contribution to the game, I think the worst I ever heard about was when when a player in the Indian team was caught shoplifting a pair of socks in the UK. Looking back, that shoplifting is such a clear piece of evidence on how little players were then paid, and how much they played it because of how much they liked playing the game.

    I suppose this is the hassle the world over now. Money trumps everything else. In my intro class, it is always awesome for me to watch students struggle with that issue of money versus values that can't be really dealt with in the marketplace. I tell them that it is up to them to figure that out, and that my class deals only with the economics of the geographic issues :)

    Cricket and any sport for that matter--including the olympics, yes--have become so much prey to money that there is simply no way they can ever be rescued. BTW, the spot-fixing reminds me so much of the derivative bets on Wall Street.

    Awfully enough, the non-money world seems to be shrinking with every passing minute. So much so that I am afraid that it might be considered soon to be abnormal when it is not viewed as dollars-and-cents :(

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  9. @Sanjay - No Sanjay. I've played village cricket for 3 seasons in the UK. It WAS a glorious game, and at that level, still is. Yes, at the professional level its not what the word cricket stands for, but at the amateur level , it still is.

    That is a wonderful documentary indeed. I strongly recommend for any cricket lover. Thanks for the link.

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  10. @sriram - Yes, the all pervasive effect of money is there. It has done some good though and I wouldn't completely belittle it, but as we grow older, we'll all realise it isn't everything and it isn't even something.

    By the way, since you are very interested in printers' bloomers, years ago, The Hindu made one of the greatest bloomers of all time - in a report on Kerry Packer, it changed the P and a in his surname to F and u :):):)

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  11. Betting is a huge channel for Black Money... Given the fact that there are fewer avenues to channel and invest black money... Real Estate followed by betting.

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  12. @Prats - Oh yes, it is black money. Even the winnings are black - after all betting is illegal. Taking such huge risks even with black money - would love to see a specimen of that tribe - I don;t think we are even of the same species :)

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  13. Ramesh - it is no more the cricket that I am used to watch or play since the time I had first meeting with this gentlemen's game. I am hugely disappointed!!

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  14. @Vishal - Alas, they have both killed the golden goose and massacred virtually a way of life.

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