What Does The Australian Open And The Stock Market Have In Common?


Apparently, tennis is a huge sport to gamble on around the world.  Gamblers will not just bet on the outcome of the matches but they will wager throughout the match on individual games and points.  According to Bloomberg ,”Gamblers and investment funds are increasingly vying for profits from tennis by using computer models to win money from more casual bettors.”

Just like in the securities market, when there are computer models involved, you can bet there is someone trying to gain a speed advantage. This was brought to light last week at the Australian Open.  According to the NY Times :

“The accused is Daniel Dobson, 22, of Britain. The police said he came to the tournament last week with an electronic device stitched inside his clothing and linked to a smartphone. They said he used these devices to relay the outcome of points to his employerSporting Data, as much as 10 seconds faster than those results could be transmitted through official channels. Dobson was arrested and charged with engaging in conduct to corrupt a betting outcome. The accusation fell under a law passed in the Australian state of Victoria last April called the Integrity in Sports Act.”

“At a news conference after the arrest, Graham Ashton, a deputy commissioner with the Victoria Police, described courtsiding as a “type of cheating and betting on sports.” He said the advance notice provided by Dobson allowed bets to be placed on particular points after they happened and before agencies could close their betting windows.”

This type of activity probably sounds familiar to you because it essentially is the same thing that goes on in the stock market every day. Daniel Dobson, the accused, essentially colocated himself next to the tennis matching engine and was able to see the results of the match before they were widely disseminated.  He then used a high speed device to relay that information to his own algorithm so his firm could take advantage of it.   This is not much different than a trading firm colocating their servers next to an exchange matching engine and then transmitting that data to their algorithms before the information can be widely disseminated to the public.

However, there is a major difference between the two – what Dobson did was illegal since it broke an Australian law and what goes on in the stock market every day is legal because there is currently no law against it.