Trading Tennis Rules

Tennis provides a unique variable from one tournament to the next – the surface upon which it is played. The ability of players can vary quite dramatically on different surfaces and while this is realised by most bookmakers, it is still very difficult to quantify and express accurately in a price. The sub-varieties of hard surface that exist add to the confusion.

However, as well as the abundance of opportunities with tennis arbitrage, there are also some pitfalls which you should be aware of. Tennis is one of the few sports in which bookmakers have varying rules of settlement in the event of match which is not completed due to a player retirement & it’s important to be aware of potential ramifications.

There are 3 main categories of settlement rules:

TYPE I: NO ACTION – All bets voided
Bookmakers with this rule will simply refund all stakes on a match which ends before completion because of a player retirement.

TYPE II: ACTION
This is the opposite to the above and bookmakers using this rule will payout on the winner and keep stakes on the loser, as long as one ball has been served.

TYPE III: ACTION AFTER 1ST SET
If the match ends before completion of the first set, all bets are void and stakes refunded. If the match goes beyond the first set and is then stopped early because of a player retirement, then the bets are considered “action” and stakes on the retiree are lost while wins on the other player are paid out.

TYPE IV: ACTION AFTER 2ND SET
If the match ends before completion of the second set, all bets are void and stakes refunded. If the match goes beyond the second set and is then stopped early because of a player retirement, then the bets are considered “action” and stakes on the retiree are lost while wins on the other player are paid out.

Whilst this may seem very confusing at first, and perhaps tempting simply to give up on tennis arbs, the fact is that trading tennis is very profitable.

Your decision should not be whether or not to trade tennis but how to trade it to suit your risk-profile…

• It’s worth keeping in mind that compared to the number of matches played every year, the number of retirements is very small. Since the number of matches involved in an arb is fraction of the total matches played, the overall chances of being effected by a player retirement in an arb is also small.
• There are various positive, negative and neutral scenarios that you may face if invested in an arbitrage that involves a player who retires. Some scenarios will result in a windfall profit whilst others may result in a loss of stakes.
• Whatever your risk-profile, the filters in the TraderZone will provide you with suitable tennis arbs

Below, I’ve listed the various types of trading strategy available to you. I’ve given each a rating to indicate its risk-profile

Strategy 1: Mix No Rules [No Risk]

Strategy 2: Mix No Rules Except [High Risk]
TYPE I & TYPE II

Whatever strategy you decide works for you, it just takes a single setting in the TraderZone to ensure that you only receive trades that fit your criteria.

It’s worth noting some other observations:

• The relative prices of each player may affect your decision. For example, you may choose to ignore the differences, except when arbs involve a high-priced outsider that must be backed at a Type I bookmaker. (The logic behind this is that if the price is high, the stake is relatively small. In the event of a match not being complete, you would receive your small stake back but your large stake would be at risk at a Type II, II or IV bookmaker, depending upon which player is considered the winner)
• The significance of the Type III rule depends on whether the match is to be played over 3 sets or 5:
  In a 3-set match, this rule is almost equivalent to Type II as there is Action as soon as the first set is over
  In a 5-set match, this rule is even more closely equivalent to Type II

• The significance of the Type IV rule depends on whether the match is to be played over 3 sets or 5:
  In a 3-set match, this rule is almost equivalent to Type I as, until the 3rd set begins there is No Action.
  In a 5-set match, this rule is almost equivalent to both Type II and Type III

In practice, many sports arbitrage traders ignore the Type IV rule and combine it with any other when trading.