How Much Does FanDuel Rake?

Tonight I entered a FanDuel contest, how much rake I am paying?

I entered a $1 GPP contest with a $3,000 guaranteed prize pool, the maximum entries allowed is 3,571, which means the maximum entries is $3,571 with a pool of $3,000. So to determine the rake for FanDuel for this contests, we take the amount to be paid out divided by the maximum amount of entries which is 84%, minus one equals 16%. This means that FanDuel will pay back 84 cents of every dollar wagered in the pool. The amount we are paying in rake is equal to 16 cents per $1 entry.

With GPPs, it would be better as a user if less lineups were entered as the GPP would be shared amongst fewer users. I suspect the contest I entered tonight will be fully subscribed; and if its not, then the game within the game becomes finding GPPs where the entries are so low that the GPP is higher than the theoretical payout based on the number of entries.

If you think my calculation is wrong, I’d like to hear from you. Please comment below with suggestions.

Poloniex to remove margin lending/borrowing for US customers

Poloniex will disable margin lending and borrowing for US customers by the end of 2018. Part of dealing with a US regulated exchange such as Poloniex is they must be compliant, and this often means less access for customers. Poloniex users will wonder how liquid their margin market might become after this change, and how a shallower margin market will impact overall exchange liquidity.

From Poloniex:

By the end of the year, we’re taking steps to remove our margin and lending products for US-based customers. These changes are part of our ongoing commitment to ensure that Poloniex complies with regulatory requirements in every jurisdiction … We will provide more communication in the coming weeks about the final date but it will be by the end of the year and encourage customers to take steps to unwind margin positions at their convenience. Existing loans will remain open and continue to fund positions and earn interest for their previously specified duration.

US dollar coin vs US dollar tether

What are “stable coins”? Stable coins are a weird part of the cryptocurrency world. These blockchain based currencies seek to anchor their value with some widely used money such as US dollars (USD). US Dollar Tether (USDT) and US Dollar Coin (USDC) are two such stable coins.

USDT is traded on a few exchanges such as Bitfinex and Poloniex, and USDT is supposedly backed by USD in bank accounts, but this cannot be verified and no public audit has been released. USDC on the other hand is being traded in a few exchanges also, and is being issued by a clearinghouse created by Circle (the owners of Poloniex).

The principals at Bitfinex are connected to those at USDT, and Bitfinex has been the major conduit for USDT adoption. Since releasing USDC, Poloniex has listed a USDT/USDC pair for users to trade. I think this is fascinating because now we’ll have a place to compare value directly. This may cause USDT to “break the buck”. At the time of writing, four days into trading, the rate stands at 0.985 and has been falling a bit each day. The issuer of USDT better look for ways to become more transparent or else may need to find ways for users to redeem USDT for USD. If users can exchange USDC with USD directly at Circle, then USDC might become much more functional.



Ryder Cup Odds 2018

Whether you love watching Tiger Woods and Phil Mickelson giving high fives or if you care about which millionaire golfer has the best celebration dance, the Ryder Cup 2018 is upon us. The Ryder Cup is a golf team match play event held every other year between players representing the United States and Europe. Typically, the best players from each continent will tee off against each other starting with fourball and foursomes on Friday & Saturday, and then singles matches on Sunday. Tiger Woods, Phil Mickelson, Rory McIlroy, Justin Rose, will all be fist pumping and cheering along with fans.

Below is my review of Ryder Cup odds for 2018.


Bodog Sports Interaction CoinRoster
USA 1.90 1.68 1.90
Europe 2.20 2.34 2.20
Draw 12.00 13.00 12.00
Spread -6.42% -9.95% -6.42%


The “Spread” row listed in the table above shows the theoretical vig implied in the odds. The math for this is pretty straight-forward, take 1 divided by the decimals odds, then sum the total of all odds. e.g. 6.42% = 1- [(1/1.9)+(1/2.2)+(1/12)]. From the data in the table above, Bodog & CoinRoster have the best odds overall because their combined implied spread is 6.42% compared to 9.95% for Sports Interaction, even though the odds Sports Interaction is posting for Europe and the Draw are better, the low odds provided to USA make up the difference.

USA is the favorite this year, but only marginally. Europe are the slight underdogs. A $1 bet on USA will pay $1.90 if they win, but a $1 bet on Europe will pay $2.20. This makes sense considering USA has a deeper bench of the world’s top golfers including Justin Thomas and Dustin Johnson. Europe does have the best player in the world right now in Justin Rose, as well as Rory McIlroy, but if the weakest players on the USA might be Bubba Watson and Phil Mickelson, Europe has to compete with lower ranked players such as Thorbjorn Oleson. Europe has a few cagey veterans such as Sergio Garcia, Henrik Stenson, and Ian Poulter, but those players are not at the top of their game’s and it will be tough for them to compete head to head with the likes of bombers such as Brooks Koepka.

To compare the odds from a variety of sports books, click here for Odds Checker golf.

Deribit Portfolio Margin

This post will describe the Portfolio Margin system used at Deribit, a bitcoin derivatives exchange. Portfolio margin is a risk-based margin policy that aligns margin requirements with the overall risk of a portfolio. Portfolio margin usually results in significantly lower margin requirements compared with the sum of margin requirements on individual positions. If a portfolio is long and short, portfolio margin can allow the risk of positions to be “netted off” which may result in an lower overall margin requirement.

I’m most familiar with the CME SPAN margin system which is used to evaluate the risk of futures and options portfolios, but the same general principals apply to Deribit portfolio margin.

Deribit users can request to have portfolio margin applied to their account by e-mailing To qualify, Deribit users must maintain a minimum net equity of at least 0.5 bitcoins, must demonstrate some experience trading options, and declare to have understanding about the concept of portfolio margin.

Here is how Deribit determines portfolio margin:

  • maximum price move of +/- 10.00%
  • maximum implied volatility change of SQRT (30/days to expiration)*27.00%. Example: options expiring in 30 days: IV change of maximum 27.00%, options expiring in 15 days: IV change of maximum SQRT (30/15)*27.00%
  • Contingency component of 0.5% of underlying value of all options in portfolio. Example: you have 200 options in your position (long and short), 0.5% of 200 BTC = 1 BTC is added to the portfolio margin calculation.
  • Contingency component of 1.00% of underlying value is added for offsetting futures. Example: you are long 100 BTC in Future A, and short 100 BTC in Future B, then 1.00%*100 BTC will be added to the portfolio margin calculation.
  • Contingency component of 0.00% for VEGA’s offsetting in different expirations. Example: you are net long 10 VEGA in expirations A/B/C, and net short 10 VEGA in expirations D/E/F, we will add a contingency of 0.00% thereof to the portfolio margin calculation.
  • Initial margin is Maintenance Margin + 30%. Example: If Maintenance Margin is 10 BTC, Initial margin will be 10 BTC+30% = 13 BTC.

Deribit also notes that when liquidating positions, it will start with futures first. This is presumably because the futures contracts are more liquid. Deribit also says that when margin levels are breached, they may liquidate futures first, but may also add futures positions if it reduces overall portfolio risk. For example, if a portfolio is net short puts, Deribit may add short futures instead of buying back puts to achieve minimum margin requirements.

Enbridge Income Fund Good Deal or Bad Deal?

Enbridge (ENB) has announced this morning it will acquire all the outstanding shares of Enbridge Income Fund (ENF). The deal will see each common share of ENF exchanged for 0.735 of a common share of ENB and $0.45 cash. With ENB trading this morning at 34.10, this deal is worth $25.5135 for each ENF share.

In addition, ENF shareholders will be entitled to ENB’s fourth quarter dividend and ENF’s monthly dividends through to closing of this deal. If the deal closes as expected before the record date for Enbridge’s fourth quarter dividend, expected to be November 15, 2018, to be paid in early December, an ENF shareholder will receive, as an ENB shareholder, the ENB December Dividend and the ENF dividend to be paid in November to ENF shareholders of record on October 31, 2018. In the event the Arrangement closes after the record date for the ENB December Dividend, the Cash Component will be increased for the ENB December Dividend based upon the Agreed Exchange Ratio less any dividends paid by ENF to its shareholders after November 30, 2018.

This deal is part of a broader industry trend for pipeline companies to buyout their master limited partnership units after tax changes and as the investment vehicles become less popular. Enbridge has previously announced the buyout of Spectra Energy Partners.

Is this a good deal for ENF shareholders?  Probably not. But tax rules are changing and it has become less tax advantageous for pipeline companies to list MLPs or income trusts, so the parent companies are buying back their listed pipeline MLPs.

Enbridge Announces Definitive Agreement to Acquire All Public Equity of Enbridge Income Fund Holdings Inc., Achieves Significant Milestones Toward Corporate Structure Simplification

CALGARY, Sep. 18, 2018 (Canada NewsWire via COMTEX) — Enbridge Inc. (ENB) (Enbridge) and Enbridge Income Fund Holdings Inc. (ENF) (ENF) today announced that they have entered into a definitive arrangement agreement (the Agreement) under which Enbridge will acquire all of the issued and outstanding public common shares of ENF (the Arrangement), subject to the approval of ENF shareholders.

What is a Market Maker?

A market maker quotes both buy and a sell prices in order to profit from the spread between bids and offers and also from the spread between a price quoted and a reference or theoretical price.

The bid-offer spread is the difference between the highest buy prices and the lowest sell prices. For example, a market maker might quote a bid price of $1 and a offer price of $2. This means customers can either sell at $1 or buy at $2. The goal of a typical market maker is to post prices that will attract interest on both sides of the market (prices that attract buyers and sellers) and therefore profit from the difference between those who buy and those who sell.

A market maker can also price their market based on a benchmark or reference price. This price could be a liquid benchmark or a theoretical price.  For example, if a merchant can buy goods for $1 from a supplier, while transportation, storage, and other costs come to 20 cents, they might be willing to sell to local customers for $1.50, which would guarantee the merchant a profit of 30 cents. If the supplier’s price changes to $1.30, then the merchant might choose to adjust their retail price to $1.80 to ensure the same profit margin, even if the merchant doesn’t buy any more goods from the supplier in the meantime.

A bookie quoting betting odds is also a type of market maker. Even without making trades with other bookies, a book maker can use the odds competitors are posting to set their own prices. If a large Las Vegas casino is quoting the Yankees to win the World Series at decimal odds of 20, the local bookie might offer odds of 15. Although this wouldn’t guarantee a profit for the bookie, it would provide a betting market for local customers. If the local bookie can post odds for a variety of baseball teams, they might be able to attract bets on many teams teams and therefore get closer to making a constant spread on all customer bets.

Posting a Fixed Odds Bet

The 2018 PGA Tour Championship is being held next week and I’m pretty excited to watch who wins the tournament, but also who wins the FedEx Cup $10 million bonus check! In this post I’ll describe how I created my own odds for this tournament and posted them on CoinRoster just like a bookie.

Since the winner of the Tour Championship is a widely followed bet, its a bit easier for me to determine fair odds. I can use an odds website such as Odds Checker to find out what the odds might be and I can also use my favorite sportsbook and base my own odds on theirs.

After reviewing the odds posted elsewhere, I create a quick spreadsheet to do some math. I make a list of 18 players with their associated decimal odds, and then in another column I convert their decimal odds into percentage odds. Now I can sum the percentage odds to see the total implied odds in percentage terms. It turns out, the 18 players I listed have a combined 94%  implied chance. CoinRoster only allows me to post a maximum of 20 outcomes, so since there are 30 players competing in the tournament, I must also post odds for “Any Other Player” which will payoff if any other player not on my list of players wins the tournament.

To calculate what odds I should apply to the Any Other Player option, I can simply take the difference between 100% and the sum of the percentage odds for all the players I’m posting odds for. This comes out to 6% (100 – 94).  The decimal version of 6% odds is 16.66 (1/0.06). But if I post odds of 16.66 for the Any Other Player option, it will leave no potential profit for me, so I decide to offer odds of 10 for Any Other Player. These odds imply a 10% chance that Any Other Player wins the tournament.

I add Any Other Player at 10 on my spreadsheet of odds. Now I will sum all my odds (all players plus Any Other Player option) to see a total of 104%. This means that with the odds I’m posting, I’m building in a theoretical 4% spread for myself.

Click Here to download the spreadsheet I made displaying my odds calculations

Posting the odds as described above will not guarantee a 4% profit for me though. 4% guaranteed will only happen if the money bet on each outcome I’m listing is made in exact proportion to the odds being offered. For example, to guarantee the 4% implied spread, I would need bettors to place 10% of their money on the 10 to 1 odds, and 5% of their money bet on the 20 to 1 odds. Any other configuration of money bet will result in me taking the risk that the outcome with the most money bet becomes the winning outcome, in which case I will may loose money overall. This is the principal risk to the market maker. So the goal of a good odds maker should be to post odds that get action on both sides (or all sides) of a bet, so the risk is distributed in a way related to the underlying chances, thereby spreading the risk and getting close to the theoretical 4% edge.

Now that I have a list of my odds in excel, I’m now going to post those odds on CoinRoster and decide how much risk I’d like to take.

The first thing I do on CoinRoster is log into my account and click on the Create Contest link from the main menu. This brings me to the create contest page where I first need to choose a contest type. I’m choosing “MISC” as my contest type since this is the free form contest where anything can be posted. I type in the title and description of my bet, and then choose a registration deadline of 7am on the Thursday the tournament begins and a settlement deadline of Monday night following the tournament close. The registration deadline is the time after which no more bets are allowed, and the settlement deadline is the time when this bet will be settled and winning bets will be paid off. I choose Monday night for a settlement deadline in order to compensate for weather delays that would result in a Monday finish.



After filling out the details of the create contest form, I’m going check the “fixed odds” box and then paste each player name and their associated odds from my spreadsheet into the create contest form. Then I choose the maximum amount I’d like to risk, which is 0.1 bitcoins, and the minimum wager amount which is 1 satoshi. From the “settlement type” option, I’m going to choose crowd settled and I’m going to make this a public contest.

Once I click the Create Contest button, the contest will be created and the amount I’m risking (0.1 bitcoins) will be taken from my account. If it turns out that I don’t get enough action to require my full 0.1 bitcoins, the difference will be returned to me at the settlement deadline, but in the meantime the entire risk is being held by CoinRoster.



The bet is also not yet live, once I click the create contest button, a message is displayed telling me that the contest needs to be approved by an admin. Once this is done, my contest is live and can be viewed by any user and bets can be placed. Click here to view this contest.

A few things to note about the odds I have posted. At the time of writing, it seems sports books are offering 15 to 1 odds that Tiger Woods will win this tournament. However, I would love to see Tiger win again, so I’m offering 25 to 1 odds on Tiger, better than any other sports book, to encourage users to bet on him. Kind of a little hedge bet for myself. Feel free to take advantage of these great Tiger Odds.

Also, CoinRoster offers free bitcoins to new users, check their homepage before signing up to take advantage of their latest offer. Using their freeplay is a great way to play for free and hopefully win some bitcoins!

Crypto Interest Rates Soar

A big spike in the rate of interest being paid to Ethereum and Litecoin lenders is being shown on Bitfinex this morning. At the time of writing, rates have jumped up to 0.05% per day on ETH and 0.0443% per day on LTC. This translates into simple annual rates of 18.25% for ETH and 16% for LTC. BTC lending rates on Bitfinex remain lower, but have also moved up over the past several days, now reaching 0.0174% per day (6.35% annualized).

Crypto market watchers should notice that investors lending out their crypto balances as margin on exchanges are demanding higher rates as the price of crypto currencies has been declining. This makes sense since I’d want a higher rate to lend my crypto as I expect the value of that crypto to be lower in the future since I want to be compensated for the risk of declining crypto prices.

On Poloniex, the rate for BTC loans remains near 0.0061% per day, but the interest rate for DOGE (which has been the best performing major crypto currency over the past month) is commanding interest rates of 0.60% per day, which translates into over 250% annualized.

These wild rates might not last very long, but its informative to see how markets are reacting to the expectation of lower crypto currency prices. Borrowers (speculators) seem willing to pay higher rates for cryptos they expect to decline in value, and lenders seem willing to facilitate these loans as long as rates rise to compensate.

For more information on crypto margin lending, see my previous post.



Comparing CoinRoster Prices to Market Odds

This post is about trying to beat the odds on CoinRoster daily fantasy golf, a game where the fantasy points are determined based on score to par. The worst score to par becomes zero and each fantasy point is awarded based on the difference from the worst score. For example, if the last placed player has a real world score to par of +4 and the first placed player has a score to par of -10, then the first placed player will have 14 fantasy points. All other players are assigned a relative point value.  Six players are drafted to each roster, so the total score of each roster is the sum of the individual scores of all players on each roster.

My goal is to find some drafting strategies that take advantage of the difference between the price of golfers available to draft on CoinRoster versus the odds of betting on golfers to win the tournament.

The price of each player in the CoinRoster draft is relative to their world golf ranking. But I wondered how to determine whether this is a good price or a bad one? And which factors should I consider while attempting to make this determination?

I have compared the prices of the players available to draft with their odds of winning the tournament. I know from previous research that the odds of each player is related to their expected relative score to par.

I made a list of all players available to draft using excel with their associated price on CoinRoster, then I calculated the percentage chance implied by the prices of each players in the draft by taking their drafting price divided by the sum of all player prices. So if a player costs $3000 to draft and the sum of all players prices is $80,000, then this implies 3.75% ($3,000 / $80,000).

By finding this drafting price ratio, it gives me an “implied” percentage chance of each player having the most fantasy points based on CoinRoster’s drafting price. Then for curiosity’s sake, I converted those implied percentage numbers into decimal odds. The next thing I did was add a column of each player’s odds of winning the tournament and then I converted that into a percentage number also. Now I can compare apples to apples using their percentage chances.

With this information, I can eyeball and compare the odds numbers and the percentage numbers (which are the same value, but just displayed in different formats). I can also rank and sort the data in various ways using excel, so I subtracted the implied market percentage chance from the implied price percentage chance to uncover the difference between the two numbers.

By subtracting the two prices (the percentage chance implied by drafting price with the percentage chance implied in the player’s betting odds) I can notice if the price for a player available to draft is relatively lower on CoinRoster than is implied by their market odds. If the player is cheap and represents good value to draft their price on CoinRoster will be lower than implied by their betting odds. This means the player is cheap to draft, but if a player’s market odds are lower than their relative drafting price on CoinRoster, the player is expensive.

For the 2018 BMW Championship, Dustin Johnson has the best value for this tournament according to this formula. His odds were 9.36 (which implies a more than 10% chance he will win the tournament, and thereby have the best score to par) but his CoinRoster price was relatively cheap (even though he is the second highest priced player). Justin Rose, Rory McIlroy, and Hideki Matsuyama are also some of the most relatively best priced players.

Tiger Woods also has the third highest relative value to draft. This makes sense since Tiger’s world golf ranking (which the CoinRoster drafting price is based on) is relatively low compared to his chances of winning the tournament. So intuitively, this affirms my belief that I’m on the right track.

Some of the most expensive players on CoinRoster are Tyrrell Hatton, Alex Noren, Brian Harman, Kevin Kisner, and Peter Uihlein.