Friday, May 17, 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.