On Developing a Solvency Framework for Bookmakers

By Dominic Cortis

Download PDF of Full Text

Abstract

The betting industry has grown significantly but there have been no developments in creating a regulatory framework akin to the EU Solvency and Capital Requirement Directives in the Financial Services. This work derives a modular method to calculate the profit and variance of a portfolio of wagers placed with a bookmaker by subdividing these into bundles according to their likelihood size. This calls for improved risk manage-ment and regulatory set-ups similar to those of the financial services industry, which should include a minimum capital requirement for bookmakers to accept a particular number of bets — “A passport for taking risks.”

Keywords: Solvency, betting, reserves, risk, gambling

Citation

Cortis, Dominic, "On Developing a Solvency Framework for Bookmakers," Variance 12:2, 2019, pp. 214-225.

Taxonomy Classifications


Subscribe to the RSS Feed

Email List

Sign up today for the Variance e-mail list and receive updates about new issues, articles, and special features.

Mission Statement

Variance (ISSN 1940-6452) is a peer-reviewed journal published by the Casualty Actuarial Society to disseminate work of interest to casualty actuaries worldwide. The focus of Variance is original practical and theoretical research in casualty actuarial science. Significant survey or similar articles are also considered for publication. Membership in the Casualty Actuarial Society is not a prerequisite for submitting papers to the journal and submissions by non-CAS members is encouraged.