Simultaneous Offsetting of Risk Technology Trading

Simultaneous Offsetting of Risk Technology (S.O.R.T.) Trading is the use of Software Technology to achieve a mathematical certainty of profit when trading financial markets.

S.O.R.T. is an acronym for “Simultaneous Offsetting of Risk Technology”.

It has been more commonly used when trading with multiple bookmakers on all possible outcomes of a sporting event.

Thousands of sporting events take place around the world on a daily basis, and bookmakers offer odds on the results. It is not uncommon for multiple bookmakers to offer different odds on an event with only two or three possible outcomes, making a possible S.O.R.T Trade exist. The reason for this is like any market, the bookmakers are fighting for our business which means they must offer different prices than their competitors, also the bookmakers all originate from different regions; therefore the betting which occurs on international events will be weighted differently with bookmakers from those regions. A Sort Trader will then place two or more bets with two or more bookmakers and by using proportionate amounts of money to the different odds offered can guarantee a small but definite profit, usually between 2.5 and 8 percent.

Tax Exemptions

S.O.R.T. Trading is especially significant to businessmen and entrepreneurs in the United Kingdom, as any profits gained are Tax Free.

S.O.R.T. Trading first gained notability in the United Kingdom in 2001 when, then Chancellor of the Exchequer and now Prime Minister, Mr. Gordon Brown announced in the 2001 Budget that the current tax on betting stakes would be replaced with a tax on bookmakers’ gross profits.

Financial Secretary to the Treasury, Mr. Paul Boateng, said:

"Today sees the start of a new era for betting in Britain. Tax-free betting is great news for punters, but the benefits go much wider than that. These reforms will allow Britain's betting industry to become a world-leader in the international betting market."

S.O.R.T. Trading is not as popular in the United States as traders are liable for Tax on their profits.

The Internal Revenue Service says:

"Gambling winnings are fully taxable and must be reported on your tax return."

Example Trade

Andy Roddick is playing a tennis match against Lleyton Hewitt.

Odds on A. Roddick = 1.95 (19/20 in fractions)

Odds on L. Hewitt = 2.20 (6/5 in fractions )

If you have €1000 and split it up as shown below then there is a mathematical certainty of profit.

If you stake €530 on A Roddick it would equal €1033.00

If you stake €470 on L Hewitt it would equal €1034.00

This guarantees a Return on Investment of 3.35% minimum.

The Odds shown in the example above would never be offered from one bookmaker as it would put that bookmaker in a position where he would stand to make a guaranteed loss. However it would be possible to have these odds offered by opposing bookmakers i.e. bet with A. Roddick with one bookmaker and bet on L. Hewitt with another Bookmaker. These trades are available all day, everyday, but are near impossible to find without the use of computers.

Computer Software

There are several companies who develop this type of specialized software.

The software for Sort Trading gathers live feeds from an array of online bookmakers and in milliseconds calculates which bookmakers differ on certain events. Then the Sort Trading software displays this data on your computer in real time (not all software available operates in real time). The good Software will indicate how much money needs to be placed down to produce a mathematical certainty of profit and bring you into the bookmakers web pages (not all companies will offer this feature).

Pitfalls

There are potential pitfalls to this industry. The first is companies claiming that it is totally guaranteed. This statement merits some truth but there are things which can go wrong.

Things which may go wrong

  • Bookmakers can limit the amount you can trade (this will only happen if you trade uneven amounts of money i.e. €532 instead of €530)
  • Bookmakers can become insolvent and not pay out your winnings (this only happens when you use small bookmakers and not the more established ones. Stick to the U.K. Bookies as the industry of bookmaking is highly regulated their.)
  • Mistakes with amounts can be made and therefore putting you in a situation where you can be at a loss (this will only happen when negligent).
  • Odds can change (this too is rare, stick to the basics and make sure you refresh your screen before you place your bet.)