Anyway, I was under the impression the time weight multiplier always gave a boost to the final outcome odds, it just gives less of a boost to those who bet late.
If that was the case, the house would lose money.
Assume that there's a match between teams A and B.
All the money that has been put on team A is 100 BTC and all the money that has been put on team B is 300 BTC. You have put 0.01 BTC on team A.
The total money is 400 BTC. 5% of that 400 BTC goes to the house and 95% of that goes to the winners. So, the prize pool is 380 BTC.
Team A wins the match and they should give your prize.
Assuming there is no time weight multiplier, you will get 380 * (0.01/100) = 0.038 BTC
If you have placed your bet early, you will get more than 0.038 BTC. Ask yourself where does the extra money come from.
The extra money comes from those winners who have placed their bet late.
If the house increase the winning amount of those who have placed their bet early without decreasing the winning amount of those how have placed their bet late, they will lose money and that's not possible.
Thanks for the explanation.
I think the extra money that you're talking about comes from a reduction in the outcome odds. Take a look at a recent event on freebitco.in, for example, the England vs. France quarterfinal game. 65% of the money was placed on France, and 35% on England. So you would expect the odds to be (1.0/0.65) = 1.54 for France and (1.0/0.35) = 2.85 for England. But the actual odds were much less for both teams, 1.31 for France and 2.10 for England.
So, it seems to me that the TWM always does boost the odds, and this extra money comes from a reduction in the outcome odds.
