Next Generation Sports Product

So will we see people banned if they win to much from the sports books?

No mention of front running unless you count this

we have formed the infrastructure for this project through assembling a crack trading team from some of the strongest players in the bookmaking industry

Can't imagine the "crack trading team" operating without a swatch at what successful players are doing. The game's a bogy imo.

I guess it all comes back to the same old bookie business model problem.  If they're not going to ban people, at least from the sportsbook, then they're going to have to be making exceptional prices..

Is that how you see it?

Do you mean unexceptional JL or am I reading it wrong?

They will get people who win against them and they will have to decide what to do about them.

They have stated that they will only be operating in the less liquid markets, so I guess maximium bets will apply.  More than £3.65 I hope.

Will loses be PC deductable for any churners

will there be any way to identify which bets are coming from the sportsbook? or will it be like at present (w/cross matching) where we can't tell which bets involve betfair in more than their most basic middleman role?

how will we have confidence that betfair won't deliberately settle/void markets with debatable outcomes in their favour?

(actually we can generally tell but by the time you've worked it out it's often too late to get a bet on)

It's clear that they intend to make them separate markets, so you'd have an exchange market and a sportsbook market.

The "technology enabling this" they're talking about is the ability to keep bets open (i.e. loaded up but not "fired in") while switching markets. This isn't possible pre-beta but in theory is possible in beta.

They have stated that they will only be operating in the less liquid markets

That will be them all then hazel until Last5minutes.com kicks in.

Agree with ror - I expect it to be a separate bet choice:

"the product will highlight exactly how superior it is the vast majority of times." "This product will complement the Exchange, rather than compete and it is for this reason that we refer to the two together as a ‘Next Generation Sports Site’"

Feck - I did mean 'exceptional' - if they were able to make very efficient prices then there wouldn't be any value for shrewdies.  Of course making 'unexceptional' prices is perhaps a more realistic way to achieve this

They will basically be inline with what other bookmakers odds are. If they are not then there is value to be had somewhere.

you may be right. i took complement rather than compete to mean they were sticking them together. either way they still complement and compete.

How does Betfair SP fit in with their new sportsbook ?

I would have thought BFSP is all they needed to be added to all markets?

and will the sportsbook offer lay betting as well?
to be competitive against other bookmakers wont they need to offer better prices?
so exhange users can lay off the sportsbook markets ?

Or am I fick ?

They are going to have to restrict stakes or ban winners.  I can't see how this book can hope to compete with the high street.

i dont understand this, whhy dont they simply create an entity which will offer liquidity in the exchange markets. as long as they dont have any time advantage or matching prefernce it should be acceptablle for most here.

It wont be a faceless market like on the exchange. They will be able to pick and choose what business they want. Could offer good customers higher stakes etc. They couldnt do this if they have to offer it on the open market to the fleecers on here.

Good point, henok. frog is probably correct (it's so they can restrict betting with the people they want and to the amounts they are happy with)... but their approach has terrible downsides.The site at the moment is a pain to navigate. With the new product,will punters have to first visit the exchange, decide the prices are rubbish,and then try to find the corresponding market on the new bookie site? That's just great. More pointless clicking around getting in the way of betting.

Betfair should do something about just making the site easier to find stuff.Like for example, making the sports front page load fast.

To be fair,the beta site *does* have a faster front page load. They are doing something right with the beta!

Apr 24, 2012 -- 9:55PM, Mr Magoo wrote:

Good point, henok. frog is probably correct (it's so they can restrict betting with the people they want and to the amounts they are happy with)... but their approach has terrible downsides.The site at the moment is a pain to navigate. With the new product,will punters have to first visit the exchange, decide the prices are rubbish,and then try to find the corresponding market on the new bookie site? That's just great. More pointless clicking around getting in the way of betting.Betfair should do something about just making the site easier to find stuff.Like for example, making the sports front page load fast.

thats what i thought unless they are going to give this new product a new webadress or simply offer liquidy as a customer of the exchange, integrated with the exchange i think it will make quite a messy site. in teh worst case it might even be a ploy to take away the casual customers away from the exchange, leaving the exchange for the hardcore professional traders and gamblers. i dont want to be here if that is the case

btw, does anyone know whether punters who take their bet from this new product pay commision?

Almost certainly henok. As with exchange games, customer gets stuffed twice. Firstly on the under EV odds, secondly on commission on the winners.

I don't really see how this can be worth betfair's time and resources. If a market is illiquid and then betfair offer an overround book on it through their sportsbook, surely people will just offer slightly higher odds through the exchange? Unless they stop stuffing us twice and remove the commission with a 95% + book, or run a 100% book I can't see it working? That's assuming they keep the existence of an exchange market for an event obvious from their sportsbook, rather than duping unknowing customers into thinking they've got no choice...

Betfair could pioneer new ground here, offering better liquidity, whilst avoiding being picked off.  They have made a big mistake recruiting a "crack trading team" ("expensive" would be a better description, compared to the limited value the team will generate). 

Betfair have looked at the huge profits Bet365 have made compared to Betfair, and want a piece of that kind of action.  That is fair enough, but what they have chosen to do is very inefficient.

The real way forward is to use a system of dark pools.  The higher the percentage win rate on an account, the less they can see on the screen at prices set/available.  The on screen amounts displayed to a shrewd customer would be in fivers/tenners, and small amounts would move the price quite a lot.  Whereas big losing accounts would be able to see the full liquidity up on the screen in the hundreds/thousands of pounds.  It doesn't really matter on the occasions when a price is quite far away from EV, a non-shrewd customer is just as likely to back as to lay at the on-screen prices, and will not be able to discern which is value. 

The shrewd punters would nibble away, forcing the market up or down (and if the market has say £5 at 1.78/1.79/1.80 to back and £5 at 1.81/1.82/1.83 to lay, then each time the shrewd punter nibbles at say the back price, say with £5 at 1.79 and £5 at 1.8, the Betfair algorithms would automatically try to get back out of the bet by placing a bet backing on screen at 1.79 and 1.8 in the lay queue).

Each time the shrewd punters have nibbled away more than say 0.05 units (e.g. moved the price down to 1.75 from 1.8) an alert would be generated, and the Betfair 'crack trader' could then move the backs and lays up or down accordingly, to bring the real market into line with where the shrewd punters have nibbled away. 

This system is much cheaper than what Betfair have done.  It would still generate valuable information from the shrewder accounts, whilst not letting them take big nibbles/chunks out of Betfair profits.  Then the losing customers would have big chunks/liquidity available to them. 

The non dark pool system Betfair have put in is a sort of copy of what Bet365 have done.  Instead, Betfair should have gone for the much cheaper, much more efficient, much more lucrative, and much more satisfying for losing customers system of constructing dark pools where shrewd accounts can't see the full liquidity available, and have to in effect 'declare their hand'.

Interesting post ballabriggs, it does seem a bit crude for an innovator like Betfair.

I'm wondering if the sport book data will be available to the api so that the bots might use it as a basis on which to populate the exchange.

Do dark pools exist on other betting sites ballabriggs or is this an idea from elsewhere?

Cannot see BF charging commission on this new product at all as then it would be a non-runner against the competition with the target audience they are aiming for.

Wonder if they will do early prices on the horses - that would be fun to see from the "crack" trading team

Instead, Betfair should have gone for the much cheaper, much more efficient, much more lucrative, and much more satisfying for losing customers system of constructing dark pools where shrewd accounts can't see the full liquidity available, and have to in effect 'declare their hand'.

I thought they had already been doing that for the past 12 years ballabriggs.

This could be bad news for anyone playing in illiquid or semi-liquid side markets, Betfair could replace these with their own sportsbook markets. A lot of people have been complaining recently that the side markets and minor sports are dead, this could be a perfect time for Betfair to replace them with their own markets.

catflappo, if Betfair would just post their bets on the main exchange then they'd get this kind of integration for free!

I wonder if Betfair will continue their 'best execution' through this new product? e.g. if you back a team at 6.0 on the exchange and the other site had had them at 7.0, will they increase your odds? (And vv if there are better odds on the exchange than on their new betting product)

Would anyone like to guess which markets they will be targeting here? The article mentions horse AP betting which seems an odd choice, it's prone to huge odds swings based on information known only to a few people...

Can't I just use someone elses account to see whats in the dark pool?

I don't believe AP would be a wise choice. Very difficult to make that pay IMO.

There was another much cheaper, simpler and more effective way Betfair could have done this. 

The trading team set a price at what they judge is fair value, say evens for an NBA team to win or lose.

A winning account logs in and sees 5/6 the pair.  A losing account logs in and sees 19/20 the pair.  The rate of winning/losing on every account could be calculated automatically (and updated automatically after every market). 

This way, the price available to the biggest winners is the furthest away from the price set, whilst the price available to the losing accounts is very close to FV.  It doesn't matter if a big losing account ends up getting value on a selection, they are just as likely to take a poor price as take a good price.  Its arguably quite good to give losing customers value from time to time too.  What matters is to keep them playing.

By having in effect the same price for everyone, you need an expensively assembled "crack" trading team, judging bet by bet what to accept, what not to accept, and what price to offer/change to.  Instead, if the overround was tailored automatically to each account, there would be built in protection, and the only times the big winners would take 5/6 (etcetera) would be when the price set by the trading team was a very long way from the real FV.  The trading team would then know they had to move the price immediately.  Under this current system, they wouldn't necessarily know that, to anything like the same degree. 

Automatically triggered increases and decreases in overround would cut the cost of the trading team, and their time and toil involved in keeping out the big winners, whilst giving a good service to the accounts they really want to be laying bets to.   Betfair kind of does this after the event with the PC, but it is possible to do it before bets have even been laid.

'Crack team' aside, is this not just linked into the cross-matching anyways.

Once the bet is placed, the algorithms take over.  Back a football team to win, it's just balanced against every other market on the game.

The only decisions that need to be looked at is where the liquidity is and isn't (i.e. when multiples first go up for baseball, the spread is huge early in the morning in the UK since the market hasn't formed).

And once they have an extensive "all green" in one area, they can spread it / invest it into other markets creating revenue through commission (every 1000 they invest is a commission return of X to 5%).

Thinking linear based on 'results' doesn't show the true potential that this can have if actually managed properly.

Betfair's concern is also poor liquidity when markets haven't formed yet, or poor liquidity on side markets, hence the need for this crack trading team to supply liquidity for the "30%" of markets which Betfair want covered.

Betfair have a real invaluable tool to deal with this already, and they don't use it.  If markets are too quiet, then incentivise them.  0% commission on these markets during the quiet times for bets placed in that relevant period, where Betfair wants liquidity to be boosted.  Its even possible to have negative commission - if you offer prices at this time, and someone else matches it, you are charged 0% commission if you win, but if your opponent wins, Betfair take half of the commission paid, and you get half of your opponent's commission.  That is surely better than the market being dead?

Betfair have to respect that working out prices takes skill, time, and in reality money.  They seem to want that service for free, without making any concessions for it.  They just have to tailor their product and charging, so that the people who price events up share in the profit with Betfair from these currently illiquid markets.

Ballabrigs you said, "They just have to tailor their product and charging, so that the people who price events up share in the profit with Betfair from these currently illiquid markets. "

surely they do this already, its called the premium charge.

Completely agree with ballabriggs on this one. I've tried a few pricing strategies that don't pay because of transaction charging. similar concessions could be made there to allow seeding in quiet side markets to be cheaper.

ballabriggs, your approach only works if someone matches a position then doesn't play the market again.  i.e. bet on League two football Thursday night for Saturday).

But then, once I had my zero, I could trade elsewhere.

The only way I see to bring early liquidity and lock in would be to offer zero on multiples if placed, say, 24 hours in advance, thus contributing to their seeding and trading.

Poor liquidity breeds poor liquidity. Who wants to put a decent sized offer into a quiet market when they know it will only end up as a book end while parasitic traders and copycats leapfrog them with their £1.99 bets. Betfair's "crack trading team" front running them will only make matters worse. Will last5minutes.com become last2minutes.com? It's about time exchanges realised it's their crummy stock market interface that's the cause of tumbleweed markets. Requiring a degree in computer programming to get a decent sized bet on kind of restricts your prospective customer base.

Does anyone else think that if this crack trading team would try making serious money on the exchange independently they'd get ripped to shreds?

Going back to the last "forum chat" an important question asked and answered was as follows:

What stops your employees from memorising my betting details, writing them down, copying them, taking screen shot pictures on their I-phone etc and then going home and spending some time replicating what I do? (RTTF, Edinburgh)

There is extensive monitoring of staff access to customer personal information and betting activity, with any identified unusual activity fully investigated. The betting activity of staff is also thoroughly monitored, and any activity which may be related to the betting activity of customers is fully investigated. This monitoring also extends to any accounts shown to be linked to those of staff members (e.g. friends and family accounts).
Ian – Manager, Security

This question unfortunately was about betfair staff and not betfair policy.  Is it okay for betfair "crack traders" to be guided by the successful punters on here?  I.e., lets think back to the "high flyers" experiment we were notified about after its trial (found in the financial quarterly/annual reports)... I would like to know how this worked in practise and whether the successful punter's bets were looked at when considering whether to lay/back a "high flyer's" bet?  The same has to be asked again about the introduction of the sports book!  If they are going to use inside information there is no beating these "crack traders" no matter how poor they are.  I would like to hear a statement from betfair whether or not they will use inside information or not (but doubt we will hear anything - maybe Betfair Community Manager can enlighten us?) as this would be very expensive for me (and, I expect most others) to find out in retrospect.  I think such a scenario would mean a lot of us "hanging up our boots"...  Or maybe it will force a "very" last minute.com ... but still at the expense of us having lost a lot of money before realising inside information is being used!  IF of course, betfair do end up being tempted into using inside info... let's not be naive, the bookies have been clearly doing it for years.  "All part of creating a book" they would lead us to believe ;)

Just to clarify as I think I have ended up writing an essay lol... this all comes down to getting "value", and this is the very issue.  Betfair's intention, I would have thought, would be to siphon out as much "value" from the exchange into the sports book.

It's a very fair concern I think as to how this "crack" team will be allowed to operate.

One thing is beyond doubt - this new sportsbook will primarily be run for Betfair, not for customers, despite what all the marketing blurb will say.

I see the former head of Nordic Sports with laddies is heading up this crack team.

Several times I've suggested there should be an optional second password on your account that, when set, means no employee can see what you've bet until after the event has closed. If you have a problem before the event you have to give the helpdesk the password and then reset it afterwards. The fact that only 5 people showed any support probably illustrates how few people would be affected by front running. If betfair's "security" team don't own 5 (London) houses apiece they must be new starts. A betfair insider once asked me "Well what do you expect us to do? Lock them in a room with no mobiles?". It would have to be a room with no windows but why do the security team need to know there's unusual betting patterns before the race? Maybe they don't want to delay the BHA's 5 year investigation.

Security newbie: "Fk me, there's an account here with a phenomenal backing and laying record yet it doesn't seem linked to any particular trainer or jockey. In fact it covers the whole horse racing insider spectrum."

Security chief: "That's our account ydc."

Betfair are devoid of morals. Front running is inevitable.

City vermin imo.

The point made above by "Ian, Manager - Security" does not hold up to even basic scrutiny.

Standard procedure for employees of traditional bookmakers has always been that when they take a bet from one of their shrewdest winning accounts, they will then call up a different bookmaker and place a similar bet themselves.  This is standard, and is viewed in the industry as one of the perks of the job. 

A Betfair "crack" trader can then see that a big winner has placed a huge bet backing a horse at 1.5 on Betfair.  They can then go place the same bet on another exchange.  They can even back at 1.47 or 1.48, knowing that someone will arb between the two markets to nibble off a tiny profit.  That way the Betfair crack trader's bet enters the Betfair market/ecosystem, but it is hidden from the Security team, because it shows up on the arber's account, not the "crack" trader's account.

Every bookmaker, including this "crack" team will look at who is betting on what, and every trader from every bookmaker, including Betfair's will follow bets in themselves.  There is no point anyone complaining about it, this is what will happen as night follows day, and the incentive to price up accurately, and the profitability from pricing up accurately, will dwindle.  The crack trading team won't damage the markets with excellent liquidity, but the markets with average/middling liquidity will end up quieter as a result of the crack team's participation in the ecosystem.

ballabriggs - i think you are going way over the top here imo.

I don't think ballabriggs is going over the top but you would think exchanges would view it differently from the bookmakers. The latter couldn't care less about the shrewdie but he supplies liquidity on exchanges. Betfair's indifference to the problem (as well as their stupid stock market interface) is the reason they've turned into Last5minutes.com.

Betfair aren't far off being an SP (albeit bf SP) only firm.

How do u get rid of the 'Stupid Stock Market Interface'? Only provide punters with level 1 data? I am not convinced that is the answer. Do you like to know how much u can get on at any price anytime? If £1000 is up at 3.5 now at least u can take it if you want it. If you just had the price with no amounts it could be £10000 or it could be a £10. People would uncover what was really there anyway with little nibbles at the current price.

The only way to change it is to change the fee structure. E.g. commission is 1% of turnover or something rather than on net wins per market. Or a flat fee per bet of say £1 regardless of order size.

'Realistic' prices 'in line with the rest of the risk taking industry' that won't be competitive w/ exchange prices? With these prices made by a 'crack team' of the best traders in the industry betting against the bf punter?

They're hardly selling it, are they?

Even in a release aimed at investors, the company is not striking a note of any great ambition for the sportsbook.

Even allowing for the fact that the article could be a bit disingenuous about how markets develop in horse racing, still their core product though not one that the newer generation of betting executives necessarily hold close to their heart, they are not suggesting that they are going to offer any kind of value or standout prices.

Their prob. might well be attracting custom rather than having to decide whether to exclude or restrict fixed-odds winners.

from what I have read and understood the aim of the "next generation sportsbook" is to bring new money into the Betfair coffers.  If that happens then maybe it will not have any effect on the exchange eco system.  If the new sportsbook takes money that otherwise would have been on the exchange then it may have an impact on the exchange eco system.  Based on betfair's stated aims the said effect on the exchange eco system will probably be unnoticed by everyone except those that play the early markets (eg. football match 5 days out) or some unpopular inrunning markets. 

However, if the sportsbook proves to be as great a success as betfair hope, then they may be tempted to widen the range of markets that they play to boost their profits. Such a move could have greater impact on the exchange eco system.  Because any weakening of the betfair exchange would offer opportunities for existing or new exchange competitors, I doubt very much whether betfair would take such an approach.  Furthermore, I dont think the new sportsbook, as currently described by betfair, will have anything more than a marginal effect.  This biggest impact may be on design and functionailty of the website.

ror, if the price-taker on bf sportsbook pays comm., it's immediately an incentive to trade the price out on the exchange (in the same way that traders are advantaged over price-takers at the moment).

The net effect of this is that bf locks in its losses to arbers and traders.

The move to have a sportsbook turns a subsection of the betting population, inc. my easiest strategy, from losers on here who use the site as a hedging and smoothing facility, to bf winners, draining the pool.

Imv bf are in a cleft stick about whether to make the sportsbook comm. free or not, whether to have a single integrated site and log-in and whether to restrict winners by stake or otherwise.

Do you like to know how much u can get on at any price anytime?

frog, how do you do that when you've got 5 minutes of odds swinging back and forth like a pendulum, offers from now you see it now you don't spoofers / shell and pea merchants and insiders often totally monopolising one side of the market because of the first come first served queueing system?

hazel, I see some potential for bf early prices (if offered early enough) to lead to a leakage of arbing/trading custom to rival exchanges.

Let's say that this one-stop shop offers the same horse prices (inc. tipping line horses and steamers) as the High St. If bf tries to restrict the activity of its sportsbook players on the exchange e.g. charging double comm., it loses the negative ev part of the arb to something like the duck and is left holding the value entry point for the bet.

If it charges comm. on the sportsbook and thus a single comm. system for sportsbook and exchange, then it suffers a trading loss to the arber.

The effect of trying to capture 100%, rather than 70%, of many bettors' dollar is to turn exchange losers into exchange winners.

ballabriggs, I'm with you entirely: some form of differential information / queue position / minimum bet size based on customers' win rate or lifetime winnings would help level the playing field and generate more liquidity for bf.

These 'crack trading teams' can't in effect be that crack, as earlier posters have pointed out. Their brief for other bookies is not to engage in prop trading on bf, but rather to balance books or to load them up with the bets of losing punters on at overbought prices. They're likely to win 1) by excluding shrewdies, and 2) by staying - ev compared to the bf price. How are they going to do those things when working for bf itself?

They have to offer liquidity, no a new market

Maybe they plan to become shell and pea merchants with a difference. The bets only disappear if a shrewdie attempts to match them.

I suppose it can only be to our benefit if Betfair have indeed employed a team of staff who spend their time dealing in Class A drugs.