is liquidity decreasing?

Sometimes u read all the horseracing money is on betfair now - yet people on here say liquidity is decreasing [;)]

cpfc4me     13 Sep 10 13:45 
"If liquidity is decreasing, then it is reasonable to assume that liquidity is increasing somewhere else. But where?"

or maybe people have less disposable income for gambling

liquidity is desperate in the other place - the other day I was on a market with my £100, another £2 of someone else's and every other box empty.

Decreasing.....more fallen off a cliff

Well early racing markets have anyway

Would love to know how much of the US Open £9 million and the £1million per horse race is just re-cycled trader money.  Probably a very high percentage.

BF amounts matched give a much misleading view of liquidity.

Sorry  Lads    dont  agree  with  you . you  can   get  a  grand  on  here   any   fav  post   time ......Try  the  big  three    say      5.00  Brighton   Dreamacha   phone  any  of the  big   three can  i  have  a  grand  on  Dreamacha    at   3/1   it  goes    somthing   like  this      hold   for   10   mins    sorry   Sir   you  can   have    £36   quid   at   9/4

Would love to know how much of the US Open £9 million and the £1million per horse race is just re-cycled trader money.  Probably a very high percentage.

BF amounts matched give a much misleading view of liquidity.

How much would you estimate net liabilities are in an average market that shows £1m traded?

In football, I'm definitely getting less matched. Notice it even on Premier league games.

Yes and this just thins what's available even more

As part of our ongoing commitment to accommodate the needs of our customers we constantly look for opportunities to improve the Betfair site.

Over the coming weeks, in response to customer demand, we will be increasing the number of markets offered within Football. For the World Cup we introduced a selection of new markets, as well as increasing the number of markets offered In-Play, and we will now be replicating this for selected top football matches. We are also looking to expand on the number of markets offered for smaller scale matches.

These changes are driven by your input and we would like to thank all of you for giving us your feedback.  Please continue to provide us with your suggestions on how we can make the site even better.

Many thanks,

The Betfair Team

I agree buzzer, I think that that is an issue that will solve itself over time though. I like having the extra markets, as they give you more to cross reference against, helping to create more accurate models.

Having said that, I think Betfair should continue with the new markets, but only for high quality games (epl, euro, champions league etc.). Hardly anything getting matched in the new markets for the bundesliga for instance.

I've tried betting on "next goal" in fotball matches. I've noticed that there's often a lot of bets witing to get matched, but very few bets get matched. The market seems perfect. Waste of time. No edge to be found. Not even in-play. I guess this is because it's fairly easy to calculate the probabilities pretty exactly if you know what to do. Non professionals I think stay away from these markets. Professionals and semi professionals agree on the odds. No bets gets matched. No liquidity.

The same goes for "half time/full time" bets. No value to be found. Waste of time.

i think not - dream on

and its always been the case - if yoou wanner get smth matched why dont you put smth up - instead of waiting for value as u say

definitely less getting matched this last couple of months , even the soccer world cup was fairly sluggish .

it might pick up with the nights drawing in ,but its way down on last season

art, what are you trying to say?

he's saying if you want to get matched ,put up odds  that will get matched

The problem is that the odds I'm willing to lay want get matched, the same way as the odds other bettors lay want get matched. that's the problem art. Can't your see it?

thats the sort of thing in running players say... cant understand why no one will lay them good odds about a fast finisher winner

getting much less matched in almost all sports (i was mostly betting on the less liquid stuff to start with) and seeing much less on the screen despite all the bogus betfair mirror bets which appear these days making the market look more liquid than it actually is.

how much of the decline is down to premium charge and how much is down to cross matching? is it possible that betfair lose out from those money grabs in the long run?

Didn't notice it on the World Cup coach, I thought liquidity was very good.

Livebetter Joined: 16 Aug 10
Replies: 74 13 Sep 10 22:19   
I've tried betting on "next goal" in fotball matches. I've noticed that there's often a lot of bets witing to get matched, but very few bets get matched. The market seems perfect. Waste of time. No edge to be found. Not even in-play. I guess this is because it's fairly easy to calculate the probabilities pretty exactly if you know what to do. Non professionals I think stay away from these markets. Professionals and semi professionals agree on the odds. No bets gets matched. No liquidity. 



Some markets are like that. 1+ goals is another one, because it is purely the reverse of 0-0 there isn't any ambiguity about the price so there is naturally a large volume waiting to get that price.
Best to get in the queue early and wait.

Football is still very strong imo

Pretty sure they don't understand their own business model anymore buzzer. The one noticable thing that happened with the PC is that overnight the small side markets vanished (As they were hard to get a book made and usually seeded by winners). Then we have an economic downturn, which contrary to popular belief means there's less money for gambling and Betfair proceed to open more and more markets

In tennis, we now have set betting correct scores , winner of current set, correct score within current set, etc etc with the effect being that all the markets are too thin outside of special games. Soccer has always been a bit like that with numerous ways of betting on 3 goals, but they seem to be trying to make the problem worse, not better.

I think the problem is more complex than that...

1,  Each time BF opens a new market on a football match, Liquidity is drawn from elseware.
2 years ago, you couldn't bet on 5goals (over n under),  or 6 goals over n undar.

Yet today those to markets alone can match over 100K in a match.


2, Each time BF opens a new market, so do all the other book makers.
  -Thus if BF open 1 new market per game, x 20 other bookies = Huge ammounts of arb money moving away from certain markets.



3,   Very odd this,   The other night I was watching the odds of a Brazilian footy match.
      In the correct score market,  a single market marker was operating, yet every few mins he would turn off his server and show no price.  (no change in the action).   Would you bet in that market?


4,  Ressesion, Loads of government jobs about to go..  "The fish are nervous".


5, Finally,
HUGE number of new bots operating. Most of which trade on razor thin margins. In tiny ammounts.



Def lots of different problems. Thats all before the premium charge!!!

Sorry. I've been on holiday. Feck said he would do my trading while I was away. But turns out he was too busy.

Most of the problem in the side markets is that there are only 1 or 2 people making the prices. So if mr market maker lays a chunky one it can be almost impossible to green up red out if necessary.
This means mr market maker will offer worse prices to compensate and mr bettor will look at the market and think these prices are sh1te.

^
This is very true

^ agreed.




Hense why I usually stick to the bigger markets...
Such as

Premier League    winner, 2nd 4th 6th  ect
FA cup winner
and
Carlicng cup winnre

BETFAIR


R.I.P

MIB34 Joined: 24 Nov 07
Replies: 101 14 Sep 10 21:47   


^ agreed.




Hense why I usually stick to the bigger markets...
Such as

Premier League    winner, 2nd 4th 6th  ect
FA cup winner
and
Carlicng cup winnre 


must be pished or cant find his glasses

TDK has given a reason for liquidity falling on theracingforum.

TDK is correct. Allowing insiders to run riot in a free market was never going to work long term. Thats why they brought in insider trading laws for the world stock markets back in the 1930s. I remember discussing this with one of the people that worked for Betfair from the start back in the early 2000s at Newmarket. I think the feeling was that it was not their duty to regulate horseracing. Insiders are allowed to bet with bookies so how could they be stopped on Betfair? They flirted with the idea for a while as this article in the Evening Standard suggests:

It's odds against a betting ban
By Lydia Hislop. Last updated at 00:00am on 10.07.02

Add your view


Betfair, the market leader in betting exchanges, has grasped the nettle by today calling for trainers to be banned from betting. It may be an exquisite PR manoeuvre from a company fighting for the right to exist, but the sensitive matter has now at least been aired in public.

Last month's Kenyon Confronts programme appeared to confirm conspiracists' worst fear: that trainers who knew their horses couldn't win were laying them (standing bets from other punters, like a bookmaker) on the exchanges.

Victor Chandler's statement this week fanned the flames. He admitted it was "common practice" to offer "free bets and similar arrangements" to trainers in exchange for information until stricter Jockey Club guidelines were introduced two years ago.

Betfair's trading records since discredited the Kenyon claim, but exchange operators cannot deny that their existence increases temptation for those people holding privileged information, like trainers, to use their advantage to make money - what the City would call insider trading.

"We're prepared to go further than legally obliged if the outcome is to reassure the public that exchanges are a level playing-field," said Mark Davies, Betfair's director of communications.

"Following a meeting yesterday, we decided to stop short of not accepting bets from trainers. But we do now advocate trainers be banned from betting and, should the Jockey Club introduce that rule, we would be delighted to comply with it."

Buck passed, its recipients rightly point out it's easier said than done.

Jockey Club spokesman John Maxse said: "Our integrity-review committee has just reconvened and I cannot rule out the possibility trainer betting will be discussed. But when making rules, you must be able to enforce them."

Jockeys have always been banned from betting. Whisper it, but this doesn't mean they all don't. Some get caught - a handful of apprentices served long bans in the Nineties and, in the previous decade, the now-infamous Graham Bradley was spotted queuing to place a bet while wearing his jockey's silks. (He denies the sartorial detail.)

Any fool knows, if jockeys want to bet, they can ask a mate. The same would apply to trainers. The difference is jockeys have direct control over the outcome of a race. That, combined with their likely youth and relative lack of cash, makes them more vulnerable.

Some trainers argue such is the paucity of prize money in British racing, the only way small-scale operations can make ends meet is to land a gamble.

Jack Ramsden - the celebrated punter whose wife Lynda is a trainer - doubts whether such trainer-punters, living life on the financial edge, actually exist.

He said: "I'm highly sceptical. One or two yards may have their moments, but you can't keep a stable afloat on that alone over a period of time."

But Ramsden is in no doubt how to react should the Betfair proposal become reality.

"I'd pack up if I couldn't have a bet," said Ramsden. "There's nothing wrong with trainers betting, although to do so free is definitely immoral. But everyone makes the mistake of thinking jockeys and trainers actually have a clue.

"In a 12-runner race, if you asked the trainers whether they'd win, at least 10 would be adamant they would."

I guess that the desire for quick short term growth stopped Betfair from building the systems to outlaw insider trading. If liquidity really is declining on here due to insider trading Betfair only have themselves to blame. They have the technology (with their famous audit trail) to stop trainers and owners (and their agents) betting on races where they have a runner if they wanted to. They just decided not to use it for that.

You only have to look at the number of trainers and jockeys that have been caught on the laying side of Betfair to realise that insider trading goes on. If that many people have been caught on the lay side how many others are using it to back their own horses when fit and ready and back opponents when they are not?

you need to differentiate between horses and sports in general. Otherwise gives tars the other sports with racings problems

True. But the other concept on the thread about Malta cherrypicking some big customers was news to me. I thought they were just hedging multiples and running games out there.

Other sports have rules that stop participants from betting. Racing only bans jockeys from betting at all and other connections from laying. Eveything else is open season for insiders in racing.

the other concept on the thread about Malta cherrypicking some big customers

where is that? have looked cant find

Thread on theracingforum about the same subject.

ok found it, sounds like a load of rubbish to me. No source or anything. Do you have anymore info than a post on a racing forum?

Doesn't sound like Betfair's style tbh. They don't even take the liability for their own juiced multiples ffs.

High Roller segment

During the first quarter of the year, Betfair ran a trial service with a small number of ‘‘High Roller’’
customers. The size and scale of the betting patterns of these customers is too large to be fully hedged
through the Betting Exchange and so Betfair has necessarily accepted proprietary risk on these bets.

The trial with High Roller customers proved to be profitable, but the volatility of returns from such
customers is such that Betfair has now decided not to proceed with this product offering for the
foreseeable future.

Revenue from the High Roller segment during the first quarter was approximately £25 million and
EBITDA(2) was approximately £7 million. The results will be reported as a separate segment in FY11 and
have been excluded from the Core Betfair revenue for the quarter stated above.

http://corporate.betfair.com/investors/fy-2010-financial-results/~/media/Files/B/Betfair/pdf/results-announcement.pdf

Suprised they've decided not to proceed with it as they'll have access to allsorts of betting data to cherry pick the mugs bettors and let the others flow thru the exchange, brendan.

Seems to explain where the liquidity went at least.

interesting that they made 7m on 25m in 1 quarter but decided not to continue, must have been significant proportion of profits for that quarter.

To be workable by both parties the high rollers must be taking greatly reduced odds (compared to bf market) in order to get on to reduce their liabilities rather than having a punt. Not sure "high rollers" is best description sounds to me like other bookmakers maybe in markets with low liquidity?

I thought the whole idea was rubbish so what do i know

Perhaps they decided that when they were forced to publish this due to the float, regular customers would be wondering why they couldn't bet against the biggest mugs on the site and cancelled it as a bad idea?

More likely the fact they mentioned "the volatility of returns from such customers is such that Betfair has now decided not to proceed with this product". Wouldn't have been wise to risk a lucky run from those mugs punters and a dent in the pnl figures before a float. I'm sure the fact regular customers were denied access to mug punters didn't come anywhere in their decision Lori.

If the customers were likely to cause the biggest stink ever when they found out, they might have.

Seems even more controversial than the PC to me.

I think as soon as they set up Betfair International it was always on the cards they'd look to cherry picking certain punters with all the info they had at hand, who knows what else goes on in Malta. Let's face it they never admitted the cross matching until they were outed.

Bet these high rollers got diaries to

Why on earth can't they feed the bets through? If it's because their markets are not liquid enough, are the high rollers asking for a better price than available elsewhere?

It can't be that they requested bets in especially thin markets.

If they don't want to take proprietary risk, they shd be looser in the price guarantee they give these big punters and let us bet against them!

Lori, you're right, it stinks.

Let shark fight it out against shark on the exchange markets and stand all the mug bets--the ideal formula for maximizing profits.

Meanwhile spend a lot of money developing and flogging casino games.

As always there are alot more questions than answers. Why cant the high roller get on else where and if they cant why does betfair want to take the risk rather than leaving it to the market.

Like to see a version of the current ad where the the betfair middleman decides he will take the the money and the fist knocks out one of the punters in the pub

brendanuk, yes, exactly.

I wd guess that the high roller are asking for a price and bf's markets are not liquid enough to stand it in its entirety. This, however, is the interpretation that is most favourable to the company.

I am amazed that there isn't more of a stink about this and have submitted a question on the topic to the q&a.

The Management, person-to-person betting is a marketing slogan, much more than a cast-iron description of how bf operates.

I seem to recall Mark Davies saying that car adverts could get away with saying, 'it's the smoothest ride of yr life'. This meant the car wd be accepted as having good suspension.

In the same way, bf often pair up yr bet w/ someone else's (not if you've placed a multiple and not if you're a high roller).

Like to see a version of the current ad where the the betfair middleman decides he will take the the money and the fist knocks out one of the punters in the pub

I cant see what the issue is, It always been in the terms of the site that betfair reserve the right to stand counterparty to any bet.

betting_quant, I am not suggesting for a moment that bf have broken their own t&c s.

But surely you can understand how this will go down? First, it looks like they thought they needed an artificial boost to their figs. before a float; then that they realised it wd be more profitable to let the sharks play against the sharks and to bet against the fishes themselves (using the sharks to set prices--to mix metaphors).

Of course this is the strategy of every conventional bm.

It suggests that p2p betting is not optimally profitable for the operator, and that bf judge it thoroughly legitimate for them to become a more conventional bm. This wd have the added advantage for them of limiting their losses to their persistent winners (and maybe eliminating some of these losses altogether...)

Winners will not like these admissions contained on the public section of their site.

betting_quant Joined: 08 Jun 10
Replies: 58 23 Sep 10 15:24 
I cant see what the issue is, It always been in the terms of the site that betfair reserve the right to stand counterparty to any bet.


Holy crap! This is major news! YOU DON'T SEE WHAT THE ISSUE IS??? Jeez, this is the first time I've been drive to using all caps

The issue is that if Betfair took all the best bets for themselves (aside from cross-matching, it doesn't get any better than that), it would become increasingly difficult to make money, and Betfair would no longer have the right to call themselves a betting exchange, it doesn't matter what their T&Cs say. Multiples etc. is absolutely fine by me, but this is nothing short of disgraceful.

It seems to me that Betfair are not happy with their lot as a low margin operator, and glance enviously at the margins of traditional bookies. They seem to be forgetting that it's low margins that made them successful in the first place! If they end up becoming one, most customers who make a profit on here will move away, as their profits will be restricted to the extent where even low liquidity exchanges offer higher profit potential. This in turn will lead to more liquidity on other exchanges (although leisure punters would need to follow, atrracted by better prices).

If Betfair decide that they can make more as a traditional bookie than as an exchange, they really will hand over the reins. They already have a traditional bookmaker business in Italy as well as their Malta multiples, but they are notoriously risk averse (for good reason in my opinion).

So if Betfair is going to feast on small fish and whale meat leaving the rest of us with shark invested waters, they'll be killing the exchange model.

This thread seems to be turning into a tale of Animal Farm.

Come to think of it, thats not such a bad analogy. Didn't the horse (p2p punters) get sent to the knackers yard, and the pigs (bf) who took over the farm from the humans (trad bookies) couldn't be distinguished as they sat feasting themselves together at the table?

Last financial yr, bf made about 15 million profit. Bet365 made about £100 million.

Any potential investor is going to ask bf, 'why did they make so much more than you?' And bf will say, 'they exclude winners, but we have to share with ours'.

Then the investors will say, 'why not exclude yr winners?'. Bf will say, 'we take pc', but it won't be enough. They will say, 'exchange betting is our selling point'. The investors might suggest they keep it in a limited way, but stand persistent losers' bets.

Maybe traditional bookmaking is just more profitable than running an exchange.

you could just say ripping off customers is more profitable than giving fair deal (fair betting there is an idea!)

Anyone got a link to the "funeral of traditional bookmaker" its zombie dawn of the dead

Yes of course it's more profitable. Just like running a premium brokerage service will be more profitable than running a discount one. But over time, the discount service (if they still offer the same level of quality) will increase market share.

The point is that over time betting exchanges can take more and more customers away from traditional bookies. Many people over a certain age tend not to use the internet for one.

The betting exchange model can still grow hugely, with those become adults in the next decade far more likely to choose betfair than their 50+ year old counterparts.

Just go to your local bookie and estimate the average age of the people in there.

Betfair can improve margins slightly by getting more customers - > more liquidity.

More liquidity leads to more efficient markets, which in turn means that Betfair gain a larger share of the pie by way of commission. Most profitable punter swill be happy with this too as the increase in liquidity will lead to lower margins for them, but a higher rate of turnover leading to higher profit.

The more efficient markets are, the more Betfair make. In low liquidity markets you sometimes see odds getting matched at 2 then 2.8, and the guys on the 'right' side of this probably aren't getting there randomly. This is the kind of situation where increased liquidity would improve Betfair's margins.

Askari,betfair are not p2p exchange, they are a bookmaker which uses the exchange model to perfectly hedge risk.

e.g A does not bet B, A bets with C, and B bets with C.

With C being being betfair, i.e. betfair is counterparty to bets with both A & B

in some instances it is not possible for betfair to do this, but to allow customers to be matched where it is not possible then betfair will stand as counterparty to one side of bet and incur the risk.

betting_quant, obviously bd are not 'perfectly hedging risk' if they are standing substantial liabilities from big rollers.

However, what theoretically stands in the way of bf actually perfectly hedging this risk by feeding high-roller bets into their exchange markets?

That way, bf wd for sure profit on high -roller bets, through the commission of whichever side (the high-roller or their counterparties) won.

Bf state that they discontinued their experiement of standing high-roller bets b/c the volatility of return from these bets was too great. So why did they not submit these bets to the exchange?

It may look to many people as if they wanted to show revenue and profit growth in the run-up to the float, and were not concerned about sticking to the exchange model.

*obviously betfair are not perfectly hedging risk

From previous forum Q+A

Can you assure us that Betfair will never at any point in the future begin actively trading in the sports betting markets other than to hedge the risks from your multiples product?No – but Betfair is not in the business of risk-taking on sports markets. That said, we’re always looking for better ways to meet the needs of our customers.

betting_quant, you are answering on the narrow and pedantic point of whether bf is entitled in its t&c s and customer communications to stand customer bets.

Can you not see it might be hughely damaging to goodwill if customers believe that they will be routed into betting with shrewdies if they are shrewd and will be stood independently by the bookmaker if they seem to be mugs?

Can you not see it wd offend winning price-offerers if bf took their offers just as a guide price they cd then offer independently to their mug clients?

"perfectly hedged risk" is the same as "No risk" literally, because even in the extremely unlikely event that the betfair system screwed up, they could void all bets.

Betfair are indeed not a P2P exchange, but you could say they are a many to many exchange. Sure it is Betfair who is matching the bets in the strictest sense, but the whole concept of 'perfectly managed or hedged risk' is a little nonsensical.

Ignoring multiples, this 'high roller stuff' etc and just focusing on the core exchange product, the following statements are true:

Statement one: "Our risk related to bets we match on the exchange is zero, non-existent."
Statement two: "Our risk related to bets we match on the exhcange is perfectly hedged."

Betfair can pick whichever of these statements suits their needs in meeting regulatory / legal and other requirements.

PS. Bettingquant, I have no issue with the situation you described above, but it is my suspicion as well as others here, that they have gone beyond this and effectively reduced the liquidity available on the exchange (albeit temporarily). I believe they reversed this because the potential cost was larger than the volatile profits generated.

Statement one is not quoting betfair by the way, I'm just saying it's meaning is identical to statement two.

its meaning

If someone wants to get a bet on, does it matter who matches it ? the only people affected are those who would of have originally laid it and judging by betfairs figures, they would have made a profit from these bets. But instead betfair made that profit instead and last I looked they still owned the exchange, so they are within their rights.

If these extra profits keep costs down for other users, then that can only be a good thing.

The Investor, their tecnology cd break down and they cd make a decision not to void, like in the fiasco when they massively marketed before the Grand National, had their senior execs on the course and ended up w/ a overround of something like 135%.

They made the very rational decision to scale up winners' SPs to a theoretical book of roughly 100%. They had entered into a commitment with their counterparties who took odds.

Their way of maximizing profit is not to grow more liquid markets, but to stand mugs' odds as a traditional bm.

Why did bet365 make £100 million last yr and bf only £15 mill.?

Forum Q&A Session 19/03/08

Can you assure us that Betfair will never at any point in the future begin actively trading in the sports betting markets other than to hedge the risks from your multiples product?

No – but Betfair is not in the business of risk-taking on sports markets. That said, we’re always looking for better ways to meet the needs of our customers.

Just wondered what the date was on that statement. got it from

http://www.midasoracle.org/2008/03/19/betfair-q-and-a/

betting_quant, how will bf standing bets keep costs down? Surely the increasing volatility and fluctuation in bf profits will only make the company more likely to put a capital buffer in place for poss. losses by raising costs for its exchange clients?

It matters a lot to players on here whether they are matched with the general market or historical winners. If they are matched w/ regular/historical winners, they are less likely to win over a series of bets. If they are matched w/ a population including losing bettors, they are more likely to win.

Now, for a 'yes or no' answer, do you see that bf risk losing a lot of customer goodwill if their client base thinks that if they are smart, they will only be allowed to play against shrewdies?

As you say, bf won £7 million from these high-rollers.

That's £7 million that the exchange users didn't win.

And the mix of bets that exchange users were taking over that period tipped from being proportionately more recreational-less professional to being less recreational-more professional. So the regular exchange user was more likely to lose.

You think that's something that bf will include in its PR exercises explaining exchange betting?

The idea that betfair stood the risk for high rollers at current market price I find hard to believe. They would have negotiated a discount for large amounts. Someone on the market would have been offering better prices and was not matched. I cant see how that "better meets the need of customers" Its shafting one to facilitate the another

brendanuk, it depends what market the high-rollers were betting on.

Let's say that it was East Asian clients betting on match odds or the Asian hcap in the World Cup. Bf wanted a slice of Chandler's business. They cd not have got this business if they had negotiated too deep a discount; they wd not have been offering the best price. It is poss. in these circs. that they accommodated the amount they cd in their exchange market and stood the rest.

The company shd really clear this up in their q&a b/c otherwise people will plausibly conjecture (like you) that the operator was cutting out existing customer offers.

Now, for a 'yes or no' answer, do you see that bf risk losing a lot of customer goodwill if their client base thinks that if they are smart, they will only be allowed to play against shrewdies?

Lose goodwill, Yes

Lose Customers, No

ok so just so i understand, say Barca are 1.2 @ home and 400,000 avaliable to back Betfair might gaurentee 1.2 for 500,000. Betfair takes the 400,000 and stands the rest, wether its subsequently matched or not.

Not that they are but its one possible scenario, given what we know.

betting_quant, thanks for answering.

I can see them losing some marginal losing customers e.g. customers just failing to beat commission. They cd also lose those starting to trade or experiment w/ strategies.

Betfair have some clients b/c it's too much hassle for them to get on at the bm s. Bf is a one-stop shop with prices in small amounts. If these people think they're only betting against people who can beat them, they will make more of an effort reactivating their fixed-odds bm accounts.

punters who are pricee sensitive are always going to come here, why take a price at a BM when you can get upto 20% better here ?

Likewise for those who service them, they ain't going anywhere, cause there's no where to goto.

They are 20% better to small money for those the public has no interest in, and better still for not-off horses.

Let's say that a bf rival took out an ad saying, 'on bf, if you're smart, you're swimming with sharks; if you're a mug, you're betting against a conventional bookie' and added an explanation.

Wd it encourage or discourage new clients to sign up?

Documents associated with your float give the impression that Betfair is increasingly standing certain client bets rather than feeding these through to be taken by the majority of Betfair's customer on the exchange:

"During the first quarter of the year, Betfair ran a trial service with a small number of ''High Roller'' customers. The size and scale of the betting patterns of these customers is too large to be fully hedged through the Betting Exchange and so Betfair has necessarily accepted proprietary risk on these bets.

The trial with High Roller customers proved to be profitable, but the volatility of returns from such customers is such that Betfair has now decided not to proceed with this product offering for the foreseeable future.

[Net profit] from this segment in the first quarter [was] approximately £7 million."

My question is, why can't these bets (in whatever size) be passed through to your smaller customers? Since you charge a commission on winning bets, submitting the high-roller bets to the exchange mechanism would not result in any volatility of returns for Betfair (or would at least not threaten Betfair with losses).

The impression, unfortunately, is that you are cherry-picking high-staking losing clients, while allowing skilled players (who perhaps cannot get on at conventional bookmakers) to fight it out between themselves on your P2P exchange. Some might think that this formula would yield greater profits that allowing skilled players to bet against high-rollers on your main site.

Thank you.


Over the years, we’ve been approached by a number of high roller clients who were looking for a telephone based service that would guarantee their bets were on no matter what the size or timing.   These customers would often want to bet on markets at times where there was insufficient liquidity to absorb the full bet or on markets which were nascent.  Given the size of bets made at agreed prices in many cases it was not be practical to offer theme on the exchange and the only way we could set up the service involved taking risk.  We trialled it and, while were doing so, hedged bets on the exchange to the extent practical.  That made them available to the rest of our customer base.  Overall, whilst we made money during the trial, the revenue was too volatile and we discontinued the trial as a consequence.  As an innovative business, we should be continuously trying new things and we should also be prepared to stop them if they don’t work.

This does not answer why they did not just let the bets sit there on the exchange.

It seems that the high-rollers were price-insensitive, so why did not betfair give exchange players as much of the price as the markets could absorb?

I'm wrong; the prices were agreed but high-rollers wanted to bet irrespective of 'how large' or 'when'. Still, I don't see why the bets didn't sit on the exchange.

Brendan & askari,

from a previous forum Q & A

Can you assure us that Betfair will never at any point in the future begin actively trading in the sports betting markets other than to hedge the risks from your multiples product?

No – but Betfair is not in the business of risk-taking on sports markets. That said, we’re always looking for better ways to meet the needs of our customers.

No one is saying that bf is cheating or lying; the point is that they became a bm and let the shrewdies take chunks out of each other.

Which clients are they meeting the needs of? Why are they standing a high-rolling loser and not serving up his bet to the exchange client base?

betting_quant, do you work for bf by any chance? Are you a shareholder?

betting_quant Joined: 08 Jun 10
Replies: 65 23 Sep 10 18:33   


punters who are pricee sensitive are always going to come here, why take a price at a BM when you can get upto 20% better here ?

Betfair are already in the position where even 2% commission is worse than backing EITHER side in most American sports with regular bookies. Cricket is rapidly heading the same way.

The price sensitive among us are using Betfair less and less for pre-match betting, I think that's the same across all sports. In running is still largely Betfair orientated I'm sure, but with bookies offering better and better options and Betfair offering worse and worse ones - as well as better prices on some sports across other exchanges (especially for smaller customers), anything is possible if Betfair continues to have the complacent approach of the last three or so years.

Lori, yes, and meanwhile early markets offering value on the horses are not available to decent amounts.

It is difficult for winners and bf to coexist.

20% better odds was dropped as slogan wasnt it?

Quick flick to betbrain and for tonights Sevilla match

4 bookies match or better betfairs prices for Sevilla.
3 bookies match or better betfairs price on the Draw

I dont think it should be at all difficult for winners to coexist with Betfair.

There will after all be a winner or loser in EVERY market going and it seems a very simplistic approach to say someone is winning too often, almost as a means to an end, if it isnt that guy who wins it will be another one or else no bet would be struck. Thats my threepennies worth anyhow.

I agree the main reason I have not re-entered the horse racing markets was that I used to bet mainly in the mornings on race days and nowadays the turnover is miniscule around that time and theres a big rush right at the end which isnt really my cup of tea. Also the greater number of non runners combined with the rule 4 situation makes it more of a no go too.

Now, for a 'yes or no' answer, do you see that bf risk losing a lot of customer goodwill if their client base thinks that if they are smart, they will only be allowed to play against shrewdies?


I think that is an interesting question. I think it will be bad news for them if that happens.

The best image for a bookmaker is to be seen to be inept but a good payer. BF were as near to that image as possible in the early days ie the idea that you are betting against other punters who had no more of an edge than you plus were guaranteed payers.

Probably just a sign of the times, people preferring to spend their money on other things instead of gambling. Although, in theory, the reverse could be possible, people desperate for money start to gamble.

allinadayswork, bettors either beat commission or not over a series of bets.

If a bettor who is slightly better informed than the market i.e. who on average beats a 100% book is betting against mostly recreational money, they might beat commission through skill. If they are betting against bots or insiders, they are less likely to beat commission through skill.

The proportion of players you are up against as an individual punter over a series of bets has an effect on your final margin (up or down).

Now, say bf are standing the mugs' bets themselves, and leaving you to bet against the shrewdies. Are you more or less likely to win?

And it is quite poss. that if people leave the markets as you have done, making it shark against shark, then far fewer bets will be struck.

Banks, interesting that you were slow in answering my questions when they implied criticism of the Levy Board and BHA, but seized on them even when not addressed to you when they were critical of bf.

the liquidity in football markets is disappearing in lower leagues and for me thats the human element the betfair model is diminishing and the only choice you will have is bet on the top leagues-bookmakers have proved there model is the winning one and they will always have the edge over the human element they will still ban and limit people but when it comes to choice theres no comparison-even betfair are getting in on the act with there multiples no choice poor odds low limits cut out the middleman trying to suck out what easy money is left

If we're comparing betting exchanges to bookmakers ,we have to be looking at a totally different customer base imo .

The traditional bookie man enters the betting shop not just  for a bet ,but for social interaction ,with the hope of claiming a win that is straight forward on paper ...ie , he puts on a fiver at 10/1 to win 50 while he has a chat with his mates (smoking bans must have had an impact ) it doesnt take any planning or working out complex  strategies .

The young (ish) entrants  to BF come on here for totally different reasons imo ,and thats to pick their wits against  the best gamblers , guys who fancy themselves to crack gambling as a full time method of employment .

Most will fail ,but it offers them a chance ,they are the section of society who know full well they wont beat the bookie .

So there will always be a market for exchanges UNTIL we have exhausted that section of society , bookie customers are totally different ,they WILL keep returning as losers.

Quite how Bet 365 succeed is beyond me .

Coachbuster, presumably they succeed in being some bettors' only bookie. They seem to be more successful than bf.

Sure, sometimes they lay prices, but eventually the human element of gambling, combined with the fact that they are not below bf for 5 secs, means they claw any losses back and end up well on top.

Bf has tried marketing itself as a one-stop shop, but it's increasingly hard for them do given that there is only liquidity at times that are relatively 'safe' for traders.

With some of the prices they lay on mid-ladder or 3rd favs 15 mins before the off, variance alone must cream a hefty slice off the overall horse profits ...

[:x]  was commenting on coachbuster's closing remark about Bet 365.

I shan't even digress into the schenanigans Betfred pulls with price levels 10-15 mins pre-NR at times to lock in a 10p reduction when the rest of the BMs on the planet moved the opposite direction  back into 5p territory.