Thread on theracingforum about the same subject.

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

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.

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

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.

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.

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!

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

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).

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 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.

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.

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.

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.

*obviously betfair are not perfectly hedging risk

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?

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.

its meaning

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.?

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?