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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? |
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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
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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. |
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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 |
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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. |
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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. |
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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. |
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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? |
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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. |
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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? |
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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.
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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. |
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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? |
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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. |
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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. |
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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 |
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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. |
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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. |
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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.
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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. |
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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
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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 . |
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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. |
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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 ...
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[: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. |