General Betting
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Betfair's current problems stem from its innate double-edged interest in the gambling industry.
#1 The Betting Exchange: A platform for trading bets, similar to the major financial exchanges around the world, and the original ethos of the company to which it owes its decade of success. Developing this and making it a respectable form of financial investment and legal betting is a major asset. Earns money by transaction charges and commissions.
#2 Bookmaking: Similar to a stockbroker - encouraging clients to invest money in an attempt to generate commissions. Betfair, the Bookmaker, advertises for clients it wants 100% of their "investment", just as do other bookmakers. That's why we see Casino games, PC charges, etc.
The two are completely separate entities, but ruled by one board - hence the clash of interest. Currently Betfair is the gatekeeper - to trade the Exchange customers must pay the bookmaker. It would be similar to the LSE being the only company allowed to trade on it's own markets.
The question is: where does the future lie?
#1 The Betting Exchange: A platform for trading bets, similar to the major financial exchanges around the world, and the original ethos of the company to which it owes its decade of success. Developing this and making it a respectable form of financial investment and legal betting is a major asset. Earns money by transaction charges and commissions.
#2 Bookmaking: Similar to a stockbroker - encouraging clients to invest money in an attempt to generate commissions. Betfair, the Bookmaker, advertises for clients it wants 100% of their "investment", just as do other bookmakers. That's why we see Casino games, PC charges, etc.
The two are completely separate entities, but ruled by one board - hence the clash of interest. Currently Betfair is the gatekeeper - to trade the Exchange customers must pay the bookmaker. It would be similar to the LSE being the only company allowed to trade on it's own markets.
The question is: where does the future lie?
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I always remind people of Paradise Poker, the world's number one poker site in threads like these.
They proved just how quickly you can fall behind the competition, no matter what the apparent lead. In their case the competition came out of thin air rather than the existing sites, will be interesting to see what happens here. If Betfair do a Mansion then there will be a gap in the market for a well run exchange, whether anyone wants to fill that gap for a mere 20-30 million a year or not, time will tell. |
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Doesn't the stock exchange grow by itself. You don't have to advertise for people to use it do you ?
Also the risk capital playing in the mkt. doesn't disappear into the ether. Sure it transfers from one party to another as in a gambling exchange but it never does and never can end up in the hands of just a few players, who are under no obligation at all to keep playing with it. If you buy a share, and you win, that is it goes up, you can only realize that profit if you sell the share to someone else. The underliying capital stays in the system, in fact it is increased in the system, each time the share goes up. The system/exchange grows organically you could say. Does that happen axiomatically on a gambling exchange ?. |
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Perhaps a better model offering long-term success would have been for Betfair to open up the Exchange portion to other bookmakers to use? Let them find the customers and charge their fees, whilst Betfair (Exchange) concentrated on running the exchange. Trying to do both has clearly led them down the wrong path.
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They fell into the classic trap of modern thinking that if you make 35 million one year and 35 million plus inflation the next year that something is wrong.
They captured the available market so rapidly that their lust to expand has deflected their attention from the fact they have a perfectly viable, stable, long term business. Sadly for them, they're trying to expand into areas that they aren't going to do very well in. Most "mug" punters (at least in the UK) are going to stick with household names to place their bets with, and those who are price sensitive but want a casual bet would find that Betfair is almost never the best price. Not sure how they're going to expand anything if that's the route they're interested in. They'd do better to cut out all the bloaty stuff they've added and concentrate on what they're good at. |
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My god - I agree with Lori again!
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Mr. Fine,
It is good to see that you keep on letting the world know that you haven't got a clue of how financial markets are run. There is no greater truth on earth that nobody has ever taken away a single penny from a financial market. Each and every gram of gold has always been reinvested for the good of mankind and the prosperity of the financial exchanges. And of course financial exchanges have all left the core business and expanded into new areas like virtual carrot trading and coffee-break arcade games. All bow before the oracle of the financial markets and praise his wisdom ... |
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Saint
You've got me/it wrong. I'm not putting the stock exchanges up as an example of how BF should be run. I'm just saying there is no comparison. |
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Oh and btw saint I give you permission to get up off your knees now. It's appreciated but it is a bit embarassing tbh.
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Once again Fine ... if you can't see why they are comparable ... you again show you haven't got a clue how financial markets work ... so let me kindly ask you to stop saying that they are not comparable ...
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10 years ago I thought that Betfair would eventually eradicate bookmaking as an industry of the face of the earth with its ethos of higher odds and an alround positive atitude towards successful gamblers.
Isn't it the ultimate irony of this situation that Ladblokes and co are still very much here with us, and to all intense and purposes Betfair are trying with every bone in their body to turn themselves into a bookmaker. |
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As I said in an earlier thread,
BF want the profit margins of a bookmaker with the P/E of a sports exchange. They will end up with the profit margins of an exchange with the P/E of a bookmaker. |
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What's the accepted P/E of a sports exchange ?.
There is no other publicly listed sports exchange to my knowledge. I think he must mean the P/E of a Google maybe ? If so, where does that insight come from ? Just because you can bet online with BF ?. Hardly I would have thought. You can do that with any normal bookie these days, can't you?. So where is the Google type comparison coming from.? |
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Oh maybe he means you can use a bot to bet automatically for you ?.
Wow that's really high tech and googlish. |