FAFH, I was a mug customer once upon a time.  I'm now a 50% PC payer.  It's perfectly feasible to assume if the site back then was set up how it is now that I'd never have even ventured onto the exchange.

It's a little naive to think people who are £2 punters are stupid.  They be very intelligent, successful people who don't realise it's rather easy to make very good money on here.  Like I did, they probably assume the markets here are very efficiently priced.

viva el presidente!

essentially the logic seems to be: we've built a known and popular brand through doing one thing really well. now let's take advantage of that brand recognition to make money by launching a new business doing the opposite.

just can't see that working long term.

This is what I believe.  I also believe it will work short-term and that's all a CEO cares about.  Get the share price up and then move on.

Purple already run a type of fixed odds platform called 1bet - which is just a fixed odds price derived from the exchange, and presumably fed back into the exchange. If lads could somehow offer this to customers in their shops it could do wonders for their exchange. No need for odds compilers.

john, their liquidity is so poor that a shop version of exchange prices (the exchange price less a cut) wdn't be workable for them.

This wd also happen to bf if they tried taking prices from their price-setters on the exchange in virtually any sport bar football.

Why would Lads offer exchange prices to shop customers when they already service those customers via their existing bad prices?

BF's new sportsbook offering doesn't give exchange prices, it gives BF's own version of worst price which they then get to keep all themselves.

TheVis, lads cd enter into a market share war w/ their high st. rivals, going better prices from their exchange. It wd be a massive change--it wd change the whole industry--but it's not inconceivable.

The trend is going to be towards more web-literate customers simply as the old price-insensitive punters die out and their sons, who grew up with the web, start betting. Having reasonable exchange-led prices in shop might be a natural evolution.

Believe me, everything bf has done with the fixed odds / exchange siloes has been in response to Lads' purchase of purple. They may have always intended the parallel sites and have moved on w/ implementation more quickly.

I can't see that lads / daq can do anything better, other than leveraging in-shop custom. Where bf have gone wrong is in not carrying through their original 'winners welcome' ethos to fixed odds, through more generous limits, sharper lines and trusting to markets to price-find so that they are always getting an adequate cut.

Liquidity is all that bf needs--and they don't see it; they care about completely the wrong thing.

i think the share price will suffer when the year end figures come through. Revenue must be massively down during the last 12 months, based on mine and other people i knows useage of betfair

The product of 'Exchange Betting' is the future IMO. BF are in a position to be dominant for years to come, yet they either can't see that or don't know how to market the exchange effectively.

Yes, exchange betting can appear complicated to an average punter that just wants to get his 20 quid on before he goes to work, but that same punter would be intrigued to learn of the success stories of some of BF punters, he would be inspired by them. If BF advertised some of those success stories I believe that would drum up a lot of potential interest, just look at the principle of how the national lottery works.

The fact is exchange betting is the best chance a punter has to make a life changing sum of money, or on a more modest scale be able to give up the 9-5 and make a living from home using the simple tools of a computer and an internet connection. BF don't appear to promote that point at all.

some of the golf prices this week were good and they were paying 6 places in pebble beach. dont know what other sports are like in terms of pricing.

I think part of the problem is that Betfair started to think it was bigger than it was.  It's expectations have far exceeded the realities and pressure to meet those expectations has led to bad decisions and it can't shift itself away from unrealistic expectations  If profits on the exchange had increased in line with liquidity over the last few years I'm sure this company would've done better?  Surely there should be economies of scale rather than diseconomies of scale as the business got bigger?  So in reality profits should have gone up over and above the rise in liquidity.  A simpler, cleaner, clearer brand in the process.  Maybe they've been unlucky with the timing of the recession and regulations and they were gambles that didn't pay off due in part to bad fortune.

Their recent adverts have been good imo.  In their simplest form they hit at the two big USPs of Betfair, better prices and "Cash Out", which simplifies what trading is and that only an exchange can actually do effectively.  The only thing I'd say against the adds is they've lacked humour.

Now they can't run the better prices advertisement because new customers are automatically sent straight to a separate fixed odds site.  This is confusing and misleading.  It's not only confusing; as in new customers will be not understand what's going on, but it also confuses the brand.  Everyone who properly understands the exchange betting market knows the exchange niche of the betting market is a natural monopoly, and therefore very difficult indeed to compete against, but these moves, which confuse people as to what Betfair actually is, open the door a little to a rival.

I agree with askari that their sportsbook should have been set up to blend in with the brand of the exchange.  That meant a hit on margins and prices, that are generally better than other firms so that they can be known across both sectors as the firm that gives better prices, a competitive advantage that the exchange naturally gives them.

askari also says they are envious at how well 365 are doing effectively using "their" tissue.  Well it's not their tissue it's their customer's tissue.  Betfair merely facilitate the opportunity for their customers to make the tissue.  Besides one of the reasons 365 is so successful is they are not just a parasitic bookie, although everyone who bets successfully is a parasite to some extent so it's easy to be hypocritical.  They offer odds on a very wide range of sports, some of which they do alone.  And it's partly because they do this, price competitively and advertise well, that they are so successful.  It's the completely vanila odds outfits who bet only on a handful of markets and sports that have been going belly up, because they offer nothing extra.  They probably don't make any money on many of their minority offerings, but they offer it because it's the whole package that brings punters in.

And therein lies a problem that Betfair might be suffering.  It's losing liquidity drastically on a wide variety of the less busy markets.  These markets don't bring in much commission but they form part of the product offering.  These markets are a problem to provide liquidity for in any event.  If a bookie can't do them and add profit whilst it bars winning business, then it's harder for someone on here who has to pay commission and can't bar winning business.  The super premium charge just exacerbates that problem.  And this is where I agree with askari too, addressing the provision of liquidity is very important, but seems to be low priority.  Does the Betfair fixed odds site address this issue either?  No, because all it does is basically copy whats on the site already at a higher margin.  To an extent I can see why.  Unless you have the volume of turnover that bigger firms have, you are more likely to get picked off on the minority stuff.  Although the Betfair exchange has the customers I doubt many of them ever look at the fixed odds site more than once or twice.

Sorry to clarify, having just read further, it looks like Hills only offer this facility right now on footie.

What will lads do with the purple exchange? Surely they will lose the liquidity provided by large rival bookies hedging there? Or maybe they will still prefer it over Betfair!

If the Betfair sportsbook becomes popular enough to out earn the exchange (very unlikely but possible), Betfair will be in a very odd position. It will be a bit like a large oil company that has a way of producing cheaper, higher quality fuel. If they go ahead, they would rapidly gain market share but see margins deteriorate as competitors copy them. It would eventually be like the ice-cube selling business (super competitive with much thinner margins). Betfair has the network effect benefits of running the largest exchange though. If they willingly give that up because running a traditional bookie is more profitable, someone else will take over. The exchange model will not go away, and is not 'flawed' just because an exchange makes less than a traditional bookie.

Can running a successful betting exchange really be nothing more than the stepping stone to running a successful coffin-based bookie?
I would say the answer is a resounding no. Legislation willing (think Asia/USA), exchanges will come to dominate the betting landscape.

some really good analysis in this thread, imo.

TheInvestor, their fixed-odds will only become popular if either 1) it has sharp lines / good prices, or 2) it has high limits or does not ban winners.

Bf can only do either or both of these two things if the underlying exchange market is liquid.

If it's tumbleweed, as virtually everything I want to bet on is tumbleweed, they will have to sit far away from the price (or have low limits). The effect will be to encourage spoofing, so that the people who want a bet get a fat price when live shows (on the horses) open.

There is an inverse relationship between exchange liquidity and the existence of fixed odds which I don't think the bf management has quite understood.

Although Cash Out has been generally criticised by regulars on these forums, I think it has been a stunning success in attracting the casual punter as it simplifies the benefits of the exchange.

The move to fixed odds as default seems to go completely against this campaign, and weakens/confuses the brand.

I expect the helpdesk gets lots of calls with people trying to cash out their fixed odds bets

A betting company either has to pay traders to price up a book, and offer big overrounds, or they run an exchange, where they don't have to pay the wages of traders, but winning punters have a percentage share of the spoils.  Sure, the other bookmakers benefitted from having a tissue price on Betfair, but whilst side markets have stagnated, and dwindled, what happens if main markets dwindle too?  You can't have a Betfair where Betfair's fixed odds benefits from using the tissue price, whilst not having any reward for either traders pricing it up, or winning gamblers pricing it up.

Question - Watford v Crystal Palace is currently priced on the exchange at 2.14/2.16 Watford Win, 3.75/3.8 Crystal Palace Win, 3.7/3.75 The Draw.  The Betfair Fixed Odds price is 2.2/3.25/3.25.  What is it that gives Betfair the confidence to lay at a bigger price than the exchange, at 2.2, which I believe is commission free (?).  Is a big football winner feeding in lays of Watford into the main exchange market slowly, and the fixed odds price is trying to follow in and divert bets from the exchange market into the fixed odds market?  If a price higher than the market is being put up deliberately because they have seen which way big winners are betting, then it is not just Premium Charge which winners will have to face, it is that a lot less of their bets will be matched as Betfair's own compilers are diverting bets into the fixed odds betting book.

Am I being dense or is it impossible to see your fixed odds betting history?

Go to betting history in my account and select fixed odds

ballabriggs - v. interesting

currently you can get BETTER odds on the sportsbook site than the exchange on Spurs (1.7 v 1.68) and Norwich (2.4 v 2.34)

does make you wonder what exactly betfair are playing at