General Betting
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THE PREMIUM CHARGE MUST BE SCRAPPED
THE PREMIUM CHARGE MUST BE SCRAPPED
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JTG, well, BF are currently doing neither (carrying on w/ the pure exchange model or taking targeted steps to freeze certain big winners out of the exchange).
They are instead pricing a God-awful sportsbook off their own exchange. Outwith regulatory hurdles and simplifying a bit of the complexity for recreational backers, original BF was a great model. |
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Mr Anderson, 'guaranteed execution in illiquid markets' was just management flannel. They always wanted to supplant exchange markets w/ their own worse-price FO offerings.
I would love nothing more than to have £500 dollops on tomorrow's horse racing at 5.30pm, when Bet3.65 and others start pricing up. When does BF sportsbook go live with their racing odds for the day? 10am |
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frog, your view is my view to a T, though I suspect it is actually the view only of a winning price-taker on the horses.
Mark Davies has now said on his blog that he wd abolish the premium charge. 'It loses too much stakeholder goodwill', he says. He understands that big PC payers are stakeholders in BF's business and model. |
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^that's interesting that he's saying that. in the event of a successful takeover, he's one of the people you can imagine being brought back into the fold.
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Askari - I liked the bit where he said customers USED to refer to themselves as Betfairians. How things have changed.
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Viva, the bidders for betfair have stated they want to keep the same management team, so I can't see much changing if they are eventually successful. Mark davies said in his blog that he can't see him being brought back into the fold.
the current management are promoting the sportsbook heavily in their twitter account to the demise of the exchange, they hide the exchange on their website, they are effectively bringing the exchange forum to an end by not allowing any new accounts. I can't see much changing whatever transpires on the shareholder front. Hopefully exchanges will be around in years to come. But maybe their best days are drawing to a slow end. |
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that's assuming they turn out to be the only bidders and everyone's telling the truth though hazel.
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Hazel, I rather see exchanges becoming the default mode of price-finding for bm s and betting for price-sensitive bettors and the customer-facing bookie simply and cheaply taking prices off them and adding on a margin.
You pretty much have this already to an extent. In other words, an end to arbing, an end to bookie diversity and the emergence of a better-run monopoly than BF is at the moment. Whether the monopoly will be BF in any shape or form is another matter. |
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Had a look at the Sportsbook just now, first of all it was down, but when it came back online had a good laugh at the prices. If they can find enough mugs to bet at those prices I'd be amazed.
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I'm really surprised there hasn't been more fuss made about them promoting the sportsbook by quoting the exchange's best price record.
I'd say it's parasitism, but a successful parasite has an interest in the health of its host. |
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Johnny The Guesser 23 Apr 13 08:12 Joined: 15 Apr 02 | Topic/replies: 430 | Blogger: Johnny The Guesser's blog
Ask yourself - What is the optimum business model for an exchange? 1) A seething mass of recreational punters doing battle with each other, all getting better value than the high street, all taking turns winning and losing. All getting plenty of bang for their leisure buck and always coming back. 2) Or...as above with a few customers sucking regular chunks of money out the ecosystem. What steps would you take to move the business closer to the ideal model? If the ideal business model is an exchange, then the answer is you don't need to do anything. Market forces take care of it over time, and easy money disappears. If the Betfair betting exchange is still around a decade from now, it will be a hell of a lot more difficult to make money, just like it's more difficult today than it was 10 years ago for someone starting out. |
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frog2
Date Joined: 01 Feb 08 Add contact | Send message 23 Apr 13 07:55 Joined: 01 Feb 08 | Topic/replies: 398 | Blogger: frog2's blog The Apple cut is the max amount someone pays I assume. Betfair is totally different. Those who have made over £250k in 13 years pay a min of 40% to Betfair. But most people pay an awful lot more than that through normal commission and most people lose money. [...] No, I'd say it's an analogy as close to perfect as you'll find. Apple owns the platform / infrastructure that developers build on, and take a 30% cut. Betfair owns the platform /infrastructure that gamblers bet on, and take a 40%+ cut (for big winners). Apple retail customer = purchases of apps Betfair retail customer = a losing punter (at least after commission) All the rest of us that win on here are effectively on a profit share deal with Betfair once we reach a certain level of profit. That includes big winners not paying PC: it's 40% of winnings + a variable amount of commission (effectively). The PC discourages manual players a lot more than botters. A botter that sees an increase in charges halve net profits is far less likely to leave than a manual bettor in the same situation. It also discourages marginal activity. The 'hourly rate' in terms of expected profit on here varies massively based on liquidity and other factors. People have a cut-off point where they don't bother. That's why smaller side markets are poor, it only makes sense for pros to bot them. Manual market making for peanuts and paying massive fees is not worth it. That's why my long term focus is more on bots. |
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I still suggest it is slightly different. I write a book and publish it on kindle or sell through itunes I pay that fixed percentage and thats it. It can be no more than that.
But on Betfair we take a risk every single bet. A winning punter one week/month/year can be a losing one the next. The minimum rate is 40% of profits. The max rate is 100% of profits or adding to loss when things go wrong. I think this is what they never understand at Betfair. Some bean counter there obviously thought if you make money, even over an extended period, you would always make money. This just is not the case. I constantly update trading and betting models. They frequently start to lose and need changing. The markets get efficient to edges so new edges need to be found. Look at the financial markets. How many hedge funds/mutual funds win all the time? They might have a good run then it all goes wrong. Time and again this happens when their edge disappears. All the time they are paying the brokers to trade. If Betfair had played the long game this would have happened. All they needed to do was to tweek the markets that were obviously unfair. Its great that Mark Davies has come out and said he would scrap the charge. It would be interesting to know if the likes of Bert think the same. Of course, they may have been against it from the start but unable to say in public. |
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@ Frog2 - "I believe in perfect competition and market forces" - I read on Bert's twitter page a while back. It was not on this subject but it gives an idea on his thinking.
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What about the "market forces" operating when BF seeks to maximise profits?
Are you ok with those? |
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the problem with market forces is they stop working in monopoly conditions.
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A business increases its charges to the customers who need its services the most.
I can't understand the outrage - it's schoolboy economics. |
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as I read this thread it's more about what represents good business strategy than what's fair.
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Johnny The Guesser
Date Joined: 15 Apr 02 Add contact | Send message 24 Apr 13 13:41 Joined: 15 Apr 02 | Topic/replies: 432 | Blogger: Johnny The Guesser's blog A business increases its charges to the customers who need its services the most. I can't understand the outrage - it's schoolboy economics. Thats not strictly true is it? Position players in the big markets can move to quack or pinny depending on what markets they like. Those who what to play on markets Betfair has a monopoly on can either reduce their betting or have to stick with it. Either way revenue growth from the exchange has stopped. You seriously think that the current price strategy is revenue maximizing? |
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Johnny Guesser
WALOFS - 100% of nowt leaves a net profit of nowt imo  |
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Personally, I feel that exchange betting is maybe approaching saturation point. Most people who would open an account have probably got one. Expansion into different countries is proving ever more difficult.
The exchange concept is brilliant but the reality , in real world economics, a little more tricky especially when rate of growth is slowing. How can they extract a bigger slice of the cake without damaging the key USP of better prices? The shareholders demand not only steady profits but growing profits. The board answers only to them. How can this growth be achieved from an ever more slowly growing customer base? Revenues must be increased from the existing customer base. Hence, - higher margin products...arcade sportsbook etc? - increased charges. You can't charge the losers more so that only leaves the winners. One thing I would be sure of - If BF was 'invented' today, (and the directors had the benefit of hindsight), the pricing structure would not be the "dog's dinner" of complete nonsense that currently exists. |
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how can exchange betting have reached saturation point when:
a) people are still betting in large numbers at worse prices with less flexibility at traditional bookmakers? b) liquidity has dried up in some markets which we know are popular elsewhere and used to be popular here? c) the de facto monopoly exchange is essentially hiding itself from new customers behind a sportsbook? |
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Yep, the exchange isn't even close to saturation point. Imagine if Betfair had a television ad campaign with some education and facts instead of that Betfair front room* nonsense they had. They'd only just begun to highlight the fact this is where the best prices are when they decide to hide the exchange!
*What was that actually about? |
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Or getting someone like Vinnie Jones explaining to punters that they are mugs if they bet with other the firms because they only take bets from losers. Betfair should be proud that X thousand punters made money on here last year. It should be one of its biggest selling points.
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a)Price sensitive punters opened accounts ages ago. If price insensitive punters haven't opened an account by now, they probably never will, and certainly not in the numbers of the early years.
b)Multitude of reasons. BF may be happy with the now quiet markets. It all depends on the mix of customers previously playing in those markets. Remember BF have now decided that not all matched bets have the same value to the company...ie bets won by big winners who withdraw funds are not good for maximising long term profits. c)The exchange is obviously a low margin product.Cross selling to higher margin products is needed to drive profit growth. As such, the exchange concept as a model for producing ever increasing profits has to be in question. |
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frog - I'd rather use an exchange full of losers not winners.
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I think if Betfair had a commission system based on odds:
1.01-1.3 0.1% 1.31-4 0.2% 4.1-10 0.5% 10.5-50 1% 55-1000 2% They would destroy online betting for the rest of the bookies. At the moment bookies VERY regularly offer better odds than Betfair after commission (5%). If that wasn't the case, then no-one with a modicum of price sensitivity would use anything other than Betfair. Currently most pros and leisure punters alike have accounts elsewhere for the reason that for straight bets Betfair is only best price some of the time, and an operator like Pinnacle really kills it. Pinnacle would struggle massively competing against that. Even the British bookies routinely offer better value than Betfair on short odds faves for EPL matches. |
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That's % on backer's stake.
Not saying it's necessarily a good idea though. Liquidity might not shoot up enough to offset. A tenfold increase in liquidity is probably a reasonable assumption. |
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"then no-one with a modicum of price sensitivity would use anything other than Betfair", ok that's only 'nearly' true, bit still.
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Betfair take note:
It may seem tautological that a higher rake is always better – that charging more would be better than charging less. But in fact, the opposite may often be true. The most dangerous strategy for any platform company is to price too high – to charge a greedy and overzealous rake that could serve to undermine the whole point of having a platform in the first place. . Number one on the list of Peter Drucker’s Five Deadly Business Sins is “Worship of high profit margins and premium pricing.” As Drucker notes: “The worship of premium pricing always creates a market for the competitor. And high profit margins do not equal maximum profits. Total profit is profit margin multiplied by turnover. Maximum profit is thus obtained by the profit margin that yields the largest total profit flow…” Most venture capitalists encourage entrepreneurs to price-maximize, to extract as much rent as they possibly can from their ecosystem on each transaction. This is likely short-sighted. There is a big difference between what you can extract versus what you should extract. Water runs downhill. Valuable reading. http://abovethecrowd.com/2013/04/18/a-rake-too-far-optimal-platformpricing-strategy/ |
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Fundamentally the mgmt. and backers of BF do not believe in the pure exchange model any more.
We are whistling in the wind until a liquid exchange is owned by people who do (if ever). |
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Can't disagree with that askari
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A bit like the banks they totally fooked it up but there's nothing much we can do about it. Like the banks the damage is done and it will never get back to what it could have been, because it's like a marriage where one party has been unfaithful.
A free market works best with low taxation. It's not rocket science. Raising taxes again and again is like going back to the well to sell more of the family silver. Destroying itself from within. Fixed odds bookies are all laughing. The competitor they greatly feared because it offered something so much better, decided itself to stop being so much better. |
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We can do nothing about it!
P.S My housemate is cleaning the rooms for 400p/w. 1600p/m. Me (50%PC payer) to have the same amount, I have to win 3200 which is becoming more, more difficult. And when I was beginning here I thought that Im worth more than a cleaner? |
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A cleaner is much more important and contribues much more to soceity than you do if you are making a living from gambling in the UK or any other place where gambling winnings are tax free.
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But Im providing the entertainment, but feel bit weird these days- seeing how my lovely dying on my eyes...
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you could always become a cleaner.
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Eddie the eagle Date Joined: 01 Feb 04
Add contact | Send message When: 27 Apr 13 14:01 Joined: Date Joined: 01 Feb 04 | Topic/replies: 5,274 | Blogger: Eddie the eagle's blog A cleaner is much more important and contribues much more to soceity than you do if you are making a living from gambling in the UK or any other place where gambling winnings are tax free. My gambling winnings allow me to employ a cleaner, not sure how that affects the dynamic of usefulness to society?  |
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If you win enough to pay for a cleaner, I think it's fair to say that you are winning to much at a to fast rate, therebye draining the system for liquidity and you should pay something for that, maybe some kind of a tax or Charge ?
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Will have to do my own cleaning this week. Done by West Ham's goal in the last minute at City and Donny's last minute freak at Brentford. Unreal.
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