But the exchange model is only best price on multi-runner markets where punters' information costs are high.

It was designed by racing enthusiasts and by chance happens to have a near-unimprovable IR product.

How is it going to win market share from punters' 'own' bookies?

When Betfair came along, it outdid the competition on 3 fronts:

1) Fantastic value for fun bettors relative to traditional bookies
2) Ability to trade or bet repeatedly in various directions
3) In-play betting

Now the bookies have much lower margins and they're offering in-play, as well as lots of streams and a stable site, while Betfair have increased charges. So for the average punter who places an occasional £10 or £20 bet, Betfair has gone from blowing the rest of the bookie world out of the water, to being only slightly better than UK bookies, and worse than 'the rest of the bookie world combined'.

The 3 points that made Betfair special, have been reduced to:

1) Better than average value relative to traditional bookies
2) Ability to trade is still there as a unique feature
3) Nothing special about this anymore.

So literally the only stand out point is that you can trade here. It's still the case that anyone wanting to have a few fun bets here and there, is still better off with Betfair than any single UK bookie, but people willing to shop around for the best odds, will not find Betfair to be best price most of the time on 5% commission.


Betfair wins hands down in a competition with any UK bookie on price, but I think it should beat the whole bunch of them together.

Just think how good the liquidity on here would be if only bookies that messed up their pricing offered better value than Betfair.

Apparently, one of the reasons Lads bought the purple exchange is that they found a substantial portion of their online customers also had a Betfair account. These people are shrewd enough to understand Betfair often offers better value, and they can be bothered with accounts with different bookmakers.

It seems obvious to me, that with lower commission, having a lads account would be completely pointless for these people, and they would stop using them, as would everyone doing the same thing with all the other bookies.

Betfair was great because it was fun, new and it was the punters' champion that stuck one up the then "whingeing" bookie.  The more the bookies the whinged the better it was for Betfair, it gave them publicity and advertised their better value product.

After a while it stopped being new, it stopped being fun, it stopped being the punters champion with the PC and the bookies stopped whingeing.

Really Tom ??

Try getting 10k on any horse at York today and you will get on ...... but you will be backing a large chunk at 1/100 about a 3-1 shot

THEY NEED TO GET INTO THE U S A SO THEY CAN BET ON THE RODEO MARKETS,

Tom
Date Joined:     26 May 01
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17 May 13 09:18 Joined: 26 May 01 | Topic/replies: 24 | Blogger: Tom's blog
The Investor,

You missed a key advantage that Betfair has. That is in terms of size of bet you can get on in the bigger markets. You can easily get £10k+ on Betfair on most events. Try getting more than £1k on with bookies whether in the shops or online. Obviously it depends on prices but they are simply not interested in taking bets. Pinnacle are the exception to the rule.

Yeah that's right, my points were mainly relevant for the fun bettor, rather than people making a profit, and they will generally be allowed to bet large amounts with (some of) the bookies as well.

Dstyle, thank you; you have to take what I say w/ a pinch of salt as I am not an insider but actually a hobbyist compared to full-time bettors on here. 20% of my guesses will be off.

The gross amount lost for the last year of records by the UK consumer to the remote industry is estimated at 2.04 billion., according to the Gambling Commission Industry Facts published last December. We know that bf captured 346 mill. of this, so some 17%. The 356 mill. figure is for 'core' revenue, comprising the exchange, sportsbook, games and poker.

Meanwhile the amount lost on sports betting in betting shops was 1.4 billion (and on FOBTs and games 1.6 billion). 9.1 billion was wagered on sports, with horses the most popular sport with 5.15 billion bet. Football had just over a billion. The horses resulted in a profit for the layers of 668 mill. at a margin of about 13%.

The big trend in sports betting for the estates is the erosion of margins on the horses due to the chains losing their pricing power to bf; this has led to an erosion of revenues (down 13% over the last two years). It is a rational response for the High St. to seek to move their recreational bettors onto the FOBTs.

It is clear that the remote handle just for UK bettors & gamers is much larger than the amount wagered in shops on sports. We don't know how much larger without having a number for the remote gaming profit margin. It's likely, though, to be less than the 13% margin the offices make on horse racing and 23% on football. It makes complete sense for bf to have a games and poker offering, given the share of gross yield (punter losses) surely contributed by these forms of gambling. I've always thought their games obtrusive and insensitively marketed (I still do) but looking at the numbers, there's no way that they can't have it and invest in it.

I'm not sure that there's much headroom on sports betting for bf to British online bettors. The two areas for growth will be 1) licensed European countries w/ previously limited or no betting options; the key product here will be IR football, and 2) arguably, bettors who do not currently bet online.

The other growth area will be mobile, in that some people who do not bet on their computer may come to bet on their phone. The reason bf is marketing 'cashout' is that its greatest danger is that these people try them as a novelty, quickly lose and go stale. I wd guess that these new bettors include a lot of the people wagering 9.1 billion in shops. Bf has to be a lot more clever in targeting them, for instance in racing channel adverts, sponsorships and other content that can penetrate into the office environment.