General Betting
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From his blog:
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http://www.markxdavies.com/2013/10/21/the-brakes-on-innovation/
The brakes on innovation
October 21, 2013 | Filed under: Betting industry, Europe, Gambling, Regulation and tagged with: effect of gambling taxes, gambling industry regulation, gambling taxes, impact of Place of Consumption Tax, regulation of the betting industry
I was in Sweden recently to talk to the regulators there about how the gambling industry has evolved over the last decade. They were starting a two-day conference looking at the future, and they asked me if I would give them some context to set them off.
So off I went, to Stockholm, having spent a couple of days reminding myself of some of my stranger experiences in the industry – accusations that I was a front for Al-Qaeda to launder money, visits from Federal policemen tipped off that I was running an illegal gambling den; that sort of thing – and spent an hour talking through the last ten years’ developments. And odd though it is to admit it, I realised for the first time quite how big an impact regulation had had on the shape of the market.
I know that on the face of it, it’s obvious: it’s hardly revelatory to explain that today’s operators need 28 licences to offer their wares across Europe (assuming Member States agreed to grant them), where a decade ago (and until much more recently) the prevailing wisdom had been that European law required them to have only one.
But that isn’t what I meant. What struck me was that at a deeper level, regulation had had a far greater on product. Although it’s undeniable that there is a lot more choice for the gambling consumer today than there used to be, it’s also true that the core product is much closer to what it always was than it would be if regulation hadn’t hindered progress.
You’re skeptical? Well consider this: almost exactly ten years ago, people on all sides of the gambling industry were locked in an existential battle over betting exchanges. Why was it existential? Because Betfair felt that it was going to be legislated out of business, and the bookies thought they were history unless they (Betfair) were. There was a genuine belief that, although it might take a generation, every chance existed that one day, anyone who punted on sport would be betting peer-to-peer.
Today, there’s more chance of Ed Balls defecting to the Tories than there is of that, and the reason is wrapped up as much in regulation as it is in any failure to simplify the product or to sell it more effectively to a wider audience.
Quite simply, all over Europe (and further afield), attempts to prevent licensing of the exchange made it difficult to achieve international growth; as a result, when take-up of the product in the UK started to slow down, the company reacted in the only way it could in order to maintain the trajectory it had established: it broadened its product offering along conventional lines. Or, put differently, it started to become more like everyone else.
In other words, regulation acted as a brake on innovation, which might in specific instances (such as this one) please some individuals, but in general terms is rarely, if ever, a good thing. Product which is not driven by customer demand – the market’s evolution by means of consumer selection, as Darwin might have had it – is far superior than one dictated by statute.
Or, indeed, by tax. It is hard to miss the fact that most innovation in the gambling industry has been the result of the larger players being driven onwards by small, not to say start-up, companies based (with exceptions you can count on one hand) away from onerous gambling tax – a position that is, of course, about to change. In ten years, we will doubtless look back and see what impact that had.
The article above appears in the latest edition of Gaming Intelligence Quarterly as the content of my “And another thing…” column.
.
http://www.markxdavies.com/2013/10/21/the-brakes-on-innovation/
The brakes on innovation
October 21, 2013 | Filed under: Betting industry, Europe, Gambling, Regulation and tagged with: effect of gambling taxes, gambling industry regulation, gambling taxes, impact of Place of Consumption Tax, regulation of the betting industry
I was in Sweden recently to talk to the regulators there about how the gambling industry has evolved over the last decade. They were starting a two-day conference looking at the future, and they asked me if I would give them some context to set them off.
So off I went, to Stockholm, having spent a couple of days reminding myself of some of my stranger experiences in the industry – accusations that I was a front for Al-Qaeda to launder money, visits from Federal policemen tipped off that I was running an illegal gambling den; that sort of thing – and spent an hour talking through the last ten years’ developments. And odd though it is to admit it, I realised for the first time quite how big an impact regulation had had on the shape of the market.
I know that on the face of it, it’s obvious: it’s hardly revelatory to explain that today’s operators need 28 licences to offer their wares across Europe (assuming Member States agreed to grant them), where a decade ago (and until much more recently) the prevailing wisdom had been that European law required them to have only one.
But that isn’t what I meant. What struck me was that at a deeper level, regulation had had a far greater on product. Although it’s undeniable that there is a lot more choice for the gambling consumer today than there used to be, it’s also true that the core product is much closer to what it always was than it would be if regulation hadn’t hindered progress.
You’re skeptical? Well consider this: almost exactly ten years ago, people on all sides of the gambling industry were locked in an existential battle over betting exchanges. Why was it existential? Because Betfair felt that it was going to be legislated out of business, and the bookies thought they were history unless they (Betfair) were. There was a genuine belief that, although it might take a generation, every chance existed that one day, anyone who punted on sport would be betting peer-to-peer.
Today, there’s more chance of Ed Balls defecting to the Tories than there is of that, and the reason is wrapped up as much in regulation as it is in any failure to simplify the product or to sell it more effectively to a wider audience.
Quite simply, all over Europe (and further afield), attempts to prevent licensing of the exchange made it difficult to achieve international growth; as a result, when take-up of the product in the UK started to slow down, the company reacted in the only way it could in order to maintain the trajectory it had established: it broadened its product offering along conventional lines. Or, put differently, it started to become more like everyone else.
In other words, regulation acted as a brake on innovation, which might in specific instances (such as this one) please some individuals, but in general terms is rarely, if ever, a good thing. Product which is not driven by customer demand – the market’s evolution by means of consumer selection, as Darwin might have had it – is far superior than one dictated by statute.
Or, indeed, by tax. It is hard to miss the fact that most innovation in the gambling industry has been the result of the larger players being driven onwards by small, not to say start-up, companies based (with exceptions you can count on one hand) away from onerous gambling tax – a position that is, of course, about to change. In ten years, we will doubtless look back and see what impact that had.
The article above appears in the latest edition of Gaming Intelligence Quarterly as the content of my “And another thing…” column.
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Replies: 31
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True. Gambling is one of the most poisonous industries in the whole world, be it operators, regulators or politicians. All want to abuse the market and it's the gambler who suffers.
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Mark was a massive loss to BEtfair - wish they could ask him back in some guise.
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Don't agree with the piece, companies like 888 were making huge profits, and it made sense that if people were going to bet on pretty dire nasty games, then BF might as well have them too. They were easy things to mimic, which made money for BF. The homogeneity of BF's overall offering was a result of following the money, not responding to regulation. Also, even in a regulatory framework, there is still room for innovation, and it is hard to think where and what BF have done that is genuinely innovative, in the last 11 years since starting out.
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Don't agree balla. The games on Betfair make a very small percentage of its profits, clutter up the interface and downgrade and confuse the person to person brand.
I think he is saying they had to bring in the rubbish because they couldn't offer anything abroad exchangewise and thus could not grow. |
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No probs. To be fair, cash-out is a BF innovation (?), so they at least did do something innovative. Are there any more positive examples?
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I think the blog post is spot on, although I would point out that regulation cannot be used as an excuse for new UK facing customers having the exchange hidden from them in favour of the sportsbook. You'd think, since its the exchange price that is advertised on Oddschecker, that it would send you through to the exchange price. You'd think wrong.
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I recall they made a bet on a non-runner a void bet.
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I suspect even Hitler made some good decisions
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Betfair & flutter got lucky when they started up. Bookmakers were going offshore and there was talk of a gross profits tax so they were allowed to get on with it despite the fact onshore bookmakers were still paying a turnover levy and tax. How unlike when the first internet exchange, Interbet, arrived years earlier. They were told they had to pay the standard (was it 7% tax + 1% levy) on turnover. I don't know if this was the Labour governments way of stuffing it up the bookmakers but it was amazing exchanges ever got off the ground. The OFT even issued a warning that it wouldn't tolerate a return to turnover levy as that would be anti-exchange. Whatever the reasons, other countries were never going to roll over and see the biggest part of their gambling income being taken away by some foreign internet firm. The only way exchange betting will take over the world is if the governments themselves are the middlemen. Come to think of it, that "cut out the middleman" advert was another thing betfair got right.
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We'll end up with the most successful gambling operations being illegal and funded by bitcoins, if we haven't already.
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why's that Clydebank?
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If regulators screw bookies and gamblers it leads to underground gambling. It wouldn't surprise me one bit if the richest bookies in the world are those that are tapping in to China and India. Technology will keep on moving forward and if the bitcoin really establishes itself that will help underground gambling even more. Illegal gambling is possibly helping the bitcoin as much as anything
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ballabriggs • October 22, 2013 3:51 PM BST
No probs. To be fair, cash-out is a BF innovation (?), so they at least did do something innovative. Are there any more positive examples? Cash-out isn't an innovation. It's just an automated, lazier way of using the exchange that its customers have (probably) always been taking advantage of. |
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ann witt 22 Oct 13 16:21 Joined: 10 Jan 02 | Topic/replies: 112 | Blogger: ann witt's blog
Betfair & flutter got lucky when they started up. Bookmakers were going offshore and there was talk of a gross profits tax so they were allowed to get on with it despite the fact onshore bookmakers were still paying a turnover levy and tax. How unlike when the first internet exchange, Interbet, arrived years earlier. They were told they had to pay the standard (was it 7% tax + 1% levy) on turnover. I don't know if this was the Labour governments way of stuffing it up the bookmakers but it was amazing exchanges ever got off the ground. The OFT even issued a warning that it wouldn't tolerate a return to turnover levy as that would be anti-exchange. Whatever the reasons, other countries were never going to roll over and see the biggest part of their gambling income being taken away by some foreign internet firm. The only way exchange betting will take over the world is if the governments themselves are the middlemen. Come to think of it, that "cut out the middleman" advert was another thing betfair got right. It seems many countries simply don't want an exchange. In the Netherlands for example, there are no betting shops. You can have a bet on something called the 'Toto' that I believe has something like 20% margin built in, and lets you bet a maximum of 22 Euro (or something along those lines). They have some limited internet betting, but the way it's structured is (near) monopolistic with ridiculous margins. A bit like the lottery is run in the UK and other countries. |
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Such countries need to be educated Investor. Will we ever have a good example of exchange betting for them though?
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As this patent
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=7742972.PN.&OS=PN/7742972&RS=PN/7742972 suggests there's no reason why tote betting cannot be incorporated into exchange betting (or vice versa). The tote bets would just become final auction sp bets and if these were not placed via the exchange's internet site (i.e. they were placed at outlets such as course booths or the equivalent of betfred's tote direct) those agents would have to take their extra costs directly from the punters. |
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http://www.youtube.com/watch?v=t0f6eKSZg5k
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A well run exchange more than has a place. A poorly run one should be hounded. BF isn't quite either at the mo.
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BF is to exchange betting what chemo/radiotherapy is to a cancer cure.
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Feck, can you start a thread and summarise your main points on it? I am struggling to get a handle on your ideas that are popping up in many different places the last few weeks.
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Listening to the radio this evening I thought I heard that they changed the law regarding gambling advertising in 2007? That certainly seems to make sense as I don't really recall the proliferation of adverts before then. Maybe it's just coincidence, maybe it's not.
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frog, I am not Feck and see no point in doing a Feck N. Summary. I think there's maybe 3 or 4 posters on this forum who'd even consider the feckfair alternative. The rest require that betfair remain a marks for nomarks franchise scheme. The whole exchange scene is depressing. Betfair about to poison the USA, Badblokes hoping to kick start a free lunch for parasites exchange all over again while poaching information and not an innovation in sight.
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Another factor that might be behind the demise of the exchange is the increasing use of mobile betting.
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Another factor behind the demise maybe the fall in literacy and numeracy standards over the last 10 years
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So
more advertising = easier to push bad value products and brands more mobile betting = exchange betting not so appealing on a small screen fall in numeracy standards = people too uneducated to understand the exchange and also what is better value |
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There are strong and direct parallels between the BF ecosystem and biological ecosystems. Populations expanding rapidly always tend to overshoot, before retreating back to a more balanced level.
Clydebank29, is the exchange also harder to use on ipads and tablet computers? Perhaps that also doesn't help. |
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ballabriggs, I can't speak for the tablet since I don't have one. I have used an ipad on rare occasions and have found it annoying although that might be as much down to internet connection issues.
I think with anything, the more complicated the site is and the more navigation issues there are, the more relatively off putting it gets the smaller down in screen size you go. Plus if you are "on the go" you are likely to have less patience than if you are sitting at home on your computer. |
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6 hours to get £200 quid on early horses using the api. You'd be looking for time off for good behaviour betting manually on a mobile.
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What were you trying to take out?
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It's more a reference to my average early betting experiences when I experimented with the API last flat season frog. We're maybe talking about a 7.0 shot on average.
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