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It just shows how far this forum has gone from back in the early 2000s that the Chief Executive of Paddy Power Betfair can resign 3 days ago and yet there is no mention of it.
When he came to power in 2012 the exchange was in free fall with the second tier of the Premium Charge being put in place in 2011.
Since then the only sport that has grown on the exchange is cricket (in terms of matched volumes).
All management time was spent on developing the Betfair Sportsbook that saw some decent excellent growth from nothing. The exchange - the concept that was designed to kill the bookmaking industry - was ignored.
The latest results showed poor revenue growth. The reason.. bad sports results!
Well if management had spent time taking the exchange concept to the next generation and killed off the bookies whilst they were down 'bad' sports results would not be an issue. The whole point of Betfair was to be a risk free operator taking a cut from person to person punters.
Betfair has a chance to attack the culture of online bookmakers: The shameless factoring of winning punters, offering the big bonuses and best odds guaranteed to losing punters, the pushing of casino games and offers of silly odds to a maximum bet of £20.
It will be interesting to see what Peter Jackson does now the low hanging fruit of launching a sportsbook using Betfair's strong brand name has been eaten.
When he came to power in 2012 the exchange was in free fall with the second tier of the Premium Charge being put in place in 2011.
Since then the only sport that has grown on the exchange is cricket (in terms of matched volumes).
All management time was spent on developing the Betfair Sportsbook that saw some decent excellent growth from nothing. The exchange - the concept that was designed to kill the bookmaking industry - was ignored.
The latest results showed poor revenue growth. The reason.. bad sports results!
Well if management had spent time taking the exchange concept to the next generation and killed off the bookies whilst they were down 'bad' sports results would not be an issue. The whole point of Betfair was to be a risk free operator taking a cut from person to person punters.
Betfair has a chance to attack the culture of online bookmakers: The shameless factoring of winning punters, offering the big bonuses and best odds guaranteed to losing punters, the pushing of casino games and offers of silly odds to a maximum bet of £20.
It will be interesting to see what Peter Jackson does now the low hanging fruit of launching a sportsbook using Betfair's strong brand name has been eaten.
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I was going to post the report of him leaving when I saw it the other day frog, but didn’t bother because as you mentioned, the forum is a poor imitation of its former self nowadays.
I’m not sure what they can/will do to bolster growth on the exchange. Getting rid of PC would massively improve liquidity but I guess they wouldn’t want to do that at the cost of the sportsbook revenue.
I’m surprised that after being the initial disruptor in this field that a stronger competitor hasn’t arrived – If one hasn’t arrived by now though, it seems like it never will. I have no idea what is happening at Purple – their site has gone from poor to irrelevant with their tumbleweed markets.
Things could have been so different if the Richard Koch/CVC takeover bid had been successful…….
I’m not sure what they can/will do to bolster growth on the exchange. Getting rid of PC would massively improve liquidity but I guess they wouldn’t want to do that at the cost of the sportsbook revenue.
I’m surprised that after being the initial disruptor in this field that a stronger competitor hasn’t arrived – If one hasn’t arrived by now though, it seems like it never will. I have no idea what is happening at Purple – their site has gone from poor to irrelevant with their tumbleweed markets.
Things could have been so different if the Richard Koch/CVC takeover bid had been successful…….
The exchange is finished. The little people were inexplicably allowed a few years of success and then THEY took back control.
Exchange is in bankers, corporation hands. We cant expect from new CEO to be more exchange friendly as corporations are profit driven. Changing the model from sportsbook to exchange is easier than from sportsbook to exchange(how to tell the shareholders that profit will decrease in order to get customers back?).
Thats betfair problem. I dont agree that betfair dont have a strong competition.
2% commission exchange run with no adds, no arcade - doubled the profits second year in a row! Hang on, did betfair say that running exchange on 5% commission is not profitable? What about making 25m net per being on 2% commission?
Bye Breon, we will never miss you.
Thats betfair problem. I dont agree that betfair dont have a strong competition.
2% commission exchange run with no adds, no arcade - doubled the profits second year in a row! Hang on, did betfair say that running exchange on 5% commission is not profitable? What about making 25m net per being on 2% commission?
Bye Breon, we will never miss you.
I concur with The Fear. Betfair has punctured the exchange by pushing all new customers on to the Sportsbook. A slow painful death for exchange betting on most sports will continue. How much of the amounts trading are actaully betfairs own robots skimming off free money? The model is now unsustainable. I won't be doing this in 5 years time and I suspect many other long standing exchange users won't either.
Dan White
August 13 2017 6:00 PM
The sudden departure of chief executive Breon Corcoran and the weakness in the share price since the Betfair merger two years ago raise questions about giant quoted bookmaker Paddy Power Betfair.
Paddy Power Betfair (PPB) was created by the 2015 merger of Irish bookie Paddy Power and UK betting exchange Betfair. At the time of the announcement in September of that year Paddy Power shareholders, who received 52pc of the shares in the enlarged company, were promised that the "greater scale" resulting from the merger would lead "to higher returns on investment across existing and new markets".
The merged company would deliver "significant cost synergies" and be "highly cash generative and [have] a strong balance sheet", according to the announcement.
So how have things turned out 24 months later? The Paddy Power Betfair share price soared in the run-up to and immediate aftermath of the merger announcement. From just over £80 as Paddy Power in late August 2015 - most trading in PPB shares takes place in London - it hit over £107 by the beginning of February 2016.
It was too good to last. Since then the PPB share price has come back down to earth with a bump and was trading at about £72.50 in London last week. Its share price has fallen by 21pc over the past year.
While the share prices of other quoted bookies have also fallen, with William Hill down 21pc and Ladbroke Coral down 18pc, it is the weakness of the PPB share price that has attracted the most attention from investors. This is because it is much bigger than either of its two main quoted competitors.
Even after the recent share price falls PPB still has a market value of £6.1bn compared to William Hill's £2.2bn and Ladbroke Coral's £2.3bn. When you are the biggest kid on the block your problems inevitably attract more attention.
Is the fall in the PPB share price and Corcoran's sudden departure an indication that the merger has failed to deliver the promised returns? Speaking to the Sunday Independent this week, the outgoing boss said he thought the integration had gone "pretty well".
"We've covered an awful lot of ground very quickly. We achieved the synergy targets very quickly, the management team is stable and motivated, we've introduced kind a new different culture and set of values for the firm that were chosen by the employees as opposed to imposed top down."
One of the major challenges has been integrating the Paddy Power and Betfair technology platforms. Analysts say this has slowed down the company's ability to roll out new, innovative digital products. According to Corcoran the work is almost done.
The company's financial performance since the merger doesn't seem to point to failure either.
Total revenue jumped 18pc to £1.55bn in 2016 while underlying operating (pre-interest) profit and earnings per share were both up by 44pc to £330m and 331p respectively (PPB reports its results in sterling).
This strong financial performance has continued into 2017. In its half-year results, which were released last week, PPB announced that total revenue had risen by a further 9pc to £827m in the six months to the end of June while operating profit was up 22pc to £180m and earnings per share increased by 23pc to 181p.
So why, with the Betfair merger seemingly delivering the goods, has Corcoran now decided to head off in search of pastures new? The departing chief executive has been with PPB and its predecessor companies man and boy. The son of John Corcoran, one of the founders of Paddy Power, he first joined Paddy Power in 2001 as head of its non-retail (online) business. He became a director in 2004 and chief operations officer in 2010.
However, in November 2011 he surprised many people when he left Paddy Power to become Betfair chief executive. The betting exchange had been going through a torrid time, with its share price down by over 40pc in the year following its 2010 flotation.
Corcoran is generally reckoned to have done a very good job at Betfair, with the value of the company jumping from just £750m at the time of his appointment to £2.4bn at the time of the Paddy Power merger less than four years later.
Maybe too good. Under the terms of the merger not alone did Corcoran become PPB chief executive, but Betfair shareholders ended up with a 48pc stake in the merged company. This was despite the fact that while Paddy Power had revenue of £746m and earnings before interest, depreciation, taxation and amortisation (Ebitda) of £173m in the 12 months to the end of June 2015, Betfair's revenue was just £477m and its Ebitda £120m for the same period.
In other words, Paddy Power agreed a merger with Betfair on terms of virtual equality despite the UK company's Ebitda being less than 70pc of Paddy Power's. Based on the comparative financial performance of the two companies prior to the merger a 60:40 split might have been more appropriate.
With the PPB share price now lower than it was before the merger announcement, former Paddy Power shareholders could be forgiven for suffering from buyer's remorse.
While Corcoran's departure came as a complete surprise to outsiders, maybe it shouldn't have. With the benefit of hindsight there may have been a number of straws in the wind. In March 2016, just weeks after the merger had been consummated, Corcoran sold 43,500 PPB shares, about a quarter of his total shareholding, for £4.16m.
Corcoran still owns just under 140,000 PPB shares, worth over £10m at the current share price. He is also listed as having options over a further 431,700 shares at strike prices of between £18 and £87. Even after the recent falls in the PPB share price, these options are collectively in the money to the tune of about £17m.
However, 104,000 of these options are conditional on his continued employment by the company so the actual value of his options now that he has announced his intention to leave is probably considerably less.
"There's never a good time to leave a great business," Corcoran said during the week.
"I've been working in this industry longer than most of us will ever be married. I do think it's an opportune time for the business given that the platform work is in its final stages and that, to all intents and purposes, we feel in the business that the merger - other than the tech work - has been done. I've committed to the board that I'll oversee the final part of this [the merger], which is the delivery of the tech project.
"I'm excited about taking on a new challenge in a different space."
While Corcoran can hardly be faulted for wanting to do something different after nearly 17 years as a bookie, he does leave PPB at a time when the company and the betting sector as a whole is facing into stronger regulatory headwinds.
Gambling is a bit like tobacco and alcohol. Given that the urge to gamble seems to be hotwired into our DNA, governments have little option choice but to tolerate it or else surrender the market to illegal, often criminal, operators.
Instead they seek to regulate and tax it. However, in recent years the rise of online and telephone betting - over 80pc of the more than £5.5bn wagered by punters with PPB in the first half went online - has left regulators struggling to catch up.
That may be about to change. In Australia, where PPB does about 30pc of its business, the federal government has strengthened the ban on in-play betting - where punters can bet on sporting events as they are taking place - and also credit betting. With in-play betting accounting for 15pc of the stakes and 8pc of revenues at its Australian business in the first half of 2016, the impact on Paddy Power has been significant.
Closer to home, the UK government is getting ready to crack down on fixed-odds betting terminals (FOBTs), of which there are more than 34,000 in the country. These accounted for 13pc of the total amount lost by punters, about £1.8bn, in 2016. Dubbed the "crack cocaine of the betting industry", most analysts now reckon that the maximum FOBT stake will be slashed from the present £100 to £20 or possibly even £10.
Betting taxes, which had been cut in response to the growth of online bookies operating from offshore tax havens, are also creeping up again. The UK introduced a new gambling tax, levied at 15pc of bookies' gross profits, in 2014. The UK betting tax is payable by all bookies, both onshore and offshore, taking bets from British residents.
Ireland introduced a 1pc tax on all bets placed by Irish residents with offshore bookies and a 15pc tax on betting exchanges' commission in August 2015.
While a return to the 1980s, when Irish betting duty was raised to 20pc, is hardly likely any time soon, gambling is likely to remain a target for cash-strapped finance ministers everywhere. The fact that the proliferation of gambling channels has led to renewed concern about gambling addiction - there are an estimated 28,000-40,000 problem gamblers in Ireland and as many as 600,000 in the UK - will allow any future betting tax increases to be dressed up as somehow protecting problem gamblers from themselves.
PPB is confident that it can ride out any regulatory storm. It points out that the Paddy Power/Betfair merger was part of a wider consolidation of the sector that also saw Ladbroke merge with its smaller rival Coral in 2015.
"There are undoubtedly headwinds and regulatory challenges. The strong will get stronger and the weak will fall away," says a spokesperson.
August 13 2017 6:00 PM
The sudden departure of chief executive Breon Corcoran and the weakness in the share price since the Betfair merger two years ago raise questions about giant quoted bookmaker Paddy Power Betfair.
Paddy Power Betfair (PPB) was created by the 2015 merger of Irish bookie Paddy Power and UK betting exchange Betfair. At the time of the announcement in September of that year Paddy Power shareholders, who received 52pc of the shares in the enlarged company, were promised that the "greater scale" resulting from the merger would lead "to higher returns on investment across existing and new markets".
The merged company would deliver "significant cost synergies" and be "highly cash generative and [have] a strong balance sheet", according to the announcement.
So how have things turned out 24 months later? The Paddy Power Betfair share price soared in the run-up to and immediate aftermath of the merger announcement. From just over £80 as Paddy Power in late August 2015 - most trading in PPB shares takes place in London - it hit over £107 by the beginning of February 2016.
It was too good to last. Since then the PPB share price has come back down to earth with a bump and was trading at about £72.50 in London last week. Its share price has fallen by 21pc over the past year.
While the share prices of other quoted bookies have also fallen, with William Hill down 21pc and Ladbroke Coral down 18pc, it is the weakness of the PPB share price that has attracted the most attention from investors. This is because it is much bigger than either of its two main quoted competitors.
Even after the recent share price falls PPB still has a market value of £6.1bn compared to William Hill's £2.2bn and Ladbroke Coral's £2.3bn. When you are the biggest kid on the block your problems inevitably attract more attention.
Is the fall in the PPB share price and Corcoran's sudden departure an indication that the merger has failed to deliver the promised returns? Speaking to the Sunday Independent this week, the outgoing boss said he thought the integration had gone "pretty well".
"We've covered an awful lot of ground very quickly. We achieved the synergy targets very quickly, the management team is stable and motivated, we've introduced kind a new different culture and set of values for the firm that were chosen by the employees as opposed to imposed top down."
One of the major challenges has been integrating the Paddy Power and Betfair technology platforms. Analysts say this has slowed down the company's ability to roll out new, innovative digital products. According to Corcoran the work is almost done.
The company's financial performance since the merger doesn't seem to point to failure either.
Total revenue jumped 18pc to £1.55bn in 2016 while underlying operating (pre-interest) profit and earnings per share were both up by 44pc to £330m and 331p respectively (PPB reports its results in sterling).
This strong financial performance has continued into 2017. In its half-year results, which were released last week, PPB announced that total revenue had risen by a further 9pc to £827m in the six months to the end of June while operating profit was up 22pc to £180m and earnings per share increased by 23pc to 181p.
So why, with the Betfair merger seemingly delivering the goods, has Corcoran now decided to head off in search of pastures new? The departing chief executive has been with PPB and its predecessor companies man and boy. The son of John Corcoran, one of the founders of Paddy Power, he first joined Paddy Power in 2001 as head of its non-retail (online) business. He became a director in 2004 and chief operations officer in 2010.
However, in November 2011 he surprised many people when he left Paddy Power to become Betfair chief executive. The betting exchange had been going through a torrid time, with its share price down by over 40pc in the year following its 2010 flotation.
Corcoran is generally reckoned to have done a very good job at Betfair, with the value of the company jumping from just £750m at the time of his appointment to £2.4bn at the time of the Paddy Power merger less than four years later.
Maybe too good. Under the terms of the merger not alone did Corcoran become PPB chief executive, but Betfair shareholders ended up with a 48pc stake in the merged company. This was despite the fact that while Paddy Power had revenue of £746m and earnings before interest, depreciation, taxation and amortisation (Ebitda) of £173m in the 12 months to the end of June 2015, Betfair's revenue was just £477m and its Ebitda £120m for the same period.
In other words, Paddy Power agreed a merger with Betfair on terms of virtual equality despite the UK company's Ebitda being less than 70pc of Paddy Power's. Based on the comparative financial performance of the two companies prior to the merger a 60:40 split might have been more appropriate.
With the PPB share price now lower than it was before the merger announcement, former Paddy Power shareholders could be forgiven for suffering from buyer's remorse.
While Corcoran's departure came as a complete surprise to outsiders, maybe it shouldn't have. With the benefit of hindsight there may have been a number of straws in the wind. In March 2016, just weeks after the merger had been consummated, Corcoran sold 43,500 PPB shares, about a quarter of his total shareholding, for £4.16m.
Corcoran still owns just under 140,000 PPB shares, worth over £10m at the current share price. He is also listed as having options over a further 431,700 shares at strike prices of between £18 and £87. Even after the recent falls in the PPB share price, these options are collectively in the money to the tune of about £17m.
However, 104,000 of these options are conditional on his continued employment by the company so the actual value of his options now that he has announced his intention to leave is probably considerably less.
"There's never a good time to leave a great business," Corcoran said during the week.
"I've been working in this industry longer than most of us will ever be married. I do think it's an opportune time for the business given that the platform work is in its final stages and that, to all intents and purposes, we feel in the business that the merger - other than the tech work - has been done. I've committed to the board that I'll oversee the final part of this [the merger], which is the delivery of the tech project.
"I'm excited about taking on a new challenge in a different space."
While Corcoran can hardly be faulted for wanting to do something different after nearly 17 years as a bookie, he does leave PPB at a time when the company and the betting sector as a whole is facing into stronger regulatory headwinds.
Gambling is a bit like tobacco and alcohol. Given that the urge to gamble seems to be hotwired into our DNA, governments have little option choice but to tolerate it or else surrender the market to illegal, often criminal, operators.
Instead they seek to regulate and tax it. However, in recent years the rise of online and telephone betting - over 80pc of the more than £5.5bn wagered by punters with PPB in the first half went online - has left regulators struggling to catch up.
That may be about to change. In Australia, where PPB does about 30pc of its business, the federal government has strengthened the ban on in-play betting - where punters can bet on sporting events as they are taking place - and also credit betting. With in-play betting accounting for 15pc of the stakes and 8pc of revenues at its Australian business in the first half of 2016, the impact on Paddy Power has been significant.
Closer to home, the UK government is getting ready to crack down on fixed-odds betting terminals (FOBTs), of which there are more than 34,000 in the country. These accounted for 13pc of the total amount lost by punters, about £1.8bn, in 2016. Dubbed the "crack cocaine of the betting industry", most analysts now reckon that the maximum FOBT stake will be slashed from the present £100 to £20 or possibly even £10.
Betting taxes, which had been cut in response to the growth of online bookies operating from offshore tax havens, are also creeping up again. The UK introduced a new gambling tax, levied at 15pc of bookies' gross profits, in 2014. The UK betting tax is payable by all bookies, both onshore and offshore, taking bets from British residents.
Ireland introduced a 1pc tax on all bets placed by Irish residents with offshore bookies and a 15pc tax on betting exchanges' commission in August 2015.
While a return to the 1980s, when Irish betting duty was raised to 20pc, is hardly likely any time soon, gambling is likely to remain a target for cash-strapped finance ministers everywhere. The fact that the proliferation of gambling channels has led to renewed concern about gambling addiction - there are an estimated 28,000-40,000 problem gamblers in Ireland and as many as 600,000 in the UK - will allow any future betting tax increases to be dressed up as somehow protecting problem gamblers from themselves.
PPB is confident that it can ride out any regulatory storm. It points out that the Paddy Power/Betfair merger was part of a wider consolidation of the sector that also saw Ladbroke merge with its smaller rival Coral in 2015.
"There are undoubtedly headwinds and regulatory challenges. The strong will get stronger and the weak will fall away," says a spokesperson.
There are 2 kinds of businesses. Scale businesses where the more customers you have the more money you make, and margin businesses where the greater the margin you have the more money you make.
PP mistook bf for a margin business when it is a scale business.
PP might realise its mistake and demerger from bf.
PP mistook bf for a margin business when it is a scale business.
PP might realise its mistake and demerger from bf.
The exchange grew quickly because it was a gold rush. There was money to be made and that attracted customers. Over time it became harder and harder to make money, the advocates reduce, the novelty wears off, the premium charge kicks in, the bookies stop bleating, become more competitive and harder to profit from, and regulation reduces the user base. The incentive to provide liquidity reduces and business plateaus. The premium charge is only a small part of that equation. Honestly I think the business has reached as far as it is going to get and there is little Betfair can do. I personally think they've done a decent job.
Sports betting continues to grow worldwide, while, excepting cricket, bf's share declines.
Basically bf scrood the pooch with the PC, which killed secondary markets, and by keeping the commision rate too high. Smarkets is making profits on 2% comission.
Basically bf scrood the pooch with the PC, which killed secondary markets, and by keeping the commision rate too high. Smarkets is making profits on 2% comission.
Politics betting has increased substantially, so it's not just cricket.
If I was Betfair I'd look at the user make up of politics and cricket betting and try to figure out what type of people and why they are being attracted to it.
I'd look very closely at the relationship between who offers liquidity and who takes it. Has it changed over time? Is it due to factores outside of Betfairs' control? and is that relationship optimal for the business? I'd break that down for every sport and every market within that sport.
If I was Betfair I'd look at the user make up of politics and cricket betting and try to figure out what type of people and why they are being attracted to it.
I'd look very closely at the relationship between who offers liquidity and who takes it. Has it changed over time? Is it due to factores outside of Betfairs' control? and is that relationship optimal for the business? I'd break that down for every sport and every market within that sport.
Now that PP are on board. I'd compare historical turnover for the different sports and different markets within those sports to help determine if there's a general level of falling interest or whether it's to do with the vagaries of the exchange and it's market dynamics.
All new customers are aggressively diverted to the Sportsbook. If they prove to be able to make money they will get restricted and might then look to the exchange. Therefore only the successful punters by and large are betting on the exchange against each other. This (in combination with the pernicious Betfair robtos creates an increasingly accurate market which makes it increasingly hard for exchange punters to win after commission. Therefore they gradually drift away, liqudity reduces further and the exchange continues to quitely decay.
If Betfair actively promoted the exchange it would be stronger than it is now.
If Betfair actively promoted the exchange it would be stronger than it is now.
I think there was a time not that long ago when they actively pushed the sportsbook and not the exchange, but I think that time has passed and there are now plenty of tv adverts pushing the exchange.
PP retweeted the exchange today which ive never noticed before
The odd politics market might match £100m but it is peanuts in the scheme of things when minor league T20 cricket matches match £20m-£30m.
What I find interesting is how they focused 100% on the sportsbook for a time and now have merged all the numbers so it is very hard to work out what contribution the exchange makes to the overall business.
Most of the growth appears to be from building a sportsbook from scratch on the back of the Betfair brand and cannibalising the exchange business.
Prior to the PC and loss of management interest in the exchange the business was growing at a great rate.
Instead of thinking up incentives to get early liquidity and go for the kill against the bookies they took the easy option.
Who can blame them? They had an IPO coming up and business is all about making money.
What I find interesting is how they focused 100% on the sportsbook for a time and now have merged all the numbers so it is very hard to work out what contribution the exchange makes to the overall business.
Most of the growth appears to be from building a sportsbook from scratch on the back of the Betfair brand and cannibalising the exchange business.
Prior to the PC and loss of management interest in the exchange the business was growing at a great rate.
Instead of thinking up incentives to get early liquidity and go for the kill against the bookies they took the easy option.
Who can blame them? They had an IPO coming up and business is all about making money.
@frog2
"now have merged all the numbers so it is very hard to work out what contribution the exchange makes to the overall business"
On the contrary, I think it's pretty much trivial - what am I missing in the below?
2016 Annual Report quotes
Sportsbook stakes 5,266m
Sportsbook net revenue % 6.6%
Sports revenue 609m
Gaming revenue 245m
Total revenue 853m
Which I think makes it clear that "Sports revenue" includes the Exchange. If the Sportsbook net revenue is 6.6% of 5,266 (which is 347.5m) towards total Sports revenue of 609m, that leaves 261.5m which the Exchange must account for.
"now have merged all the numbers so it is very hard to work out what contribution the exchange makes to the overall business"
On the contrary, I think it's pretty much trivial - what am I missing in the below?
2016 Annual Report quotes
Sportsbook stakes 5,266m
Sportsbook net revenue % 6.6%
Sports revenue 609m
Gaming revenue 245m
Total revenue 853m
Which I think makes it clear that "Sports revenue" includes the Exchange. If the Sportsbook net revenue is 6.6% of 5,266 (which is 347.5m) towards total Sports revenue of 609m, that leaves 261.5m which the Exchange must account for.
From irish independent
The sudden departure of chief executive Breon Corcoran and the weakness in the share price since the Betfair merger two years ago raise questions about giant quoted bookmaker Paddy Power Betfair.
Paddy Power Betfair (PPB) was created by the 2015 merger of Irish bookie Paddy Power and UK betting exchange Betfair. At the time of the announcement in September of that year Paddy Power shareholders, who received 52pc of the shares in the enlarged company, were promised that the "greater scale" resulting from the merger would lead "to higher returns on investment across existing and new markets".
The merged company would deliver "significant cost synergies" and be "highly cash generative and [have] a strong balance sheet", according to the announcement.
So how have things turned out 24 months later? The Paddy Power Betfair share price soared in the run-up to and immediate aftermath of the merger announcement. From just over £80 as Paddy Power in late August 2015 - most trading in PPB shares takes place in London - it hit over £107 by the beginning of February 2016.
It was too good to last. Since then the PPB share price has come back down to earth with a bump and was trading at about £72.50 in London last week. Its share price has fallen by 21pc over the past year.
While the share prices of other quoted bookies have also fallen, with William Hill down 21pc and Ladbroke Coral down 18pc, it is the weakness of the PPB share price that has attracted the most attention from investors. This is because it is much bigger than either of its two main quoted competitors.
Even after the recent share price falls PPB still has a market value of £6.1bn compared to William Hill's £2.2bn and Ladbroke Coral's £2.3bn. When you are the biggest kid on the block your problems inevitably attract more attention.
Is the fall in the PPB share price and Corcoran's sudden departure an indication that the merger has failed to deliver the promised returns? Speaking to the Sunday Independent this week, the outgoing boss said he thought the integration had gone "pretty well".
"We've covered an awful lot of ground very quickly. We achieved the synergy targets very quickly, the management team is stable and motivated, we've introduced kind a new different culture and set of values for the firm that were chosen by the employees as opposed to imposed top down."
One of the major challenges has been integrating the Paddy Power and Betfair technology platforms. Analysts say this has slowed down the company's ability to roll out new, innovative digital products. According to Corcoran the work is almost done.
The company's financial performance since the merger doesn't seem to point to failure either.
Total revenue jumped 18pc to £1.55bn in 2016 while underlying operating (pre-interest) profit and earnings per share were both up by 44pc to £330m and 331p respectively (PPB reports its results in sterling).
This strong financial performance has continued into 2017. In its half-year results, which were released last week, PPB announced that total revenue had risen by a further 9pc to £827m in the six months to the end of June while operating profit was up 22pc to £180m and earnings per share increased by 23pc to 181p.
So why, with the Betfair merger seemingly delivering the goods, has Corcoran now decided to head off in search of pastures new? The departing chief executive has been with PPB and its predecessor companies man and boy. The son of John Corcoran, one of the founders of Paddy Power, he first joined Paddy Power in 2001 as head of its non-retail (online) business. He became a director in 2004 and chief operations officer in 2010.
However, in November 2011 he surprised many people when he left Paddy Power to become Betfair chief executive. The betting exchange had been going through a torrid time, with its share price down by over 40pc in the year following its 2010 flotation.
Corcoran is generally reckoned to have done a very good job at Betfair, with the value of the company jumping from just £750m at the time of his appointment to £2.4bn at the time of the Paddy Power merger less than four years later.
Maybe too good. Under the terms of the merger not alone did Corcoran become PPB chief executive, but Betfair shareholders ended up with a 48pc stake in the merged company. This was despite the fact that while Paddy Power had revenue of £746m and earnings before interest, depreciation, taxation and amortisation (Ebitda) of £173m in the 12 months to the end of June 2015, Betfair's revenue was just £477m and its Ebitda £120m for the same period.
In other words, Paddy Power agreed a merger with Betfair on terms of virtual equality despite the UK company's Ebitda being less than 70pc of Paddy Power's. Based on the comparative financial performance of the two companies prior to the merger a 60:40 split might have been more appropriate.
With the PPB share price now lower than it was before the merger announcement, former Paddy Power shareholders could be forgiven for suffering from buyer's remorse.
While Corcoran's departure came as a complete surprise to outsiders, maybe it shouldn't have. With the benefit of hindsight there may have been a number of straws in the wind. In March 2016, just weeks after the merger had been consummated, Corcoran sold 43,500 PPB shares, about a quarter of his total shareholding, for £4.16m.
Corcoran still owns just under 140,000 PPB shares, worth over £10m at the current share price. He is also listed as having options over a further 431,700 shares at strike prices of between £18 and £87. Even after the recent falls in the PPB share price, these options are collectively in the money to the tune of about £17m.
However, 104,000 of these options are conditional on his continued employment by the company so the actual value of his options now that he has announced his intention to leave is probably considerably less.
"There's never a good time to leave a great business," Corcoran said during the week.
"I've been working in this industry longer than most of us will ever be married. I do think it's an opportune time for the business given that the platform work is in its final stages and that, to all intents and purposes, we feel in the business that the merger - other than the tech work - has been done. I've committed to the board that I'll oversee the final part of this [the merger], which is the delivery of the tech project.
"I'm excited about taking on a new challenge in a different space."
While Corcoran can hardly be faulted for wanting to do something different after nearly 17 years as a bookie, he does leave PPB at a time when the company and the betting sector as a whole is facing into stronger regulatory headwinds.
Gambling is a bit like tobacco and alcohol. Given that the urge to gamble seems to be hotwired into our DNA, governments have little option choice but to tolerate it or else surrender the market to illegal, often criminal, operators.
Instead they seek to regulate and tax it. However, in recent years the rise of online and telephone betting - over 80pc of the more than £5.5bn wagered by punters with PPB in the first half went online - has left regulators struggling to catch up.
That may be about to change. In Australia, where PPB does about 30pc of its business, the federal government has strengthened the ban on in-play betting - where punters can bet on sporting events as they are taking place - and also credit betting. With in-play betting accounting for 15pc of the stakes and 8pc of revenues at its Australian business in the first half of 2016, the impact on Paddy Power has been significant.
Closer to home, the UK government is getting ready to crack down on fixed-odds betting terminals (FOBTs), of which there are more than 34,000 in the country. These accounted for 13pc of the total amount lost by punters, about £1.8bn, in 2016. Dubbed the "crack cocaine of the betting industry", most analysts now reckon that the maximum FOBT stake will be slashed from the present £100 to £20 or possibly even £10.
Betting taxes, which had been cut in response to the growth of online bookies operating from offshore tax havens, are also creeping up again. The UK introduced a new gambling tax, levied at 15pc of bookies' gross profits, in 2014. The UK betting tax is payable by all bookies, both onshore and offshore, taking bets from British residents.
Ireland introduced a 1pc tax on all bets placed by Irish residents with offshore bookies and a 15pc tax on betting exchanges' commission in August 2015.
While a return to the 1980s, when Irish betting duty was raised to 20pc, is hardly likely any time soon, gambling is likely to remain a target for cash-strapped finance ministers everywhere. The fact that the proliferation of gambling channels has led to renewed concern about gambling addiction - there are an estimated 28,000-40,000 problem gamblers in Ireland and as many as 600,000 in the UK - will allow any future betting tax increases to be dressed up as somehow protecting problem gamblers from themselves.
PPB is confident that it can ride out any regulatory storm. It points out that the Paddy Power/Betfair merger was part of a wider consolidation of the sector that also saw Ladbroke merge with its smaller rival Coral in 2015.
"There are undoubtedly headwinds and regulatory challenges. The strong will get stronger and the weak will fall away," says a spokesperson.
The sudden departure of chief executive Breon Corcoran and the weakness in the share price since the Betfair merger two years ago raise questions about giant quoted bookmaker Paddy Power Betfair.
Paddy Power Betfair (PPB) was created by the 2015 merger of Irish bookie Paddy Power and UK betting exchange Betfair. At the time of the announcement in September of that year Paddy Power shareholders, who received 52pc of the shares in the enlarged company, were promised that the "greater scale" resulting from the merger would lead "to higher returns on investment across existing and new markets".
The merged company would deliver "significant cost synergies" and be "highly cash generative and [have] a strong balance sheet", according to the announcement.
So how have things turned out 24 months later? The Paddy Power Betfair share price soared in the run-up to and immediate aftermath of the merger announcement. From just over £80 as Paddy Power in late August 2015 - most trading in PPB shares takes place in London - it hit over £107 by the beginning of February 2016.
It was too good to last. Since then the PPB share price has come back down to earth with a bump and was trading at about £72.50 in London last week. Its share price has fallen by 21pc over the past year.
While the share prices of other quoted bookies have also fallen, with William Hill down 21pc and Ladbroke Coral down 18pc, it is the weakness of the PPB share price that has attracted the most attention from investors. This is because it is much bigger than either of its two main quoted competitors.
Even after the recent share price falls PPB still has a market value of £6.1bn compared to William Hill's £2.2bn and Ladbroke Coral's £2.3bn. When you are the biggest kid on the block your problems inevitably attract more attention.
Is the fall in the PPB share price and Corcoran's sudden departure an indication that the merger has failed to deliver the promised returns? Speaking to the Sunday Independent this week, the outgoing boss said he thought the integration had gone "pretty well".
"We've covered an awful lot of ground very quickly. We achieved the synergy targets very quickly, the management team is stable and motivated, we've introduced kind a new different culture and set of values for the firm that were chosen by the employees as opposed to imposed top down."
One of the major challenges has been integrating the Paddy Power and Betfair technology platforms. Analysts say this has slowed down the company's ability to roll out new, innovative digital products. According to Corcoran the work is almost done.
The company's financial performance since the merger doesn't seem to point to failure either.
Total revenue jumped 18pc to £1.55bn in 2016 while underlying operating (pre-interest) profit and earnings per share were both up by 44pc to £330m and 331p respectively (PPB reports its results in sterling).
This strong financial performance has continued into 2017. In its half-year results, which were released last week, PPB announced that total revenue had risen by a further 9pc to £827m in the six months to the end of June while operating profit was up 22pc to £180m and earnings per share increased by 23pc to 181p.
So why, with the Betfair merger seemingly delivering the goods, has Corcoran now decided to head off in search of pastures new? The departing chief executive has been with PPB and its predecessor companies man and boy. The son of John Corcoran, one of the founders of Paddy Power, he first joined Paddy Power in 2001 as head of its non-retail (online) business. He became a director in 2004 and chief operations officer in 2010.
However, in November 2011 he surprised many people when he left Paddy Power to become Betfair chief executive. The betting exchange had been going through a torrid time, with its share price down by over 40pc in the year following its 2010 flotation.
Corcoran is generally reckoned to have done a very good job at Betfair, with the value of the company jumping from just £750m at the time of his appointment to £2.4bn at the time of the Paddy Power merger less than four years later.
Maybe too good. Under the terms of the merger not alone did Corcoran become PPB chief executive, but Betfair shareholders ended up with a 48pc stake in the merged company. This was despite the fact that while Paddy Power had revenue of £746m and earnings before interest, depreciation, taxation and amortisation (Ebitda) of £173m in the 12 months to the end of June 2015, Betfair's revenue was just £477m and its Ebitda £120m for the same period.
In other words, Paddy Power agreed a merger with Betfair on terms of virtual equality despite the UK company's Ebitda being less than 70pc of Paddy Power's. Based on the comparative financial performance of the two companies prior to the merger a 60:40 split might have been more appropriate.
With the PPB share price now lower than it was before the merger announcement, former Paddy Power shareholders could be forgiven for suffering from buyer's remorse.
While Corcoran's departure came as a complete surprise to outsiders, maybe it shouldn't have. With the benefit of hindsight there may have been a number of straws in the wind. In March 2016, just weeks after the merger had been consummated, Corcoran sold 43,500 PPB shares, about a quarter of his total shareholding, for £4.16m.
Corcoran still owns just under 140,000 PPB shares, worth over £10m at the current share price. He is also listed as having options over a further 431,700 shares at strike prices of between £18 and £87. Even after the recent falls in the PPB share price, these options are collectively in the money to the tune of about £17m.
However, 104,000 of these options are conditional on his continued employment by the company so the actual value of his options now that he has announced his intention to leave is probably considerably less.
"There's never a good time to leave a great business," Corcoran said during the week.
"I've been working in this industry longer than most of us will ever be married. I do think it's an opportune time for the business given that the platform work is in its final stages and that, to all intents and purposes, we feel in the business that the merger - other than the tech work - has been done. I've committed to the board that I'll oversee the final part of this [the merger], which is the delivery of the tech project.
"I'm excited about taking on a new challenge in a different space."
While Corcoran can hardly be faulted for wanting to do something different after nearly 17 years as a bookie, he does leave PPB at a time when the company and the betting sector as a whole is facing into stronger regulatory headwinds.
Gambling is a bit like tobacco and alcohol. Given that the urge to gamble seems to be hotwired into our DNA, governments have little option choice but to tolerate it or else surrender the market to illegal, often criminal, operators.
Instead they seek to regulate and tax it. However, in recent years the rise of online and telephone betting - over 80pc of the more than £5.5bn wagered by punters with PPB in the first half went online - has left regulators struggling to catch up.
That may be about to change. In Australia, where PPB does about 30pc of its business, the federal government has strengthened the ban on in-play betting - where punters can bet on sporting events as they are taking place - and also credit betting. With in-play betting accounting for 15pc of the stakes and 8pc of revenues at its Australian business in the first half of 2016, the impact on Paddy Power has been significant.
Closer to home, the UK government is getting ready to crack down on fixed-odds betting terminals (FOBTs), of which there are more than 34,000 in the country. These accounted for 13pc of the total amount lost by punters, about £1.8bn, in 2016. Dubbed the "crack cocaine of the betting industry", most analysts now reckon that the maximum FOBT stake will be slashed from the present £100 to £20 or possibly even £10.
Betting taxes, which had been cut in response to the growth of online bookies operating from offshore tax havens, are also creeping up again. The UK introduced a new gambling tax, levied at 15pc of bookies' gross profits, in 2014. The UK betting tax is payable by all bookies, both onshore and offshore, taking bets from British residents.
Ireland introduced a 1pc tax on all bets placed by Irish residents with offshore bookies and a 15pc tax on betting exchanges' commission in August 2015.
While a return to the 1980s, when Irish betting duty was raised to 20pc, is hardly likely any time soon, gambling is likely to remain a target for cash-strapped finance ministers everywhere. The fact that the proliferation of gambling channels has led to renewed concern about gambling addiction - there are an estimated 28,000-40,000 problem gamblers in Ireland and as many as 600,000 in the UK - will allow any future betting tax increases to be dressed up as somehow protecting problem gamblers from themselves.
PPB is confident that it can ride out any regulatory storm. It points out that the Paddy Power/Betfair merger was part of a wider consolidation of the sector that also saw Ladbroke merge with its smaller rival Coral in 2015.
"There are undoubtedly headwinds and regulatory challenges. The strong will get stronger and the weak will fall away," says a spokesperson.
Nice work Longbridge.
Just shows how little has been done on the exchange since the early years.
Revenue pre-premium charge:
2004 £61m
2005 £102m
2006 £142m
2007 £181m
2008 £239m
2017 £261m
Just shows that the idiot that came up with the idea of the Premium Charge destroyed all growth on the exchange.
The financial year before it came in growth from £181m to £239m. It was growing 30% a year.
Since the premium charge managed 9% over 9 years.
30% growth down to below 1%!
They may think it makes some money before they make millions of revenue from it but it has destroyed ALL growth.
Just shows how little has been done on the exchange since the early years.
Revenue pre-premium charge:
2004 £61m
2005 £102m
2006 £142m
2007 £181m
2008 £239m
2017 £261m
Just shows that the idiot that came up with the idea of the Premium Charge destroyed all growth on the exchange.
The financial year before it came in growth from £181m to £239m. It was growing 30% a year.
Since the premium charge managed 9% over 9 years.
30% growth down to below 1%!
They may think it makes some money before they make millions of revenue from it but it has destroyed ALL growth.
In real terms it's a fall. Premium charge might be a coincidence though as it probably straddles overseas regulation. Marketing spend also seems well down. You'd have to break down the revenue into current legal territories and include marketing spend for meaningful figures. I don't dispute premium charge hasn't affected turnover. Of course it has. No going back though as you can't recreate 2008. My gut instinct is it was always going to struggle regardless of PC.
I was told way back that the annual betting that attracted more new business than any other was the Eurovision Song Contest. Cricket may attract much more turnover than Politics but the cricket business might very well be the same few people betting again and again and again, whereas politics may well be attracting much more new business. Regardless, the point is they are growing, and trying to establish why is what's important.
I was told way back that the annual betting that attracted more new business than any other was the Eurovision Song Contest. Cricket may attract much more turnover than Politics but the cricket business might very well be the same few people betting again and again and again, whereas politics may well be attracting much more new business. Regardless, the point is they are growing, and trying to establish why is what's important.
Yeah but you cannot go £181m to £239m and then bring in the PC to make even more to get a good IPO value and end up on £261m 9 years later not say that the PC was not a MASSIVE mistake.
Pure greed was the cause and it has damaged the exchange concept for an entire generation.
No gambler under 25 has probably heard of the exchange now.
They have been convinced the way to go is 'make your own bet' and go to a 250% overround!
Remember when they had a Betfair Education department to explain how to use the exchange and what value was? All gone.
Makes me feel old.
Pure greed was the cause and it has damaged the exchange concept for an entire generation.
No gambler under 25 has probably heard of the exchange now.
They have been convinced the way to go is 'make your own bet' and go to a 250% overround!
Remember when they had a Betfair Education department to explain how to use the exchange and what value was? All gone.
Makes me feel old.
I'm not sure about the effect of the PC.
I strongly believe that a pricing model which fairly charges those with time based advantages (or restricts their activity) and those who "trade" in play events is essential for an exchange to function. The PC was not the optimal way of dealing with this and worst of all, killed the "winners welcome" message, which was probably betfair's biggest selling point for new customers, and a tragically under-marketed advantage.
Stagnation in the exchange co-incided with the company staffing its leadership team with people from the bookmaking industry who, one suspects, brought with them intractable views on winners and whom the mugs' money belonged to. The sportsbook should only ever have existed as means for those uncomfortable with the exchange to bet without worrying about unmatched bets, with betfair handling off-loading their bets onto the exchange at a small premium. Instead, it was a traditional sportsbook, and marketed in front of the exchange and in direct competition. I think all of these factors contributed to the stagnation, and possibly more than the PC.
I strongly believe that a pricing model which fairly charges those with time based advantages (or restricts their activity) and those who "trade" in play events is essential for an exchange to function. The PC was not the optimal way of dealing with this and worst of all, killed the "winners welcome" message, which was probably betfair's biggest selling point for new customers, and a tragically under-marketed advantage.
Stagnation in the exchange co-incided with the company staffing its leadership team with people from the bookmaking industry who, one suspects, brought with them intractable views on winners and whom the mugs' money belonged to. The sportsbook should only ever have existed as means for those uncomfortable with the exchange to bet without worrying about unmatched bets, with betfair handling off-loading their bets onto the exchange at a small premium. Instead, it was a traditional sportsbook, and marketed in front of the exchange and in direct competition. I think all of these factors contributed to the stagnation, and possibly more than the PC.
The problem with the winners welcome strap line is that it raises customers expectations above realistic levels, which only becomes more unrealistic the harder it becomes. New customers expecting to win become disillusioned and more likely to quit. An inherent problem that the exchange model has always faced anyway. Selling the exchange on better prices and increased flexibility as they are currently doing is the better way to go imo. Where it fell down is that it no longer sold itself as the enemy of the bookies, which the bookies were inadvertently embellishing with their constant squealing. (that reminded me of the FGTH single Relax which was banned by Radio 1 and subsequently catapulted to number one). And because it's now in bed with a sportsbook it's an avenue it can longer go down. The exchange also has inherent problems with fast pictures, queue jumping and automation all of which I think are unavoidable. The PC threshold bar was set far too low (90% of the take probably comes from 10% of those effected). Why they would want to piss off the majority of small time and potential winners who mostly weren't fast pic merchants or automated, and therefore competing at a disadvantage anyway for such a small return, never made commercial sense for me.
They surely should have tweaked the PC. If you win on horseracing you might very well be a toby on football, but they say have your fun bets elsewhere? Any bets lost to the other exchange would rile me if I was head honcho.
The continued use of lifetime numbers still makes no sense to me. The Exchange is so different today to what it was when PC was originally introduced....
Aug 23, 2017 -- 6:29PM, TheFear wrote:
They surely should have tweaked the PC. If you win on horseracing you might very well be a toby on football, but they say have your fun bets elsewhere? Any bets lost to the other exchange would rile me if I was head honcho.
I think we discussed this before. You should always take the best post standard commission odds. The PC situation is at worst neutral.
I bet almost exclusively on here, dave. But mentally some people find it hard to have a bet thinking they will lose 50% if correct. Human nature.
Why do these discussions always get hijacked by the tiny minority of Premium Charge bores?
The problem is the factor which eventually kills the vast majority of exchange users - eye-watering commission charges.
I'm currently on 3.7%. If, over a 12-month period, I beat the overround sufficiently to break even on my bets (no mean feat), my overall profit/loss will be MINUS £9,000.
Nine thousand bloody quid paid to Betfair shareholders for the privilege of not winning a penny.
That's where the exchange hit the buffers, and unless that point is addressed, and commission rates heavily discounted, it can never retain enough punters to take over the world, as it should have.
The problem is the factor which eventually kills the vast majority of exchange users - eye-watering commission charges.
I'm currently on 3.7%. If, over a 12-month period, I beat the overround sufficiently to break even on my bets (no mean feat), my overall profit/loss will be MINUS £9,000.
Nine thousand bloody quid paid to Betfair shareholders for the privilege of not winning a penny.
That's where the exchange hit the buffers, and unless that point is addressed, and commission rates heavily discounted, it can never retain enough punters to take over the world, as it should have.
Trying to run an ever-growing multi million PLC that primarily exists within the finite world of industry over rounds was always going to prove challenging.
There just isn't enough pie to feed everybody.
High commission charges to everyday punters shrink the world in which they operate further.
There just isn't enough pie to feed everybody.
High commission charges to everyday punters shrink the world in which they operate further.
screaming, just how low a percentage do you think commission should be ?
0.5% to 0.2%
At that level, Betfair would take over the world. Bookmakers really would be carried out in coffins, the way the Betfair founders predicted all those years ago.
With such a negligible effective overround, no bookmaker could compete on price. They might be able to offer convenience, but the money would eventually find its way onto here, via hedging. You only have to look at what's happened on the cricket markets, where hedging from the high-margin illegal Indian books results in £30 million-plus getting matched even on stuff like single Tamil Nadu Premier League fixtures. At 0.5% to 0.2% you'd find books all over the world hedging their low-margin business too.
One crucial point. You have to retain a system of Betfair points and discount rates, however low the level of commission might be. It's the discounts which make business with negligible or even zero profit margin worthwhile, and they're a huge boost to liquidity. The big mistake the Purple site keeps making is that whenever it cuts its commission, the cut is always accompanied by the loss of potential for further discounts. Hence the apparent lack of success of cuts in the commission rate.
Betfair at least seems to realize this. Its current 2% promotion on Premier League matches, for instance, works by calculating commission at your normal rate, then giving cash back later, so you're still earning the normal Betfair points, with the consequent encouragement to bet, or arb, even at prices where you see little potential profit.
At that level, Betfair would take over the world. Bookmakers really would be carried out in coffins, the way the Betfair founders predicted all those years ago.
With such a negligible effective overround, no bookmaker could compete on price. They might be able to offer convenience, but the money would eventually find its way onto here, via hedging. You only have to look at what's happened on the cricket markets, where hedging from the high-margin illegal Indian books results in £30 million-plus getting matched even on stuff like single Tamil Nadu Premier League fixtures. At 0.5% to 0.2% you'd find books all over the world hedging their low-margin business too.
One crucial point. You have to retain a system of Betfair points and discount rates, however low the level of commission might be. It's the discounts which make business with negligible or even zero profit margin worthwhile, and they're a huge boost to liquidity. The big mistake the Purple site keeps making is that whenever it cuts its commission, the cut is always accompanied by the loss of potential for further discounts. Hence the apparent lack of success of cuts in the commission rate.
Betfair at least seems to realize this. Its current 2% promotion on Premier League matches, for instance, works by calculating commission at your normal rate, then giving cash back later, so you're still earning the normal Betfair points, with the consequent encouragement to bet, or arb, even at prices where you see little potential profit.
The 10th year anniversary since introducing PC1 will be next year.
I thought it was betfair response to "financial crisis". I treated that as a temporary charge. Worse for me (personally) was introducing x matching. When Breon had taken over the company he could have scraped the x matching, but instead he had choosen to take advantage of it, thinking that "stupid punters" will always chase the bots.
"Sports" on exchange deteriorate year by year. Exchange does not allow users to get satisfaction of winning(because of x matching) so that's why its unpopular to casual user
Betfair would better start interacting to existing customers or will end up like NOKIA(loosing all of them).
Betfair are no longer innovative(same as Nokia stopped being) Innovation is not about changing the theme of the website(to horrible yellow colours btw)? What about the exchange mechanism itself?
We are not implementing any changes.Nothing new is being offered to existing or new customers.Cash race occasionally with unrealistic targets
Same PC2 level for years does not bring customers back. Increasing commission to european countries will not attract customers also. Thanks god that THERE IS A COMPETITION(forget about ****- their corporation ideology). Private companies are more user friendly. B365, Smark3ts. Appreaciate good posts above, as forum has also become more "spacious" recently.
I thought it was betfair response to "financial crisis". I treated that as a temporary charge. Worse for me (personally) was introducing x matching. When Breon had taken over the company he could have scraped the x matching, but instead he had choosen to take advantage of it, thinking that "stupid punters" will always chase the bots.
"Sports" on exchange deteriorate year by year. Exchange does not allow users to get satisfaction of winning(because of x matching) so that's why its unpopular to casual user
Betfair would better start interacting to existing customers or will end up like NOKIA(loosing all of them).
Betfair are no longer innovative(same as Nokia stopped being) Innovation is not about changing the theme of the website(to horrible yellow colours btw)? What about the exchange mechanism itself?
We are not implementing any changes.Nothing new is being offered to existing or new customers.Cash race occasionally with unrealistic targets
Same PC2 level for years does not bring customers back. Increasing commission to european countries will not attract customers also. Thanks god that THERE IS A COMPETITION(forget about ****- their corporation ideology). Private companies are more user friendly. B365, Smark3ts. Appreaciate good posts above, as forum has also become more "spacious" recently.
I wonder how many more would get caught in the web of PC under Screaming's proposal? Quite a lot, I should imagine!
And I might be wrong, but I also imagine that low-margin business is unlikely to be hedged while PC remains?
And I might be wrong, but I also imagine that low-margin business is unlikely to be hedged while PC remains?
I take your point, Latalomne. But at 0.5-0.2% commission you'd find way more opportunities for bets. And consequently way more opportunities to back both winners and, more importantly from a PC point of view, losers.
And any sort of hedging business, by its very nature, doesn't attract PC. It results in too may losing bets, even if the business finishes up showing an overall profit. That's why there's so much of it on the cricket.
And any sort of hedging business, by its very nature, doesn't attract PC. It results in too may losing bets, even if the business finishes up showing an overall profit. That's why there's so much of it on the cricket.
just how low a percentage do you think commission should be ?
Zero. BF is not too disimilar to a bank, and they manage good profits holding people's money, and they pay interest on balances.
Zero. BF is not too disimilar to a bank, and they manage good profits holding people's money, and they pay interest on balances.
X matching is a regular source of complaints, but maybe because I came along when it was in place, I find it generally benefits me.
Nothing wrong with the principle of cross-matching, and I wonder about the motives of those complaining.
However betfair have no business taking the difference in cross matching. There is nothing technically challenging about offering people the true inverse of a price, rather than moving it to the nearest increment on the odds ladder and pocketing the difference. Bearing in mind that the Australians forced them to refund this difference, and iirc it was about £3 every year for every user, it's got to a 7 figure earner for them on the UK markets.
However betfair have no business taking the difference in cross matching. There is nothing technically challenging about offering people the true inverse of a price, rather than moving it to the nearest increment on the odds ladder and pocketing the difference. Bearing in mind that the Australians forced them to refund this difference, and iirc it was about £3 every year for every user, it's got to a 7 figure earner for them on the UK markets.
Aug 28, 2017 -- 1:27AM, pxb wrote:
just how low a percentage do you think commission should be ?Zero. BF is not too disimilar to a bank, and they manage good profits holding people's money, and they pay interest on balances.
rofl Betfair's number one operations risk is that the bank holding their customers money goes busto and takes Betfair down with them.
rofl Betfair's number one operations risk is that the bank holding their customers money goes busto and takes Betfair down with them.
Without serious fraud that can't happen. There are other risks, but discussing them previously got me banned.
Without serious fraud that can't happen. There are other risks, but discussing them previously got me banned.
There wasn't any fraud at Lehmans or Northern Rock or the Cyprus Banks*. The point is anyway that they probably have to insure against bank failure and interest rates are negligible, so they aren't making any money from deposits.
*ok that one is probably not true
*ok that one is probably not true
Fake money created by x matching spoils the markets. That is also bringing less margins. These days markets on Tennis are absolutely nothing to markets on tennis without x matching. Traders mistakes were grabed by other traders. Now they are taken by 'hedging company commonly known to everybody" Dull, no volumes, no chance to work on margin bigerr than 1-2%.Did I mention about 15k matched on 2/5goals markets in spanish football? What sense does it make when you put an offer and you know that your bet will not be taken?
Customer funds are held in a trust, which the bank can't access. Bank failure would have no effect.
To work on small margins cms need volumes. If there were smaller volumes but bigger margin, than traders would have more money anyway. So that attract new traders to be "active" on market, when you are "active" you're making mistakes. The whole proccess is very attractive and bring more customers. If there is any way to bring the customers to exchange, thats the way. Even bots wouldnt be that secure, because they would be more "exposed" to cash out. Turning x matching off would surely change the way sportsbook is connected to the exchange right now. "Price match- or however is it called:)" would be affected. These changes are very unpopular in a board who like to have secure high profits. Chances of doing that are very slim, so if cms dont like horse racing, greyhounds,cricket have only big games to trade on other sports.
Aug 30, 2017 -- 12:52AM, pxb wrote:
Customer funds are held in a trust, which the bank can't access. Bank failure would have no effect.
wrong
Don't know how about you guys, but I think that xmatching is more user friendyly because it benefits most of the users apart from sophisticated machines. I practicaly stoped trading tennis becuase of it. Boring, not many opportunities. Same Basketball. Sharks like x matching, because of their quickest feed and bigger ability to control the markets . What is interesting, is lower money amounts under stakes on football. Cant get matched for even "normal price" and x matching with that poor prices is just a shamble.
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