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leif
14 Aug 24 18:32
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It was once the 'mind-blowing' revolution to betting on racing - but has the Betfair Exchange lost its magic touch?
Jonathan Harding looks at the current state of racing markets on the famous betting platform

RP article

Journalists , trainers, owners writing the sport's Obituaries in spades latelyMischief

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By:
lapsy pa
When: 14 Aug 24 18:59
Certainly doesn't seem to be run by 'people' but manipulated by a 'book'now. The ethos gone a long time ago and always what could have been, a plc have only a duty to shareholders.
By:
longbridge
When: 14 Aug 24 19:11
Betting on racing is dying, for reasons that have been well-rehearsed on here.  The Exchange racing markets are just another casualty of that.

Shall have a nose around and find the RP article.
By:
sparrow
When: 14 Aug 24 19:26
Slaughtered by software.
By:
mrcombustible
When: 14 Aug 24 19:28
It was once the 'mind-blowing' revolution to betting on racing - but has the Betfair Exchange lost its magic touch?
Jonathan Harding looks at the current state of racing markets on the famous betting platform
author image
Jonathan Harding
Reporter

Back in the early 2000s, whether you were a serious punter or just betting for a bit of fun, there was really only one place you would want to be doing it online: the Betfair Exchange.

A colleague recalls that when they first joined the Racing Post more than 20 years ago and asked for some advice on how to learn more about gambling, they were instructed to open a Betfair account, deposit what they could afford and play around with it. It was that simple.

After its launch in 2000, the Betfair Exchange reshaped the gambling landscape, much to the chagrin of traditional bookmakers and some of British racing's leaders, by creating a hugely popular exchange where punters can act as the bettor and bookmaker, backing and laying. It offered better returns on racing than fixed-odds operators, as well as in-running betting and, with strong liquidity, it led to a wave of professional punters who built a community on the Betfair Forum, trading all manner of opinions – very often not just about the exchange.

Now, though, things are different. While other sports are holding up on the platform – most notably cricket, powered by interest from Asia – liquidity in racing markets in particular has markedly declined. In four years out of five between 2012 and 2016, more than 90 per cent of British races on the exchange had more than £500,000 traded on them in the win market; this year the total is less than ten per cent. Across the same period, the average total traded on each win market has more than halved from more than £800,000 to less than £400,000.


One explanation is that affordability checks have forced many of the bigger players to switch to black market providers or quit altogether, while a drop in activity on racing from recreational customers has meant there are far fewer minnows left for the remaining sharks to feed on.

And with sportsbooks offering a simpler proposition than the exchange, as well as extra places and bonuses, it is not clear where the next generation of in-running and exchange bettors will come from, nor where the platform now sits in the list of priorities for its parent company Flutter Entertainment, a gambling giant with a vast suite of products and US arm.

Like the lost art of tic-tac, are we approaching a time when vibrant racing markets on the Betfair Exchange will be seen as just another relic of betting's rich past – or are reports of its demise greatly exaggerated?

'We were completely different'

To publicise the launch of Betfair, co-founders Andrew Black and Edward Wray set up a false funeral procession through the streets of London and proclaimed the event "the death of the bookie", one of several marketing stunts to position it as a disruptor alongside the big firms.

The person-to-person betting website now provides markets on every sport imaginable but cut its teeth on racing and offered its first market on the 2000 Oaks. Just 36 people struck a bet on that race, but with its revolutionary new way to bet on racing, functioning almost like a stock market and enabling punters the chance to bet after a race had started at the click of a mouse, it soon grew rapidly.

"There are a lot of people at Betfair who love the exchange," says Black. "I know I'm selling my own book here, but it's a special piece of work and people who worked on it know that we created something very smart there. I would never bet anywhere else. It's unthinkable to me."

Betfair co-founder Andrew Black:
Betfair co-founder Andrew Black
Credit: Edward Whitaker
The growth of Betfair coincided with the emergence of professional gamblers such as Matt Williams, who was drawn to the platform in 2000 and ten years later made it his full-time job.

"It was mind-blowing," says Williams. "To be able to bet into a market that was live and liquid was appealing to me. It seemed that everybody who had an ability to bet in running was catered for by the liquidity. The exchange was a real disruptor and the bookmakers hated it."

To those discovering the exchange, it seemed to be all about punters. They were the ones who set the markets, with Betfair making its money in the early days through a commission from winning customers, meaning unlike fixed-odds bookmakers, it did not care who won or lost.

"We were on the punters' side," says Josh Apiafi, who served as director of racing and head of marketing at Betfair before leaving in 2007. "We were completely different. We led with straplines such as 'Winners Welcome', which is not something the traditional fixed-odds firms could ever say, especially in today’s environment. What we were trying to get across was that there was value for the customer and that we wanted you to win and be the best exchange player you can be."

In order to be the best, some punters on the exchange developed advanced software systems to play as effectively as possible. With that in mind, the exchange then required the right balance between these more sophisticated players and its recreational customers. But even after a highly controversial decision to introduce a premium charge in 2008 for a minority of the high-performing accounts, impacting those professional punters who were taking the most money out of the exchange, that balance became harder to find as the years went on and the software developed.

"After a couple of years, a lot of people had tried the exchange and suddenly Betfair had to spend more money to try to acquire new customers," says professional punter Neil Channing. "And they weren't lasting as long as they were being stripped of their money more efficiently by a band of professional layers and syndicates, who were taking large sums out of the exchange.

"You need many more people depositing £20 a month to feed one of those big players and Betfair just didn't seem prepared to spend the money to get millions of recreational punters, partly because the exchange is quite complicated, which is a barrier to entry, and it didn't make sense to them as they might not make the right percentage out of those people."

'Where have all the layers gone?'

While this is felt to have had an impact on the money flowing into the markets on the exchange, an even bigger factor has raised its head in recent years: affordability checks.

The checks have not been formally introduced as part of the UK government's gambling review but have been haphazardly applied by operators fearing heavy fines from the Gambling Commission, which has led to a marked drop in overall turnover on British racing – in June it was revealed betting turnover fell by 5.9 per cent in the first quarter of 2024.

The exchange has disproportionately suffered in this regulatory vacuum due to its reliance on a number of regular high-staking players, many of whom have refused to provide financial documents to prove they can afford to bet, which has changed the shape of the markets.

The number of active users on the platform is said to have held up reasonably well, but betting habits have changed and many are now staking smaller amounts on racing, and according to Channing, affordability checks have been a “big factor” behind this trend.

"If you're a professional layer on there you need a big balance as there will be volatility and swings,” he explains. “So if you're restricted in what you can deposit it makes it very hard to operate – it's a barrier to entry and it's hard for me to be a big layer on the exchange.

"Quite a lot of people I know who used to bet quite heavily on Betfair no longer do. The people on there are dying off as it's hard for younger people to play in a professional way."

The amount of money being matched on Betfair’s racing markets certainly suggests the decline has accelerated significantly in a short space of time. The average traded in British win markets has fallen every year since 2016, but the decline was particularly steep, falling by more than a third, between 2019 and 2022.


While the exchange still offers the best in-running liquidity, Martin Hughes, who began gambling as a full-time job after leaving his role at Barclays in 2008, agrees that it is a shadow of what it used to be.

"The exchange changed my life in some ways," says Hughes. "I messed around on Betfair after leaving Barclays but never expected to be a professional gambler. It feels like it's being hidden under a carpet now by Flutter but I love it and would still sell it as the best way to bet. I'd like Betfair to advertise it and look at the premium charge to give us a little bit of leeway.

"I still love doing it but I'm frustrated by the lack of liquidity. It's certainly changed over the last ten years and seems to have accelerated over the last few years. It feels a lot harder these days."

Interestingly, the numbers are holding up a lot better for the biggest races such as the Derby, Grand National and Gold Cup, but it’s in the more everyday fare that the drop in volumes has been particularly felt, something that has also affected Williams.

"I dropped my stake last year because there wasn't enough money in there to support what I was betting,” he says. “Million-pound markets felt commonplace when I started. Liquidity is the lifeblood of an exchange and there doesn't seem to be the same energy for it from Betfair or a will to make it better.

"Liquidity encourages action. We want to bet into strong markets but where have all the layers gone? We dip in and out, betting amongst ourselves. The money isn't there to take out of the markets – there's no depth to them."

'It's still the best thing out there'

Despite accusations that it has not done enough to attract the next generation of users and has instead prioritised its sportsbook, which has a higher margin, Betfair maintains that the exchange remains a "key component" of its offering.

Arthur Pitt, head of the Betfair Exchange, points to the development of the platform through features such as Betfair Beacons, the fire and ice emojis that appear next to market movers, recent marketing efforts and the fact the Betfair SP "consistently outperforms" the industry SP as examples of its desire to see the exchange thrive. However, he also argues the drop in activity in racing markets is a reflection of wider trends in the betting and gambling industries.

He says: "The exchange faces the same economic challenges that all operators are currently facing and, while active racing customers compare very favourably year on year, regulatory requirements and race-related constructs such as competitiveness and the attractiveness of the racing product to a younger audience have had an adverse effect on horseracing volumes."

Given those headwinds, what does the future hold for the exchange?

It is now one of several products under the banner of Flutter Entertainment following its £5 billion merger with Paddy Power in 2016. In that year, the exchange accounted for around 20 per cent of Paddy Power Betfair's revenue, whereas now it is estimated to account for less than two per cent and is expected to further decline as Flutter targets US growth, according to industry analysts Goodbody.

Betfair "remains the best peer-to-peer exchange out there" according to industry analysts Goodbody
Betfair "remains the best peer-to-peer exchange out there" according to industry analysts Goodbody
Credit: Alan Crowhurst
"It remains the best peer-to-peer exchange out there," says Goodbody's David Brohan. "The likes of Matchbook and Smarkets have had a big push in recent years but liquidity on the exchange remains unrivalled.

"In the absence of launching it in the US, we'd expect it to decline modestly each year but remain the number-one exchange out there. There could also be opportunities for further expansion in international markets, but given how small it is in a group context, it's hard to see a significant transformation to it."

In the UK and Ireland, the exchange sits alongside Betfair's sportsbook, as well as Paddy Power and Sky Bet. It is now one part of a gambling giant, which has prompted suggestions it has fallen down the pecking order compared to more profitable areas of the business and that the only reason it has not been sold is due to a fear of another company owning it, although that has been disputed by one insider, who says it remains a priority for the business.

On what the future might hold for the platform, co-founder Black says: "I think it will just continue on its own path. Liquidity has fallen but the reasons for that can be addressed and it can probably bounce back and level out.

"To some people it might be a little out of time, which is the worrying thing, but in my incredibly biased view it's still the best thing out there.

"It might be a little unloved in some parts of the company but definitely isn't in others. I think they care for it but I guess it might come second in some arguments. It deserves to be right at the top of the list of operators offering racing markets, but maybe it's not there for different reasons. That's a shame but I don't think it's dying. I think the entire industry has a problem."

The main concern for Williams, who is part of a prolific in-running syndicate, is that there is not enough new blood coming into the exchange, players with an interest in learning the system and engaging with racing, which perhaps reflects a wider trend around betting on the sport.

"If the exchange is still going in 30 years, there won't be an in-running group as most of us will be dead or retired," he says. "Nobody is coming into it now. It's too hard as there's not enough money in the markets. It's going to all the sharper in-running players and it's ever-decreasing circles.

"I was 27 when I started. I'm 50 now and I don't want to be doing this in five years. It feels like it's become worse during the last 18 months and it's going one way. I can see there still being in-running betting in the next five years, but there will be a lot less people making a lot less money. The turnover will be lower, which has a knock-on effect for horseracing."

The data backs up what Williams and his fellow professional punters have experienced in the last 18 months. It's a far cry from the early days – and, while the Betfair Exchange remains a profitable business, a major reversal of fortunes would be required to recapture that revolutionary excitement.
By:
longbridge
When: 14 Aug 24 19:42
"While other sports are holding up on the platform ... One explanation is that affordability checks have forced many of the bigger players to switch to black market providers or quit altogether"

That makes little sense - if ACs are the issue, that should hit all sports?

The argument I do buy is that the big winners have had 20+ years on here to hone their strategies - so they're more likely to win faster, and hence new recreational players lose faster, as time goes by, which makes this increasingly less fun for new players?
By:
lapsy pa
When: 14 Aug 24 19:50
^ I get that re newplayers ,a seismic drift on an early exchange price no help either with even restricted bog,maybe an argument for new players to hone in on 'turbo' prices etc though an envitable short term strategy?
By:
howard
When: 14 Aug 24 19:53
Something there with your last point longbridge. Yeah nowt to do with AC's the rot set in long ago. Something I have mentioned but it never gets written about is 95% +  punters lose but they want to lose to a bookie not other people that they are directly betting against. Because that means they are inferior to others.  Many punters loved it when Curley took £3/£4 million of the bookies. If he had won it on here and said so what then ?
By:
sparrow
When: 14 Aug 24 20:00
If I lose then I prefer it to be to someone on here because I believe that exchange betting is better for the majority of punters and always will do.
By:
askjack
When: 14 Aug 24 20:09

Aug 14, 2024 -- 2:00PM, sparrow wrote:


If I lose then I prefer it to be to someone on here because I believe that exchange betting is better for the majority of punters and always will do.


I agree 100%

By:
howard
When: 14 Aug 24 20:11
What you think is not typical though sparrow. Agree ? Forumites are more likely to be like you but 99% of users never post.  Another left field view of mine is most punters don't want to win long term. It would frighten them. They just want fun bets and occassional windfall. Not staring at a screen for hours. That's work.
By:
sparrow
When: 14 Aug 24 20:15
Probably not, howard.  Punters are stuck in their traditional rut and many are not even aware of the exchange and only associate racing with bookmakers.
By:
howard
When: 14 Aug 24 20:24
When people gave this a go in the early 2000's they lost money ( 95% of 'em )  For whatever reason people got sick of losing money on here and went back to losing it on the likes of 3 65. It wasn't the losing itself that made them move was it ?  People wouldn't ask you if you were making money off bookies but if they asked you are you winning on Betfair and you say no they might think you're a bit stupid for bothering and you might think the same yourself.
By:
leif
When: 14 Aug 24 20:32
The people on there are dying off as it's hard for younger people to play in a professional way."

Breaking news:

''Younger people'', are all dreaming of becoming successful currency [and whatever else] traders, emulating their heroes living in beach-side mansions and driving the flashiest cars on the block.

They don't want to understand the sport or spend time learning the nuts and bolts.
By:
dave1357
When: 14 Aug 24 20:32
longbridge • August 14, 2024 7:42 PM BST
"While other sports are holding up on the platform ... One explanation is that affordability checks have forced many of the bigger players to switch to black market providers or quit altogether"


The exchange might be the only place that some people can get bets of the size they want on horses. I think that's unlikely in other sports given books caution about horse betting compared to eg high level football betting. So the loss of high value bettors due to affordability might have greater effect on racing than other sports where they would be a lower % of the total bettors.

eg 100 high value football bettors are 30% exchange 70% other books - 100 high value horse bettors are 100% exchange, so when they all go because of affordability, the effect is greater on horse racing.

I might be wrong, of course, about the amount of large bets the books accept on general sports and then my theory would be bollocks.
By:
howard
When: 14 Aug 24 20:34
I think many working men liken this place to city traders. One thing I believe is it's a good thing Betfair hasn't captured nearly all the horse racing market. You've still got great value on here to modest stakes with a 2% takeout. If racing's income had been smashed by the high turnover / low profits exchange model such value would not exist imo.
By:
sparrow
When: 14 Aug 24 20:37
It just amazed me that people were happy to return to bookmaker betting but I was brought up in the game with my father an on course clerk most of his life and myself who worked for a bookmaker also for a while. I do firmly believe that the software use destroyed a great deal of the product but greed will always out.
By:
howard
When: 14 Aug 24 20:42
That's a very good point Dave. I think they will let large staking punters have a much longer run on the likes top level football.
By:
screaming from beneaththewaves
When: 14 Aug 24 20:51
The closure of the Betfair Points scheme in 2019 was a turning point (for any youngsters reading this, you gained points for turnover, win or lose, and those points reduced your commission rate in stages from 5% down to 2%). When Betfair put everyone on 2% and ended the points scheme, it appeared to be an obviously Good Thing. But I remember warning at the time that liquidity would plummet without that incentive to have a bet. Arbing, in particular, would suffer. For years I arbed in large sums, not because it won me any great amount (the margins are very small), but in order to generate huge Betfair Points totals. Once that incentive disappeared, so did the incentive to arb, and I stopped doing it entirely once my commission rate was held at 2% regardless.

A new Betfair Points scheme, whereby you could get your commission rate down from 2% to, say, 0.5%, would be well worth trying imo.
By:
Smoky Hill
When: 14 Aug 24 21:09
Betting Exchanges I think are like a fashionista trend that's on the wane somewhat.  Fun and novel when they first appeared, I used to back and occasionally lay, and enjoyed some Ante Post bets, which is all I use them for now. 
I am a small bettor, maybe £20-30 a day.  Rarely on Exchanges these days.

I also think they bring out some unfortunate aspects in people.

As with many other things in life, nobody would copy the UK model. The profits made by some bookmakers are obscene, and they probably make a small profit from me, and I admit to enjoying some of the bets offered, especially e.w. extra.. but I won't be making anyone rich.   

I used to support the idea of a Tote Monopoly and likely wouldn't object to that.
By:
hulk23
When: 14 Aug 24 21:19
changed overnight when they let a bookmaker run the place.  the very people the exchanges were in competition with. 

Black & Wray weren't interested in the darker arts, padi is.
By:
comingupthehill
When: 14 Aug 24 21:26
Basically once they floated,they were vulnerable.the big bookies hated them and have slowly chipped away at weakening them,and offering better deals to attract their customers away.
The fact paddy now owns it says it all,the threat has lifted,and more of an equal playing field.
The pitch bookies would be lost without Betfair,
It’s effectively a clearing house for liabilities,
Like Lloyds of London for insurance.

The end of multiplies was the biggest deterrent,has a lot of punters don’t bet singles,so you ve no choice to bet elsewhere.

As for traders,the 60% killed them off.and layers are just odds on backers waiting for disaster to strike.

But for single backers win only,they offer the best prices,so will always have their place.

It was a great concept ,but ,like bit coin,or green banks,or bank of Dave,they stood no chance taking on the big established banks,bookies
By:
hulk23
When: 14 Aug 24 21:27
"It's certainly changed over the last ten years"

last ten years, so since Paddy Power got involved Martin ?  you've found it a bit more difficult since then ?  CoolCool

wonder why that could be Martin
By:
scoobytoo
When: 14 Aug 24 21:42
Just out of interest what is a " prolific in-running syndicate" ???
By:
comingupthehill
When: 14 Aug 24 21:48
Drones,pmsl,or private box on the furlong marker.
By:
hulk23
When: 14 Aug 24 21:50
only "prolific in-running syndicate" i'm aware of is padi betting into those clear photo winner markets before he unsuspends the market for the general public to try and get involved in.  maybe that's what he means.
By:
screaming from beneaththewaves
When: 14 Aug 24 21:50
They take it in turns to deposit.
By:
leif
When: 14 Aug 24 21:50
Just out of interest what is a " prolific in-running syndicate" ???

The BF AI bots?
By:
comingupthehill
When: 14 Aug 24 21:55
If you think bots or padi is quicker,don’t bet in running or photos,

Then worse still,moan about it,when you know the bot will beat you.

Why don’t you look at the form,then pick a horse before the race,if the form is to confusing,the post have started to print a handy simpler racecard in shops to start you off .
By:
hulk23
When: 14 Aug 24 21:55
keep hearing about drones.   how many people have those pictures, how much money is available ?  if one person is "prolific" nobody else is getting a look in.
By:
Jack Bauer "24"
When: 14 Aug 24 22:01
It sounds lie him and his mates are sharing the cost of the drone fees and are calling themselves a syndicate. Maybe they share all the profits too so that they are not so badly affected by Betfair stealing their profits through the despicable premium charge when they have a bad run.
By:
comingupthehill
When: 14 Aug 24 22:02
I ve seen a guy getting one out of his boot in a lay-by round corner from wetherby.

And there’s a guy at chelt who just FaceTimes the big screen all day,whilst leaning on the rail.told me 4 off them do it,50k a year presume each( well I d hope so).

There’s another team running round betfred backing price pushes from 11am.

It’s ****g mad the lengths people go to,

Then my mate told a bookies rep on course( won’t mention the company),I try and do ew with the extra places,his reply,oh you’re a thief are you.

I jumped in ,don’t offer it then,ffs,he was the rep,I’m sure is job was to promote the extras places,couldn’t make it up.
By:
Jack Bauer "24"
When: 14 Aug 24 22:02
*It sounds like
By:
leif
When: 14 Aug 24 22:04
Denise would have the drones neutralised if it impacted her profits, likewise the top books.
By:
lapsy pa
When: 14 Aug 24 22:10
Jack,got PC on 10k winnings about 12 years ago, i would have always gone the extra tick,hence another tick, that's imo the problem.
A lot of time on my part,not worth pursuing for me time wise after.
By:
mrcombustible
When: 14 Aug 24 22:13
Saw 2 drones at Brighton last Thursday
By:
Rico-Dangleflaps
When: 14 Aug 24 22:20
no probs with betfair for pre event punting...ir is simply criminal activity.
By:
comingupthehill
When: 14 Aug 24 22:23
Given everyone’s gorgeous drones,or arbing Fred’s pushes,or sat at furlong pole,then padi piles in with his 108 quid.cant believe anyone bets in running,

That’s without the delays.
By:
Rico-Dangleflaps
When: 14 Aug 24 22:23
drones only needed for last 2f..but, there is only tenners to win and any amount to lose..
By:
comingupthehill
When: 14 Aug 24 22:23
Got
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