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Greg Wood
Friday November 2, 2007Betfair, the internet’s leading betting exchange, is believed to be on the verge of allowing punters to place bets which will be settled at "Betfair starting price" – the price of a horse at the moment a race begins. The move is intended to boost liquidity in its racing markets from early in the day, but is also a clear challenge to traditional bookmakers, who settle the majority of bets at the official SP, returned by a team of reporters in the betting ring at the racecourse in question.
Because Betfair makes its money through a commission on winning bets only, the over-round on its markets is rarely above 1% when a race starts. This means that the Betfair SP will almost always beat the official SP, which tends to have a margin of between 1.75 and 2% for every horse in a race.
Until now, however, Betfair punters have always been forced to take the best price on offer when they log on, or leave a "request" for a better price which may, or may not, be matched by other users. If they can bet at the Betfair SP, they will in the vast majority of cases, be paid at a better price than the official SP.
The Racing Post has carried "teaser" ads from Betfair for the last two days, suggesting that the exchange "changed the face of betting" when it was launched in 2000, and that "history is about to repeat itself" in December 2007. This suggests a launch date of December 1 for the new service.
Any TRFers care to explain how this would work?
I fail to see how offering bets at a Betfair SP is going to do anything to boost early morning activity in the markets.
It isn’t clear from this article, but is it the intention to offer the option to lay horses at this ‘SP’ as well as back them?
AP
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Haven’t got a clue how it will work, but if it does the potential is enormous.
Not only will they be able to take the same multiple bets as the High Street bookmaker, but they will also – even with 5% deduction – be offering overall better value to the sp punter, and without the big 3 corrupting the returns.
The beginning of the end for the corporate Dick Turpins?
Roll on, I say.
If betfair are laying the bets at Betfair SP then things could indeed get very interesting.
The best news I have heard this year, I hope it happens.
It will be interesting to see how it will work in practice though.
Surely if this is implemented the SP must be paid out by Betfair themselves. As much as the BF SP in itself is great news for punters, I’m slightly concerned by the notion of BF effectively becoming a bookmaker as well as an exchange, as then the motives of their business could well change.
What they could do is queue up layers/backers of SP bets, matching in the same way as now.
i.e. I agree to lay, say, £100 at SP, accepting the risk that I don’t know what it will be (in the same way as an SP bet with the bookies today offers the same risk).
That gets offered and someone will then back it at SP. There is an element of risk for both parties clearly.The flaw with that is that the SP at the ‘off’ could be very easily manipulated (e.g. by hoovering up all the prices to small money to move the sp out, having already had a disproportionate bet at SP).
The big Q, as has been pointed out, is how they will calculate the SP and how it will be ‘protected’ from manipulation.
But as betfair are, generally, cleverer and more creative than most of us lot they’ll no doubt have something a bit more novel up their sleeves.
If betfair are laying the bets at Betfair SP then things could indeed get very interesting.
Interesting in what sense?
Maybe they’ve watched Nick Mordin’s incomparable 1990 Dispatches documentary on how the trilaterals mainpulate SPs to suit themselves by smashing horses fast and late.
The trilaterals might portray taking SP bets as a risky business but in reality it’s money for the oldest rope ever.
Looks like the party’s over for the brown envelopers – all that hospitality for Lord Donoghue and it barely saved their racket for a single year.
Hello,
If this new procedure is adopted and the inevitable sqeeze on the big 4 or 5 comes about…..where does that leave Racing overall, funding wise..
The bigger Bookies are looking for any reason not to fund racing to the extent they previously have. There was an article regarding this only this week in the RP.
I have to admit I don’t know to what extent BETFAIR contribute to racing. How it is measured, collated etc.
I agree with the other contibutors that in the short term, the new Betfair SP will benefit punters’…but looking behind the scenes, will the noble gentry within the Directors Room give generously to Racing…
regards,
doyley
From RP website
Tony Calvin said: “If you are a horseracing bettor, watch this space.â€
They wouldnt be laying bets at SP though would they? They would be laying bets at presumably a small % over what was on betfair near the off – and presumably paying GPT on any profit they make. If that was so easy then there would be a lot of Betfair millionaires out there.
To date, I don’t really think that Betfair have managed to attract all that many price-insensitive bettors to their site and I’m not quite sure this will attract them either. Punters who are genuinely price insensitive obviously wouldn’t be bothered by it and those that want value would surely want to take the supposedly better price that was available on Betfair? Why would they want the Betfair SP?
The exception might be the big stakers. I can think of a few punters who might see buttons available on a 70 poke on betfair that would be quite happy to leave that there and take £500 at the Betfair SP which may be 60 say. Would they be laid by whoever was laying the bets? Or would they be restricted? Or would whoever is laying the bets back the horse on betfair to ensure the Betfair SP was reduced?
When you bet on multiples with Betfair you are actually betting with/against a Betfair company and not an actual layer as such so I presume it will be some variation of this.
Also when you bet multiples with Betfair, there is a maximum to what you can win. I got a message with a multiple football bet before which told me that the liability was too big
TDK makes a good point. Price insensitive punters who are in the vast majority will stay in the bookies and if you want a Betfair SP that badly you can do it already to a reasonable degree of accuracy with a bot.
The amounts matched on the racing markets do seem to have stagnated and traffic through the Betfair site has dropped since a peak in mid 2006.
If they really want to increase liquidity they need to look at and revise the commission structure to encourage core mid level players and make fast pics available to all users.
I think it says a lot about BF that their happy to allow a tiny minority of their customers have a significant advantage in the inrunning markets. Not very fair at all imo.
It will be interesting to see how they do it but I cant see it making a huge difference. I think more bookmakers formulating their own SP’s as seems the trend at the moment is a potentially more interesting development.
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TDK/CR
But, if Betfair can really produce their own sp’s at a more representative price than the big 3, what is to stop them opening up their own shops?
And where will the others pull the mugs in for the FOBT’s and cartoon racing from in those circumstances?This could be a huge step towards a point I made a few weeks ago for a genuine industry SP. Live market data from Betfair, big bookmaker firms and the Tote could easily be combined to produce a fair SP. The model could easily accommodate a fixed percentage over round per runner and we would have an ideal system.
The current corrupt system cannot survive.
Reet Hard
Nothing is stopping Betfair from opening shops and producing their own SPs. HOwever, once they start increasing their overheads (which they would have to significantly to open shops) they will find that they wouldn’t be able to survive long laying 105% books to all and sundry.
Going back to a point I made earlier, the fascinating part of this development for me will be how Betfair handle large staking shrewdies who may see the opportunity to get on a large bet at Betfair SP without playing on the normal Betfair market and ruining the price with their own money.
Typically a lot of big stakers now complain that as soon as they put up a big order they are repeatedly undercut and often fail to get much on at an acceptable price. If they start playing large bets at Betfair SP, are the layers of the Betfair SP going to manipulate the Betfair SP to ensure that they dont have to pay at big odds? Is this whole idea going to turn Betfair into a glorified tote? Interesting times and all that….
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