Saturday 30 July 2011

Exchange Wars

I am watching the Internazionale v Celtic match (winning a little on the Under 2.5 after a nervous second half) and found it amusing that the advertising boards around the pitch featured Betfair followed by BETDAQ on several occasions. If I was an advertising consultant for BETDAQ, I would be making it quite clear what the maximum commission rate is.

Prospect: "Hello Betfair - I am thinking of opening an account with you. I see that BETDAQ have a maximum commission rate of 5%. What is the maximum I might pay with you?"

Betfair: "You will be paying the same maximum Sir, unless you start winning, in which case it may be a little more. You're not a winner in life, are you?"

Prospect: "Well, yes. I like to think so. I make financial decisions, including betting ones, after considering all my options. How much is 'a little more'?"

Betfair: "It's only a little more - really, we prefer losers, but while we won't stop you from opening an account, we will take up to 60% from you if you are indeed a winner.

Prospect: "Sorry - the line broke up. It sounded for a moment like you said 60%"

Betfair: "Er, I did. But that's only for winners as I say."

Prospect: "Thank you. I shall take my business elsewhere."

Betfair: "How does 20% sound? Would that be OK for a while?"

Click.

3 comments:

ToyTrader/rockaren said...

What a great post to start my Sunday morning...:)

RIP betunfair@Betfair....LOL

greekfloyd said...

I thought Betfair only takes a comission of every bet that you won, and the percentage of that is from 2% to 5%. Do I get totally wrong?

Betfair Guru said...

Yes that is how they started greekfloyd, then they got a little greedier and wanted 20% ....then a little more and wanted 60%!!!

In my opinion it's playing right into Betfairs hands if all the big players leave because that's what they want to happen!! Unfortunately..few have been left with a choice.

I believe Betfairs aim with this is to drive the big players and the winners away. In one fell swoop they clear out all competition for this little separate operation they have running from Malta (I believe) mopping up over rounds....

Cross-matching was introduced a while ago as a "benefit to all". Amazingly it coincided with a shift from Betfair previously accepting they were on to a good thing at 5% of every winning position...to a new style of operation where they were directly involved in the markets themselves.

Write to them and ask them to explain how cross matching benefitted you this year ;-)

They have now given themselves the opportunity to seed their own markets and truly effect movements....

It's part of a big master-plan and certainly is not just a short term move to raise revenues as has been suggested.

Betfair don't want traders or long term winners anymore! And I honestly don't think they care if they all leave.

It has also been suggested that there will be a lean towards a conventional sports book type operation....

I know some of the big high st bookmakers have experimented on a small scale with the exchange idea..but they declared the margins weren't anywhere near as big as they are already getting...

On the other hand...if Betfair can seed their own markets...provide liquidity...semi control the price movements (no big players to fight back)....have sole rights on automated monitoring of the overround and can still claim to be one of the only places you acn get a 100% "fair" bet on then this is a wise move indeed and people are being shortsighted if they think Betfair (as a company where continual growth is a requirement of their future existence) gives any thought to their original roots whatsoever.

I would suggest the generally accepted 0.5% of account holders could be halved (at least) again for those hitting 250K lifetime profits.

Weekend traders will stick to what they know. Liquidity has INCREASED since 18/7 and you can probably guess where my thinking lies about that situation!!

Just my thoughts obviously but I will be interested to see how it pans out!