Friday 31 October 2008

Who Owns The Fish?

There are five houses painted in five different colours.

In each house lives a person of a different nationality.

These five home-owners drink a certain drink, supports a certain football team and keep a certain pet.

Yet no owners drink the same drink, support the same team or have the same kind of pet.

An Englishman lives in the red house.

A Swede keeps dogs as pets.

A Dane drinks tea.

The green house is to the left of the white house.

The green house owner drinks coffee.

The person who supports Chelsea rears birds.

The owner of the yellow house supports Crystal Palace.

The man living in the centre house drinks milk.

The Norwegian lives in the first house.

The man who supports Arsenal lives next to the man who keeps cats.

The man who keeps horses lives next to the one who supports Crystal Palace.

The owner who supports Liverpool drinks beer.

The German supports Bayern Munich.

The Norwegian lives next to the blue house.

The man who supports Arsenal has a neighbour who drinks water.

Thursday 30 October 2008

Why I Love The NBA - Part One

A good example of why I love the NBA for trading. Pre-game prices for the New Orleans Hornets playing at the Golden State Warriors were approximately 1.4 / 3.5 respectively. The Hornets are one of the strongest teams in the West, and made the play-offs last season.

The Warriors were an exciting team last year, just falling short of making the play-offs. I say 'were' because they lost a couple of players during the close season, most notably Baron Davis who will be hard to replace, but Don Nelson is an experienced coach who likes to use 3 point shooting and I hope that continues this year.

Anyway, I'm waffling, but tonight's game was always close, when a time-out was called with 2:53 left in the game, the Hornets up by 2, but with the Warriors having 2 free throws after the time-out.

Guess the price on the Hornets at this time?

You were wrong. I'll tell you. The Hornets were trading in the 1.38 / 1.42 range. To me that is crazy, and crazy means value. Value means profit.

As it happened, the Hornets did go on to win the game by 5 points, but not before they had traded as high as 2.32 (I know because I put in a back at 2 and got matched at 2.32!).

Wednesday 29 October 2008

NBA Is Back

Without a doubt, my favourite trading sport is back today with three games. Trading NBA games in-play is wonderfully exciting with the market quite often "wrong" during games. I have been watching for three seasons now, and learning and improving each year.

Liquidity is generally good, except on nights when most teams are in action when the money can be spread a little thinly, and there is no comparison with ice hockey.

Rather disappointing to see that BETDAQ are not turning these games in-play, but I will be placing my occasional straight punts on there.

Who will win the NBA Championship this year? My fancy is last year's losing finalists the Lakers (4.6 to win the NBA championship) in the strong West, with the Spurs (14) and the Suns (20) safe lays.

In the East, my lay is the Celtics (4.7). It's been a few years since a champion has repeated, and I don't expect Boston to end that sequence. Despite losing their opener, the Cavaliers (18) are good value to again make the play-offs and win the East.

Sunday 26 October 2008

Handling Stress

I read an interesting article in Science magazine this week about how people respond in times of stress.

A recent study by scientists in Illinois and Texas found that when people feel out of control, common sense tends to go out the window, and they "start subscribing to conspiracy theories and superstitions, and seeing patterns where none exist". (Sound familiar, with the "it's a fix" wailings on the Betfair forum?)

Apparently, these findings support earlier studies from the Great Depression days when astrology and horoscopes became increasingly popular.

Personally, I find that handling stress is something I have been able to improve on, although physiologically my heart-rate still betrays me. (There's a certain sum of money that I can handle losing without stressing, but I haven't figured out what it is yet - but four figures will do it!).

So my decision making is more rational these days, and I find that trading sports in-play, it is often possible to see the scared money and take advantage of other peoples irrational decisions as they stroke their lucky rabbit's foot or pray to an imaginary man in the sky, who let's face, if he did exist, would hardly give a shit about you and your losing bet!

Wembley Woes

So much for my plan to back the Chargers at half-time today in the Wembley Stadium game. Receiving the ball first in the second-half, a solid opening drive would have seen them take the lead, but Vincent Jackson couldn't make a catch, and the game turned inexorably away from me.

Money can almost always be made at half-time or late in the first half, by backing the team who will be receiving the ball first coming out for the second half, but in this case greed saw me wait too long to take my profit.

Frustrating for just a few inches to make such a difference, but that's why they call it gambling I guess.

My worst loss of the season, but still healthily in profit overall this year, so I shall take the hit and carry on.

At least the game was an exciting one with a missed extra point, challenges, successful on-side kicks, and even an unusual safety at the end.

Saturday 25 October 2008

Hull City

Another tremendous display from Hull City this afternoon. Having traded as low as 1.3 to be relegated, they are now 7 - with Stoke City, West Bromwich Albion, Bolton Wanderers, Fulham, Tottenham Hotspur and Newcastle United all more favoured for the drop.

After the first day of the season, Paddypower paid out on Stoke City to be relegated, and Betting Directory wrote the following:

"With Stoke already relegated, the question is which two sides will be joinging them? Hull are the favourites at 2/5, which may be worth a bet, given there is a good chance of another early payout if they get beat at the weekend and West Brom are the even money second favourites. Manchester City were the biggest movers following the opening weekend, after a 4-2 defeat to Aston Villa and are now as short as 7/1 to be the shock inclusion in the bottom three come May.

Paddypower Premier League Relegation Odds: Hull 2/5 Stoke 4/9 West Brom Evs Fulham 5/2 Bolton 5/2 Wigan 3/1 Sunderland 5/1Man City 7/1 9/1 bar"

I'm sure Paddypower are relieved that they didn't pull the plug on Hull City although the publicity would have been priceless.

Chickens and Elephants

"I started out with nothing, and I still have most of it". 

An old joke, but with house prices and the Stock Market dropping by the day, and no bottom in sight, (that sounds rather rude!), it doesn't seem quite so funny these days.

Of course the bottom will be reached at some point, and although recovery will be slow, (at least Pound Cost Averaging will help) at some point I will be back to where I was.

Advanced in my years as I am, I do (hopefully) still have a few years before retirement, and since I am not as stupid as I look (always a great relief to my Mother), I hope to have all my ducks in a row by that time.

Funny really how my sports investing has been a far better savings method over the past 4+ years than the more traditional stocks and shares.

My old parents are watching their HBOS shares lose value every day. I'm expecting them to ask me soon how to open an account on Betfair, but I shall point them over to BETDAQ. They can't be paying a Premium Charge at their age.

At the other end of the age spectrum, my son turns 18 next month. Since he is almost as gifted at Maths as I am, I think I could do worse than forget his new socks and gloves, but fund him a new Betting Exchange account instead.

Continuing with the financial (and toilet) humour, I read this Nassim Nicholas Taleb quote:

"Option sellers, it is said, eat like chickens and go to the bathroom like elephants" 
(Option sellers earn a steady small income from selling the options, but when a disaster happens they lose a fortune).

Friday 24 October 2008

US Presidential Election

Obama has firmed up at 1.14 for the upcoming election. With less than two weeks to go, and a commanding lead in all polls, bar one, that looks to be a fair price.

At least no one could accuse the Associated Press of fudging the numbers. Their results just happen to differ from the others. Probability theory dictates that it is possible to obtain the opinions of 300 million people by using a sample of just 1,500. Below this number, and the margin of error gets larger; above this number, and the gains in accuracy are insignificant.

The founder of polls, George Gallup said that one spoonful can reflect the taste of the whole bowl of soup, if the soup is well-stirred. The APs spoonful just happened to be a little unstirred. Either that, or the US is in for a big shock come Election Day!

World Series

It's looking as if the World Series will head to Philadelphia with the Phillies and Rays tied at 1. As in the ALCS, Tampa Bay lost Game 1 at home, but in baseball home 'advantage' isn't the advantage that it is in other sports.

In fact, Tampa Bay have won 4 of five road games this post-season, and with Matt Garza (3 game ERA 3.32) pitching against Jamie Moyer (7.15) in the crucial Game 3, I would be very surprised if Tampa Bay are not favourites. 

Back the Rays to win the World Series at anything over 1.8! (On BETDAQ of course).

Wednesday 22 October 2008

Free Money

I'm usually of the opinion that if something looks too good to be true, then it probably is, but this morning while the Toronto Maple Leafs / Anaheim Ducks game is well into overtime, I happened to check out the Regular Time market and find a sizeable sum available to back at 1.01 on the tie. I didn't even have time to pinch myself. Sometimes, there is such a thing as free money.

Sunday 19 October 2008

Chargers @ Bills

The game on Sky is underway, and it looks like the liquidity on BETDAQ is coming on strong these days. 

Certainly a lot higher than I was expecting. Here are two screenshots taken a few seconds apart early in the game.

Saturday 18 October 2008

Betfair Apologises

About eight months after sneakily introducing 'cross-matching', Betfair apologises, apparently after a slap on the wrist from the Gambling Commission.

Cross matching basically meant that Betfair were matching customer A with themselves, and then themselves with customer B at two different prices, taking advanatge of the fact that quite often in fast moving markets such as tennis, someone will want to back player X at say 1.5 where 1.49 is available as a lay on player Y.

In breach of their terms and conditions where they say they will match you at the best price available, Betfair gave you the 1.5 you asked for, but then 'cross-matched' your bet at the 1.49 giving that customer the price they asked for, but pocketing the difference.

Apparently this little scam netted Betfair the not insignificant sum of £300,000 in just a few weeks.

"Cross matching was introduced without informing customers in advance. BGB [Befair General Betting] made revenues of approximately £300,000 from the inception of cross matching until the end of March 2008."

During an online discussion with Betfair Customer Services on March 19th, user "askari1" asked the reasonable question:

How much money has the engine / arber made for Betfair so far? If commerical confidentiality prevents you from quoting a figure, could you give some indication in terms of the total turned over on a typical event e.g a televised tennis match and / or the typical post-game commission taken by Betfair?

The answer was, at best, grossly misleading: "The biggest market the new code has operated on was the televised tennis match between Andy Murray and Roger Federer a couple of weeks ago. Approximately £6.85 million was matched in the market, and the amount accrued as a result of our inability to offer a price improvement when bets were matched across the two players was £882.91 . Obviously in well-traded markets like a big tennis match the amounts won and lost by customers are much less than the headline volume figure too, but as a percentage of what’s won or lost in each market the amount is small"

A few comments.

With blatantly misleading statements like this, it is hard to believe anything that Betfair says any more.

Will we be seeing an apology (and refunds) from Betfair in a few months for introducing a Premium Charge that is absolutely impossible to verify is correct and which will vary depending on just who happens to be active in ones losing markets - a factor that we have no control over?

How can Betfair justify removing £300,000 from the exchange with zero risk to themselves as ok, but winners who make profits after taking risks are penalised heavily?

Are the Gambling Commission investigating the introduction of the Premium Charge?

BETDAQ / Bet Angel Professional

I have been asked to publicise the release of Bet Angel Professional for use on BETDAQ.

I don't use third party software myself, but I may give this a try as it comes highly recommended by a number of users, and it's free. For a while anyway.

From those familiar with the software, it is almost identical to the Betfair version, other than the lack of market depth on the ladder interface and a slightly slower refresh rate.

You can download it from , and if you need any reminding - it's 2% commission at BETDAQ.

Friday 17 October 2008

Sarah Palin Chooses BETDAQ

It Ain't Over

I had a small play on BETDAQ on the Boston Red Sox to beat the Tampa Bay Rays this morning at 1.72. The pitching match-up looked to favour the Red Sox with Matsuzaka having pitched 7 innings for no runs in Game 1 of this series, and the Ray's Kazmir having a nightmare giving up 5 runs in 4.1 innings in Game 2. The value looked to be with the Red Sox.

The price was four points better than Betfair, but my plans to lay the bet off after the Red Sox took the lead went adrift when the Rays took the lead and pulled ahead. In the bottom of the 7th, with two out, the Red Sox were down 0-7, but incredibly they came back to win 8-7.

Unfortunately I didn't lay any of the 1.01 that was traded on Betfair. Given that this was the biggest comeback in an ALCS game in nearly 80 years, and with just 7 outs remaining, I think the 1.01 was actually value.

Sometimes not being able to lay off can be a blessing in disguise, and only 2% commission on my winnings. I do have to say that for trading the game in-play, BETDAQ was really disappointing.

Thursday 16 October 2008

Betfair Forum - Greg Wood

From the Guardian's Greg Wood, an article on the new 'civilised' Betfair Forum:

No place for punter banter at smartened-up Betfair

For fans of Betfair, the hiving off of its forum is the latest sign of the exchange's rapid corporatisation

The users' forum on the Betfair betting exchange is not to everyone's taste. If some internet racing forums resemble a genteel discussion of matters of state in a Victorian drawing room, Betfair's can be more like a riot in the Coliseum.

Some contributors like to think of themselves as Caesar, while others never tire of adding their voice to the raucous background noise. More tender souls, meanwhile, could well end up as lion food.

But the Betfair forum is also by far the largest and most lively aggregation of racing fans and gamblers anywhere on the web. It has been an important part of the exchange's appeal almost from its launch eight years ago, a way to advertise the person-to-person basis of the site and increase the sense of community.

Like any community, of course, it has its share of members with personality disorders: the bullies, the fantasists and barefaced liars, and the ones with such deep-seated anger-management issues that they should probably be under lock and key.

But there are many others, too, who just want to talk punting with like-minded souls, and to do so in a forum where an honest opinion can be expressed, and even the odd insult hurled, without the sky falling in.

That, at least, is how it has always been, and those who didn't like it could easily surf off elsewhere. As of yesterday, though, the barbed wire may have started to fence off the wild frontier.

In a move which screams "float" even more plainly than the recent imposition of "premium charges" for some of its most successful clients, the responsibility for Betfair's forum has been hived off to a different part of the group - TSE Global Limited - with some important new procedures in place for forum users.

In particular, it will now be much easier to "report" other users (or at any rate, it will when the new forum actually works, since yesterday's launch survived for barely an hour before it crashed). This can only lead to the fairly rapid sanitisation of the entire forum.

Which is no bad thing, many would say. For anyone who has watched and admired Betfair's growth into a betting phenomenon, though, it follows the premium charge as the latest sign of the exchange's rapid corporatisation.

The punters who came together to make Betfair what it is are now just a means to an end, specifically a chunky share price when it floats. The forum, meanwhile, is a bit of an embarrassment.

Even Ben & Jerry sold out in the end, so the clear urge of Betfair's founders to spend more time with their money is both understandable and thoroughly well-earned. But when they are gone, what will remain?

This is surely the most intriguing question of all for punters who love the value and flexibility that exchange betting provides. Betfair's premium charge, remember, was apparently introduced because a small number of winners were felt to be draining too much money from the site's losers. Despite the dreadful PR, the money was required to keep the losers coming.

There must have been some good reason to allow their few rivals, along with many of their own customers, to kick them all over the park, and this one seems as plausible as any.

If Betfair had had a worthwhile competitor in the marketplace, though, it would never have dared to risk the loss of its precious liquidity. This, in turn, implies that its long-term viability may depend on the preservation of its effective monopoly in the market.

Now try this for a leap of logic. If a business model requires a monopoly to stop its customers eating it from within, then it is possible to argue that in the long term, it is a business model that doesn't work - which would be a good reason to cash in right now.

The graphs and projections at Betfair HQ no doubt suggest otherwise. It is arguable too that at some point in its expansion, it was inevitable that Betfair would want to draw a line under its humble beginnings and stride on into a shiny new profit-maximising future.

Sadly, an edgy, rough-house internet forum probably has no place in that.

Wednesday 15 October 2008

US Presidential Election

The Presidential Election will be decided in twelve states. The outcome in the other 38, barring something bordering on miraculous, is already decided.

To become President, 270 Electoral College votes are required. Currently Obama has 233 'in the bag'; McCain has 155.

Obama thus needs 37 more votes.

A look at the latest polls in the twelve swing states shows Obama ahead in 10. North Carolina (15) is a tie, and Indiana (11) has McCain ahead.
Obama leads in the following swing states:

Florida (27) 51% - 46%
Pennsylvania (21) 55% - 40%
Ohio (20) 50% - 45%
Virginia (13) 50% - 47%
Missouri (11) 50% - 47%
Minnesota (10) 51% - 40%
Colorado (9) 52% - 43%
Nevada (5) 47% - 45%
West Virginia (5) 50% - 42%
North Dakota (3) 45% - 43%

Although the Bradley effect is a concern, a week in politics is a long time (there are still 4 weeks to go), and there is still one more debate, Obama is looking good for the win.

He has big leads in the three most important states, and if he picks up just one of those, it should be enough when combined with two or three others. Two of the top states, and he's home and dry.

Keep checking the latest polls, but to my mind he is good value at 1.22.

Update: 18/10 Of the ten states above, the Democrats are now odds-on favourites to win the top 8, (116 EC votes) - and we are looking at a landslide victory for Obama. That 1.22 is now down to 1.17, but still good value.

Sunday 12 October 2008

American Football Elo

JPG recently asked me how I apply Elo ratings to American Football.

I find this easier than real football, for two reasons. One, the elimination of the draw as a possible outcome, and two, I use the ratings to directly determine a points differential between the two teams.

For example, today sees the New Orleans Saints at home to the Oakland Raiders. I have the Saints with a bonus for home advantage rated at 25 points, and the Raiders at 16. The handicap for this game has Saints -7.5 available at 2.16. To me this is value.

City Demoted

Some days, 'it' just isn't there. My two big plays of the day were a lay of England at half-time with a view to locking in a profit after 55 minutes which went south with Ferdinand's 52nd minute header. At least my trip to South Africa is looking promising if I can find some winners to pay for it with!

Then I had a bet on Notre Dame to beat North Carolina in the College Football when they were ahead by 2 points at a generous (I thought) 2.2, but with turnovers and very low liquidity on these games, it makes it an uphill task to trade so I ended up letting the bet run and Notre Dame came up just short. C'est la vie as we say in Surrey.

I did mange to find some winners: Florida v LSU, where I was able to green-up, Jamaica v Mexico, (Mexico were too short) and of course Salisbury City v Kettering Town mentioned in a previous post, but overall a losing day - my first of the month. Every cloud has a silver lining though - at least the Premium Charge has been lowered!

Speaking of Salisbury, I'm pleased that it really IS a city. I recently discovered that Brechin and Elgin are not cities at all, despite what their respective football league clubs names are, and I feel a bit cheated! They were cities at one time, but have been demoted to towns along with one other former city in Britain with a league team. Anyone name the town? Or the team?

Saturday 11 October 2008

Salisbury City v Kettering Town

I recently mentioned that I was developing an Elo based football ratings system. I'm rating all the English teams down to the Conference North and South and all the Scottish League teams.

JPG commented that I should be "aware that the accuracy only comes into place after around 30 matches (for each team) have been rated". While I was aware that the ratings would take a while to settle down, I honestly hadn't considered that it would be February before I could start making my fortune. I have kids! I need money for Xmas! Thanks a lot JPG!

Seriously, the comment was appreciated, and as with any system, I shall be 'paper trading' this one first, or perhaps placing small 'live' bets as I did last Saturday, and it will be interesting to see how much the accuracy improves from now until the 30 games.

I would like to know where this value of 30 games comes from? I was thinking of trying it with American Football, but waiting for two years before it settles down is not appealing.

Anyway, with the lack of games tomorrow that I will be betting on, I thought I'd look into one game that Talkbet has mentioned on his blog - - where he says to back Salisbury City at home to Kettering Town at 2.88+.

The game caught my eye, not only because Kettering have been my non-League team for many years going back to the 80s, but because Salisbury have been in something of a slump over the last five games (recent form is taken into consideration as well as the overall rating).

I ran the numbers and have Salisbury at 3.25 and Kettering at 2.49 and at the prices currently available on the exchanges, the value here in my opinion is with a lay of Salisbury. But only a small lay.

Come on the Poppies!

Update: A pleasing come from behind win for the Poppies, who stay second in the Conference, but more importantly remain atop my own personal rankings for their division as do Chelsea, Reading, Leicester City, Rotherham, Tamworth, Team Bath, Celtic, Dunfermline, Brechin City and Stenhousemuir.

Friday 10 October 2008

Jesse Livermore

Some of you may have heard of the legendary trader Jesse Livermore, whose fictionalised life story was told in the 1923 classic book Reminiscences Of A Stock Operator by Edwin Lefèvre.

Although the environment in which Jesse operated was in many ways quite different to today, it is striking how many of the lessons and rules he talks about are relevant today.

I have recently finished reading this book, and enjoyed the first half before it seemed to lose its way as a story, and became a series of chapters that gave the impression of being thrown in there simply to fill space.

Jesse started off day trading in 'bucket shops' before moving to Wall Street and making and losing a fortune more than once.

I shall return to this book in future posts, but for today's quote on trading is this:

"It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon."

Thursday 9 October 2008

Doom And Gloom

Another disastrous day in the stock market, with the American markets again dropping precipitously to their lowest levels since 2003. Expect the FTSE to reflect this tomorrow when it opens.

With stock market returns over the past 80 years averaging 10.3%, and the markets this year down (so far) some 37% or so, it will take 5½ years just to recover to the point we were in December 2007.

This 10.3% figure is a little misleading however. The actual return in most years is seldom within 4% of that number.

For those of us like me who are not that many years away from retirement, the ongoing financial crisis is no doubt bringing about a major rethink of how best to position ourselves for this. I really do not want to have to work for an extra 5 years when I could be traveling the world.

Traditional wisdom has always been to salt money away in volatile stocks, and then as retirement approaches, transition over to safer investments.

With nothing seemingly very safe any more, there’s a strong argument going on in my head right now for giving up on financial investments and concentrating on sporting ones.

Whereas I have little control over the financial markets, I can at least control my sporting investments.

Not to mention that my returns for the past three years have been significantly higher than a measly 10.3%!

Monday 6 October 2008

Feer And Greed

The financial meltdown continues today. As I've written before, it's somehow much easier for me to deal with a £5,000 loss in the stock market than it is to deal with a £1,000 loss on a sporting investment. Probably several reasons, foremost among them being that losses in stocks are usually 'paper' losses which have a good chance of recovering at some point in the future, whereas an investment on Accrington Stanley to beat Aldershot Town is money lost for ever if the result goes the wrong way.

The stockmarket has proven to be a long-term winner over many years, just so long as you don't try to beat the market by trying to find the peaks and the troughs. An approach of investing a set amount every month in an index fund will return approximately 8% a year in the long-term. It's important not to react to short-term moves, either by panicking or by getting greedy, since reacting in this way will only reduce profits or increase losses.

And it's the same way with trading sports. As with the stock market, the two driving forces are fear and greed. Anyone who has spent a lot of time on Betfair or BETDAQ will have noticed that the best opportunities are available when people are acting based on one of these emotions.

As Warren Buffett says "Be greedy when others are fearful. Be fearful when others are greedy". And he's worth a few bob, so he should know what he is talking about.

Sunday 5 October 2008

New Restaurant In Town

There's a small family owned restaurant (Purples) in the town where I live. They've been there a while, but most people have been going to the trendier corporate owned place down the street (Fartibets).

However, the latter have recently upped their prices by up to 20% for some of their best customers.

Not surprisingly some of these customers have started to try the fare at Purples.

Their selections are pretty good, mostly on a par with Fartibets.

For take-aways, there's little to choose between the two, (other than the 20% difference in prices of course). Purples are making changes, and will soon allow patrons to talk to each other.

However, if you choose to eat-in, bear in mind that if you change your mind during the meal, and want to sell your prawn cocktail to someone else while buying a sausage, there may not be the demand in Purples, so it may take longer or may not even be possible.

Purples is getting busier all the time though and may soon need to expand to larger premises.

Sunday Value

Am I missing something, or are West Ham terrific value at 1.91 on BETDAQ to beat Bolton Wanderers later today?

I have been maintaining a rating system from the start of the season based on Elo principles, and now that October is here, and it seems to have settled down somewhat, I'm going to start using it to find value bets.

I currently have Bolton rated as the worst team in the Premier League with West Ham rated 8th, but some 58.3% higher than Bolton. By comparison Chelsea are 'only' ranked 21.87% higher than Aston Villa and are priced at 1.6.

Liverpool also look to be good value to win at Manchester City, (2.28 on BETDAQ, 2.24 on Betfair right now).

Small stakes on these until I gain some confidence that the ratings are mature enough to start using live, and all bets will be placed on BETDAQ since I will usually let these run as pure punts and 2% commission versus 20% is really no contest.

Update: I guess I was missing something in regard to the West Ham price, but overall in profit with Liverpool's come from behind win.

Friday 3 October 2008

Spot The Irony

Betfair Customer Services 03 Oct 08:09

Betfair today issued proceedings in the Federal Court of Australia challenging the validity of decisions by Racing NSW (RNSW) and Harness Racing NSW (HRNSW) to impose a 1.5% turnover fee for all wagering operators wishing to cover NSW thoroughbred and harness races.

The proceedings in the Federal Court are brought under section 92 of the Constitution, alleging discriminatory conduct in interstate trade and commerce. Betfair succeeded in a separate section 92 action against the Western Australian government earlier this year.

Betfair’s Director, Corporate and Business Affairs, Andrew Twaits, said: 

“We’re happy to pay a fee to the NSW racing industry on all our wagering revenue but the turnover fee imposed by Racing NSW and Harness Racing NSW is highly discriminatory.
The fee equates to around 60% of our gross revenue but less than 10% of TAB’s revenue. Both RNSW and HRNSW are fully aware that it’s impossible for us to compete on those terms. They’ve left us with no option but to challenge the validity of their decisions.
The only fair basis on which to charge for race fields is to implement a gross revenue model where every wagering operator pays at the same rate. That way, even if there is any transfer of customer expenditure from the TABs to other wagering operators, the NSW racing industry will continue to get the same proportion of revenue from every dollar spent by punters.”
Honestly, you couldn't make this stuff up!

Letter From Betfair - Dear Loser

Courtesy of the Betfair forum, it appears that Betfair have e-mailed a number of people (small winners) this week with this offering (note especially the ending of the first paragraph):

Congratulations! You’ve had a winning week on Betfair. And like 98% of your fellow winners out there, you won’t be paying any Premium Charge; and by our estimation, you never will.

There’s been a lot of misinformation in the press and chatrooms about the new charge, so we just wanted to assure you of this after your successful week and to share some information with you.

The charge will only affect customers who, in the long-term, generate very little commission compared to the amount they win. Those customers pay less as a proportion of the funds they remove from the exchange than we spend bringing those funds to the exchange in the first place. This behavior is unsustainable for the long-term health of the exchange and not in the interests of customers, like you, already contributing their fair share.

We don’t want to limit any customer winning because that’s not what we’re about – we are just asking a few to contribute a little more, so that we can continue to grow the exchange for everyone’s benefit.

In its first week, the Premium Charge is being paid by fewer than 500 customers. During this period, we had more than 110,000 people punting on the exchange, so, fewer than 0.5% of our customers fell into the new charge category.

Betfair’s liquidity continues to be excellent. For example, the volumes traded in our football markets, last week, were the third best ever, surpassed only by the final weeks of Euro 2008 and the World Cup.

Many thanks for your support and we hope you continue to be a winner with Betfair. Yours sincerely,

The Betfair Team

" won’t be paying any Premium Charge; and by our estimation, you never will."

Amazing. In other words, " got lucky this week and had a small win, but you will never be one of our biggest winners you big fat loser so keep betting". How insulting.

They also claim that liquidity continues to be excellent, but the cricket markets for one have been noticably quieter, and as I keep saying, once BETDAQ gets going, and it is improving each day, the tipping point will one day be reached and Betfair will be a shadow of its former self. Very short-sighted.

Thursday 2 October 2008

Betfair Provides A Lesson In Customer Alienation


If you were told by your government that you were too successful and that you would have to pay an additional tax, would you be happy?

Probably not.

But this is essentially what Betfair, the world's most successful online betting exchange, recently told its customers.

The company recently announced that it would be adding a "Premium Charge" that is insists will only impact a small number of its customers - less than 0.5%.

The Premium Charge applies when a customer has, over the past 60 weeks, mets all of the following criteria:

The customer's account is in profit.
The total charges paid by the customer are less than 20% of gross profits.
The customer bet in more than 250 markets.

Not surprisingly, the response from Betfair punters was not favorable despite the company's assurances that very few customers are going to be impacted. And despite rumors that Betfair might be rethinking its stance because of the backlash, The Guardian reports that the company insists it is moving forward.

While a discussion of the specific issues that led Betfair to think its "Premium Charge" suitable are beyond the scope of this blog and would be boring to those who don't use betting exchanges, there is a lesson here that is applicable to any business - how you treat your customers matters and how you announce and implement changes that impact them makes all the difference.

Perhaps the most curious aspect of Betfair's move is the fact that the company has not tried to hide the fact that its change impacts its most successful customers. Its fee page even states:

"In addition to the other charges detailed above, a small number (less than 0.5%) of our most successful customers will incur Premium Charges."

Notwithstanding the justifications Betfair thinks it has to levy a "Premium Charge" on its most successful customers (which again are outside of the scope of this discussion), in my opinion no wise business ever presents - let alone implements - any change that specifically and overtly penalizes its most successful customers and sends the message to other customers that being a "successful customer" has an extra cost.

In my opinion, it's clear that Betfair has put its own interests above those of the customers it knows are its most "successful." And that's never good.

In theory, the most successful and sustainable businesses are those whose interests are well-aligned with those of their "best" customers (i.e. those customers who derive the most value from their products and services). In other words, the business wins when the customer wins.

Of course, businesses realistically cannot bend over backwards for customers all the time when it comes to maintaining a viable, profitable business. But there's a very fine line between running a profitable business and running a greedy business.

Clearly, Betfair's dominant position in the betting exchange market has given it the belief that it can take more from its customers. Incidentally, this type of belief isn't exclusive to Betfair - eBay faced a similar response when it hiked seller fees earlier in the year.

But because of the nature of a service like Betfair and the fact that it has no qualms about blatantly targeting its most "successful customers," the risk individuals take when their success is dependent on a dominant business is especially well highlighted here.

If there is a bright spot in all of this, however, it's that Betfair has just given its competition an opening and I'm pretty sure that other betting exchanges looking for more liquidity will be happy to welcome the over-successful punters Betfair decided to alienate.

Wednesday 1 October 2008

New Strategy On Over / Under 2.5

Since I have an uncanny knack for backing unders less than a minute before a goal goes in, I have a new plan. Instead of fearing every corner or free-kick just outside the penalty area, I will now boldly back the overs and cheer every goal as it hits the back of the net.

I'm figuring that in televised games, the market will be highly efficient, so bet one today is in the Liverpool v PSV Eindhoven Champions' League fixture. I have laid the under at 1.91 (so why has the price suddenly just dropped to 1.86?) Typical.

Here we go.

Oh, and this is on BETDAQ by the way, where pre kick-off odds are the same as Betfair.

Update: Good start - goal after 4 minutes! Should I lay off? Nah.

Premium Charge Applied

And so it begins: £260.21 deducted for the Premium Charge at 12:49PM today on a gross profit for the week of £1,749.20 (net £1,260.21 at 4.5%) - so a total commission of 19.375%. Not far short of the 20% they promised!

Now the problem of how to incorporate this into my spreadsheet. Since I like to track my P&L by sport, I should probably pro-rate this per bet, but that will be hard to do. Maybe this problem will be enough for Betfair to make me exempt from the charge? I'll give them a call...

It seems a lot of people misunderstood the allowance of £1,000 that goes against this charge. It started 60 weeks ago, and for many people including myself, was "used up" long ago. How you can use up an allowance that never existed at that time is a bit of a joke.

I was on BETDAQ yesterday for some of my trading. Still lower liquidity than Betfair, but from what I see and read, BETDAQ is picking up all the time, and perhaps that tipping point will soon be reached.