Betting Exchanges

[Firefox14]

Hey Guys,

I was just curious why there aren't more betting exchanges and how on earth they lose money? I'm guessing they don't, being that much like poker, players bet against each other and they gain commissions from the orders. Am I missing something?

[noyb]

yes. for players to start betting against each other you need other players to make offers. when an exchange starts out they have no customers, so unless they do something right they're not going to get any customers either as there's nothing sign up for. about 95% of all betting exchanges have failed because of this. only BetFair has been an outright succes story and now has so many customers it can do whatever it wants basically. at this point bettors need them more than they need them. the other still operating exchanges are all bleeding money in overhead or doing so-so.

[Zuon]

Perfect analisis Noyb!
Someone suspect that Betfair insert its money to growth the liquidity or to move the quotes, but there is no evidence for this (and for me is a big stupid theory).

Sure, around betfair are born some betting site that cover the client bets on betfair.

[Firefox14]

yes. for players to start betting against each other you need other players to make offers. when an exchange starts out they have no customers, so unless they do something right they're not going to get any customers either as there's nothing sign up for. about 95% of all betting exchanges have failed because of this. only BetFair has been an outright succes story and now has so many customers it can do whatever it wants basically. at this point bettors need them more than they need them. the other still operating exchanges are all bleeding money in overhead or doing so-so.

95%!!! That's a high number. From what I've read, exchanges are the future, but I guess if there isn't someone sharp at the helm, as with any business, failure is inevitable. But 95%? Wow! That, I did not know. But if successful, referring to my first post, it's a "win-win" situation for them correct? They cannot lose?

[wrongturn]

The exchange business is similar to online auction business. Only one, or maybe two can be successful, because buyers go where largest number of sellers are and vice versa. So there are not many customers left to grab by late starters.

[That Foreign Guy]

Betfair don't need to put their own money in (except maybe when hedging their multiples positions I dunno if they just suck that risk up or what) - all of the major bookies have seven figure balances in their accounts at betfair.

[CHUBNUT]

Betfair don't need to put their own money in (except maybe when hedging their multiples positions I dunno if they just suck that risk up or what) - all of the major bookies have seven figure balances in their accounts at betfair.

sadly this is the sort of nonsense you get in forums when you ask an open question. Befair survive purely because they were the original and bettors are so stupid they go along with anything they're told. Their commission make it mostly pointless to bet on any sort of professional basis and trading is the only worthwhile option, even then one has to be wary of the comm.
Contrary to public belief, exchanges are dying. no matter what the model is you need fools with money, sadly they dont last long in that enviornment and people like betfair have only the sharps to feast off (with their premium comm)
sooner or later the smarter part of the herd moves on to greener pastures, greedy bookmakers offering great incentives in the hope of catching the now elusive gambling idiot. Of course open forums like this only make matters worse by socially inept gambling casulties posting delusionary views.

[Zuon]

95%!!! That's a high number. From what I've read, exchanges are the future, but I guess if there isn't someone sharp at the helm, as with any business, failure is inevitable. But 95%? Wow! That, I did not know. But if successful, referring to my first post, it's a "win-win" situation for them correct? They cannot lose?

Right!
they cannot lose.
Their only problem is to attract new client.
You must remeber that to manage a gambling site have high costs thus you can't survive if you don't have enought clients.

[That Foreign Guy]

sadly this is the sort of nonsense you get in forums when you ask an open question.

I apologise for not quoting the precise post I was responding so posters who are unable to hold more than one topic in their tiny little minds could keep up with the discussion. As you can see I have fixed this error.

Would you like a prop bet on the survival of Betfair?

As they are now a listed company this is quite easy. I'll even give you some options:

Betfair.com (or its direct successor if the company is acquired) permanently stops operating before Dec 31st 23:59 2012 - I'll offer 5 to 1

Same bet but before Dec 31st 23:59 2013, I'll offer 3 to 1

Betfair's gross income (based on annual report) is lower in 2012 than 2011 evens.

[Scottish]

Betfair don't need to put their own money in (except maybe when hedging their multiples positions I dunno if they just suck that risk up or what) - all of the major bookies have seven figure balances in their accounts at betfair.

Exactly, most bookmakers lay off their massive exposure on certain events on Betfair.

[jhol3990]

isn't part of the premium charge designed so betfair takes it cut from bookies laying off their risk on betfair?

[aliante]

Probably in Betfair there are more traders/scalpers than bettors. Betfair knows that traders can operate only there, even with premium charge, since there are no real alternatives.
Scenario will change if other reliable exchanges will grow up.

[aliante]

Betfair.com (or its direct successor if the company is acquired) permanently stops operating before Dec 31st 23:59 2012 - I'll offer 5 to 1

I'll offer 75 to 1

Same bet but before Dec 31st 23:59 2013, I'll offer 3 to 1

35 to 1

Betfair's gross income (based on annual report) is lower in 2012 than 2011 evens.

Backed!

[FourLengthsClear]

isn't part of the premium charge designed so betfair takes it cut from bookies laying off their risk on betfair?

That might have been an afterthought.
The primary 'target' of the premium charge however were those individuals who make a living from trading/market making.

[CHUBNUT]

You guys mustnt use betfair or you would have a clue. You only have to see the farce over the last month to see that their business model is in trouble. They are desperately trying to gain ground in poker/casino areas at the expense of the sports markets, as a result their not investing enough cash in the technology to keep it stable. Nobody is going to put significant money at risk trading in markets that are prone to crash for the entirety of an event as they have on several occasions lately, once for a full afternoon in the busiest time of the week, premiership football.

[CHUBNUT]

http://www.guardian.co.uk/business/2011/may/22/betfair-crisis-directors-quit-shares-slump

[rick50time]

nothing is working anymore..

[byronbb]

Sports betting market is way too sharp. Why should some square get a bet down on the Phillys vs Nats on a line correct to 4% when he a) did no work b) is an idiot. Think of the lines you could deal in a vacuum to
squares? The market gives away all its hard work to the very people they are trying to fleece.

[That Foreign Guy]

The market gives away all its hard work to the very people they are trying to fleece.

Welcome to capitalism.

[usernametaken]

Can one bet against each other in the US on poker without the rake being so high and constant?