Originally Posted by
noyb
countless have tried opening an exchange, 99% have failed. it's all about liquidity: to atract customers to place bets, there need to be offers. to get offers, you need customers. since a start-up won't have any customers, it's a circle you can't break out of, and will make the operation fail every single time, unless you make the offers yourself.
in other words, it's necessary to continually seed an enormous amount of markets with your own money and make sure the odds offered in these markets are better than the prices offered by books. a concept that exchanges often don't seem to get: why bet with them if there are better prices elsewhere. the exchange might say: but you can make your own offer and get better prices that way, isn't that great!! every bettor knows, or will find out within minutes, you'll never get matched at any exchange other than betfair on a regular basis unless your odds are way off and therefore they won't offer anything until they're paid to do it or there are enough other customers online to match them (which is hardly ever the case at any exchange with the exception of Betfair).
anyway, you'll have to swallow both operational and betting losses first either seeding markets yourself or subsidizing others to seed for you before you'll have any customers willing to bet with you consistently, let alone a critical mass of customers big enough to cover your costs.
once you're past that initial stage though, but you'll likely never get there, you can sit back and watch the money come in. Raise commission, do whatever you want, now the catch 22 of liquidity being provided is working for you, instead of against you. People are relying on your platform and make offers amongst themselves all the time because they know if the price is reasonable they'll get action. Only one exchange has made it to that stage, and that's Betfair. All others are either somewhere in between basically looking like they won't make it (matchbook wbx betdaq), or are long gone (and there were dozens in Europe who failed).
To make a long story short, unless you have very very deep pockets and are willing to invest everything that's in those pockets, I wouldn't do it.
SBR Top-Rated Sportsbooks
Reply With Quote
