How can exchanges lose?

[Lazy-Man]

Theres no way they loser right? All they do is take commission and hold bets. Why aren't there more exchanges out in the market

[andywend]

LazyMan,
Don't take any offense into my response but the chances are strong you have never started up your own business.

There are tons of start-up expenses and plenty of continuing operation expenses to deal with.

It takes quite a bit of time for any business to have a solid client base and betting exchanges aren't any different.

BetFair has the entire Non-U.S. market completely dominated and as long as that cancerous piece of legislation called the UIGEA is still on the books, I wouldn't count on too many exchanges opening up anytime soon for U.S. bettors.

The UIGEA needs to be repealed and everything changes.

[Hareeba!]

and as I understand it Matchbook lost a bundle to credit customers who stiffed them

[Bill Dozer]

Most bookmakers that fail don't lose bookmaking. They just don't make enough profit to cover their overhead. Often the biggest is marketing but there are servers, IT, CS, banking and programming. Matchbook likely had over a half million into their software before we ever saw it.

Books, especially exchanges, do need to market. Often you'd see book that don't have enough money hit the forums with huge bonuses. They essentially bonus players with other's deposits until the check their books and see they are down X amount if they paid everyone who is owed. When someone is slow-paid and people do start asking for their loot, the book closes.

[oopfish]

i make WD will i see my money again?

[Zak]

Fairly simple dynamic - commision, typically up to 5%, versus development costs and overhead and a ton of marketing. It works if you can reach a critical size, if not it fails.

[Igetp2s]

You also have no idea if they are seeding the markets and basically bookmaking at very low margins. Like Matchbook is doing right now.

[justonetime]

Most bookmakers that fail don't lose bookmaking. They just don't make enough profit to cover their overhead. Often the biggest is marketing but there are servers, IT, CS, banking and programming. Matchbook likely had over a half million into their software before we ever saw it.

Books, especially exchanges, do need to market. Often you'd see book that don't have enough money hit the forums with huge bonuses. They essentially bonus players with other's deposits until the check their books and see they are down X amount if they paid everyone who is owed. When someone is slow-paid and people do start asking for their loot, the book closes.

Does software really cost that much? Had no idea.

[Hareeba!]

Does software really cost that much? Had no idea.

special purpose software for an exchange
hardly off the shelf stuff from your local PC store

[HeeeHAWWWW]

They can't lose ............... if they can get to a critical size. As betdaq and matchbook showed, they get to a minimal size, but what we really need is a second betfair. I'm guessing what it'll take is a big gambling group willing to seed the markets fully, and it'll eventually attract enough business away from betfair.

[Doug]

You also have no idea if they are seeding the markets and basically bookmaking at very low margins. Like Matchbook is doing right now.

THIS !

[laconic]

http://en.wikipedia.org/wiki/Sporting_Options

[stikymess]

Most bookmakers that fail don't lose bookmaking. They just don't make enough profit to cover their overhead. Often the biggest is marketing but there are servers, IT, CS, banking and programming. Matchbook likely had over a half million into their software before we ever saw it. Books, especially exchanges, do need to market. Often you'd see book that don't have enough money hit the forums with huge bonuses. They essentially bonus players with other's deposits until the check their books and see they are down X amount if they paid everyone who is owed. When someone is slow-paid and people do start asking for their loot, the book closes.

Solid post.

Don't forget employees, from IT to CS, then management want to get paid as well. With their margin so low they are more likely to fail than a regular book. IMO.

[kkkkk]

an exchange can be threated like company offering services. so like every company in service sector they can go broke becose they also have costs that they need to cover - so reason is bad management. beside that most exchanges offer casino and arcade games so they are not pure exchanges dont forget that.

[nenad]

your own mistake

[thespeculator]

isn't the international version of betfair like a regular book, when you play a parlay it says you are betting against betfair international, i think it mentions that on the right hand side

[dikefale]

isn't the international version of betfair like a regular book, when you play a parlay it says you are betting against betfair international, i think it mentions that on the right hand side

Yes it is,i just wanted to write this.

[cyberinvestor]

I remember one of the big causes for loss was chargebacks.

[mikeanite]

I remember one of the big causes for loss was chargebacks.

if it is really the mean reason, they should ask for Docs before they even accept funds from customers.

[ACoochy]

Exchanges are beginning to find new ways to attract customers....One exchange gives me 7.3%pa BUT does charge 10% of your profit (note NOT initial deposit) when it comes to withdraw time....Still, its solid 4 what i use it for (arbs) and i feel good knowing that a exchange is offering me better ROI than what the local bank is able to...GL

[Hareeba!]

Exchanges are beginning to find new ways to attract customers....One exchange gives me 7.3%pa BUT does charge 10% of your profit (note NOT initial deposit) when it comes to withdraw time....Still, its solid 4 what i use it for (arbs) and i feel good knowing that a exchange is offering me better ROI than what the local bank is able to...GL

they pay interest on your money?
which exchange is this ?

[ACoochy]

they pay interest on your money? which exchange is this ?

pm sent

[Santo]

isn't the international version of betfair like a regular book, when you play a parlay it says you are betting against betfair international, i think it mentions that on the right hand side

I think this may be a legalese thing; Betfair match your bet against somebody else but claim to be the matching party for both in order to satisfy local legislation.

[FourLengthsClear]

I think this may be a legalese thing; Betfair match your bet against somebody else but claim to be the matching party for both in order to satisfy local legislation.

I think he is referring to the "Multiples" section of Betfair which is for parlays and where Betfair does take the other side of your bet.

The odds are based on the exchange but with a 5% juice applied.

[Monte]

Shrink blew his head off and left MB with a 500k debt, see it was very easy for them to loose money.

[laconic]

I'm sure Betfair experimented with directly booking their high rollers over a trial period. It worked out ok for them in the end. However, they decided to end it after the trial as the volatility of the situation was a bit too rich for their blood I think.

[skrtelfan]

Shrink had a BBQ, he didn't shoot himself.