I think one massive problem that betfair will find if they tried to replace the big traders themselves as one entity is how incredibly hard it will be to avoid big losses. Think about it - if you were given several million to trade the exchange with and all other traders had disappeared, and you had to trade all runners balancing things up (even with the use of bots and handicappers allowing you to take extra liability on some runners) - just how incredibly difficult that would be, given the slim margins between ticks. It would be OK for a bookmaker with the large gaps between the fractional odds, but not on an exchange where the difference can be as small as between the 1.60 on the lay side and the 1.61 on the back side, with the true 'value' presumably somewhere in the middle. A big bet comes in on the back side because someone knows something, or a big lay comes in as the horse starts sweating and Betfair have given away massive value bets with no hope of laying it off against other people. Betfair couldn't even continue its high rollers service for rich lunatics at controlled odds favourable to betfair due to the volatility of results, what hope would they really have of replacing us as one entity on a tight exchange? There needs to be multiple sources of unmatched money or the whole thing would be hopelessly unbalanced. Every time there is an unexpected gamble they'd find themselves hopelessly exposed. The company would be taking a massive, massive risk with their shareholders money IMO. Companies like Centuar have tried to seed less liquid markets for them, where there are bigger speads, and have failed hopelessley. Betfair could only ever do it on a much smaller scale unless they made the tick sizes as big as the bookies, and this would only drive punters away as the better value would be gone.
Is there one 'exchange' in the world with tight spreads that is controlled by one entity?
They would also be opening themselves up to being accused of insider trading - they know whos account is who, whos account for instance is a bookmakers account desperate to lay off liability - if they were trading themselves then they could just jump infront of that bookmaker and make him pay the maximum.
I think they know that they could never replace us all so they're simply going for a larger slice of the pie that we make. They may trade a bit more themselves, but replacing us all would be impossible unless they want to join Centuar in having to explain to investors where the funds have gone
Betfair Premium Charge
-
enzabella2009
- Posts: 747
- Joined: Tue Nov 03, 2009 3:58 pm
Please can someone explain me why no1 here is thinking to protect his/her business. How can you guys put all your hopes on the unuseless betdaq. Betfair want get rid of you (us)? well put the bloody money togheter get the licences and develop your own untouchable destiny. There is way and It`s not betdaq but, a 3rd or 4th alternative which the 500 big traders and punters could easily invest on it.
Hi Enzabella
Surely an exchange needs more than just traders - it also needs hundreds of thousands (or millions) of casual punters to make it work.
Jeff
Surely an exchange needs more than just traders - it also needs hundreds of thousands (or millions) of casual punters to make it work.
Jeff
enzabella2009 wrote:Please can someone explain me why no1 here is thinking to protect his/her business. How can you guys put all your hopes on the unuseless betdaq. Betfair want get rid of you (us)? well put the bloody money togheter get the licences and develop your own untouchable destiny. There is way and It`s not betdaq but, a 3rd or 4th alternative which the 500 big traders and punters could easily invest on it.
-
enzabella2009
- Posts: 747
- Joined: Tue Nov 03, 2009 3:58 pm
Not easy ferru but, not impossible. Ipotetically, 500 big punters and big trader pay 60% PC ( only Ipotetically) how much would it be? 75M? more? less? Lets think only Ipotetically at the moment. IF were you in my position and you `d given the choice to pay 60% charges to betfair with no guarantees or the choice to invest your money into a new exchange development what would you do?
I'd probably use Betdaq! 
If I had money to invest, I think I'd steer clear of venture capital, particularly when the risks are so high...
Jeff
If I had money to invest, I think I'd steer clear of venture capital, particularly when the risks are so high...
Jeff
enzabella2009 wrote: IF were you in my position and you `d given the choice to pay 60% charges to betfair with no guarantees or the choice to invest your money into a new exchange development what would you do?
The problem with Betdaq is there are not enough losing punters / traders, if there were then the big traders / punters would follow.enzabella2009 wrote:Not easy ferru but, not impossible. Ipotetically, 500 big punters and big trader pay 60% PC ( only Ipotetically) how much would it be? 75M? more? less? Lets think only Ipotetically at the moment. IF were you in my position and you `d given the choice to pay 60% charges to betfair with no guarantees or the choice to invest your money into a new exchange development what would you do?
This would be the same if you started a new exchange.
who would all these 60% P.C payers be taking money from ? it just would not work imo.
you need to give the casual / mug punters a reason to use the exchange and at the moment they might as well still use betfair.
Last edited by freddy on Thu Jun 30, 2011 12:03 pm, edited 1 time in total.
-
spreadbetting
- Posts: 3140
- Joined: Sun Jan 31, 2010 8:06 pm
Betdaq isn't a lost cause , at current rates they're matching much more than betfair was in the early days. And it's always been possible to make money on exchanges, I remember the likes of sporting options, flutter and could happily turn over a profit probably a lot easier than it is now on Betfair. Plus remember Betdaq is where the majority of bookmakers have accounts for edging off.
This isn't the time to start sending out negative images of Betdaq but more negative images of Betfair if you want a viable option for the future.
This isn't the time to start sending out negative images of Betdaq but more negative images of Betfair if you want a viable option for the future.
If you were to trade at random, you'd almost break even. If Betfair were to trade at random, then they probably would break even, given that commission would be taken out of the equation. And if they employ as traders some of the people they've just put out of work, they'll probably do much better than that!hgodden wrote:Think about it - if you were given several million to trade the exchange with and all other traders had disappeared, and you had to trade all runners balancing things up.
As regards Betfair laying runners in the manner of a bookmaker, I think they will pick and choose their battles. So let's say the market gets excited about a particular horse, and it starts to steam. If Betfair think the move is hype driven, I suspect they'll quite happily lay the horse. But if they think the move is due to insider knowledge (or they're not sure), then they'll simply give that horse a miss (or back it). As a result, the market will probably snap back sharply when the market realises there is no-one about to lay their back bets (and traders rush to close their trades).
Similarly, if a horse drifts sharply, and is well above the bookies' price, Betfair may simply choose not to lay it.
As a result of the above, I suspect that the market will be more range-bound than is currently the case, as you won't have traders closing their trades mid-move to give fuel to a strong move. Instead, the swings may quickly dry up and reverse.
What do you think?
Jeff
Need a new exchange.
But the main problem faced by any new exchange is the liquidity problem, where there aren't enough causal punters intially. Attempts to solve this involve the company using some seed money of its own to offer prices, but the problem is where does the initial seed money come from?
A solution could be to adapt exchanges to serious uses outside sports, something that companies would be prepared to sponsor. There would then be plenty of initial seed money to attract punters and traders on the sports markets.
To what serious use could exchanges be put? A big opportunity is to use them as general prediction markets... companies need ways of making predictions about things (for instance future sales), and prediction markets have proved very efficient.
"Prediction markets (also known as predictive markets, information markets, decision markets, idea futures, event derivatives, or virtual markets) are speculative markets created for the purpose of making predictions. The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter.
People who buy low and sell high are rewarded for improving the market prediction, while those who buy high and sell low are punished for degrading the market prediction. Evidence so far suggests that prediction markets are at least as accurate as other institutions predicting the same events with a similar pool of participants."
http://en.wikipedia.org/wiki/Prediction_market
Big opportunity for a new exchange platform based on prediction markets?
But the main problem faced by any new exchange is the liquidity problem, where there aren't enough causal punters intially. Attempts to solve this involve the company using some seed money of its own to offer prices, but the problem is where does the initial seed money come from?
A solution could be to adapt exchanges to serious uses outside sports, something that companies would be prepared to sponsor. There would then be plenty of initial seed money to attract punters and traders on the sports markets.
To what serious use could exchanges be put? A big opportunity is to use them as general prediction markets... companies need ways of making predictions about things (for instance future sales), and prediction markets have proved very efficient.
"Prediction markets (also known as predictive markets, information markets, decision markets, idea futures, event derivatives, or virtual markets) are speculative markets created for the purpose of making predictions. The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter.
People who buy low and sell high are rewarded for improving the market prediction, while those who buy high and sell low are punished for degrading the market prediction. Evidence so far suggests that prediction markets are at least as accurate as other institutions predicting the same events with a similar pool of participants."
http://en.wikipedia.org/wiki/Prediction_market
Big opportunity for a new exchange platform based on prediction markets?
It's important to remember you can set up prediction markets in anything... future sales, weather, election results, it has even been proposed that the entire government be replaced with prediction markets..
"Futarchy is a form of government proposed by economist Robin Hanson, in which elected officials define measures of national welfare and prediction markets are used to determine which policies will have the most positive effect.[1]"
http://en.wikipedia.org/wiki/Futarchy
And all these different markets could be traded
"Futarchy is a form of government proposed by economist Robin Hanson, in which elected officials define measures of national welfare and prediction markets are used to determine which policies will have the most positive effect.[1]"
http://en.wikipedia.org/wiki/Futarchy
And all these different markets could be traded