Interesting article by Geoff Banks

[tomallen123]

Found this on his website and haven't seen it posted anywhere on the forum.

http://geoffbanksracing.com/2015/06/10/ ... ommission/

Here's a bit of it;
RACECOURSE DATA TECHNOLOGY

In the last 20 years or so most firms now utilise software provided for them by RDT. The build of their system and its layout is specifically designed to facilitate easy wagers to and from exchanges. A wager can be practicably negotiated faster than on a web browser, a whole set of prices backed, or an entire position closed out. RDT receive a commission from Betdaq for such activities. Such software did not exist in said advanced form when the SPRC devised the mechanism in the 1990’s. All bookmaker software on track is designed to facilitate wagers with exchanges. It has caused a sea change in how bookmakers engage in business on track. They differ from their off track colleagues in that instead of being viewed as traditional ‘layers’ – balancing books with real money, they have metamorphosed to ‘traders’

TRADING

What should also be considered is the wholesale change in the approach by on course bookmakers to betting. When the mechanism was put in play, the majority of firms were traditional in nature. That is to say they were in the business of framing a book and accepting risk. This has fundamentally changed. The vast majority now ‘trade’ many wagers away with exchanges to create margin and keep risk levels low. In order to engage sufficient liquidity to make this practice work – prices must virtually mirror those available on exchanges. For example – a firm will typically offer 4/1 a horse for any variance on an exchange from 4.9 to 5.4. If the operator is lucky, he will be able to trade at 4/1 and hedge at 5.4 – bookmakers have become the new ‘arbers’

There’s little discernible difference between ‘show’ odds and exchange odds for the more fancied runners

Off track firms are, by extension, accepting wagers – and risk, on shows therefore based almost purely on exchange odds. This is a far from healthy system – and a central plank for lower levy returns – down over 50% in recent times. Most bets are accepted at board odds- rather than the more ‘protected’ SP returns. Off track firms do not ‘trade’ wagers in the manner in which on course firms do. To boot, since the shows being returned are up to one minute behind changes in exchange odds, off track firms find themselves subject to arbing from punters. This business is unprofitable and most bookmakers close accounts from those engaged in this practice. Such moves are unpopular and leave firms open to unjustified criticism.

THE STARTING PRICE

Let us consider the actual SP – in practice most track firms have stopped trading aggressively, or at all – it’s often too risky to bet to exchange odds and risk a sizeable wager which a bookmaker cannot trade, with the exchange, in the limited time before the off. Prices are revised downwards throughout the ring – or unavailable. Most books are structured and the operator is loathe to change it. Large operators, such as William Hill on course, are naturally particularly mindful to ‘bet well’ with one eye understandably on their important off course entity. In my experience their returns are given considerable weight in any return. SP’s are, in practice, more favourable to the industry for these simple reasons.

There’s habitually a considerable difference between exchange SP’s and Bookmaker Sp’s.

[burdo77]

Good article, it seems to me that the on coarse bookmakers have more of an impact in the exchange than I thought. Sometimes I see huge bets being plunged into the exchange which go contrary to exchange trend so naturally I lay, however more money keeps getting plunged. Would this be an on coarse move or just manipulation?

[steven1976]

Maybe a bit of both Burdo depending on the time from the off, lenfth of race, size of the bet as bf or their market makers also have to manage their risk.

If for example it was a 3 mile race and the bet occurred on a 5/1 favourite, 5 mins before the off, the market makers may feel more comfortable pushing the odds out and selling it on to others than they would in a 5F race with a quite clear favourite, 30 seconds from the off, where they want to off load their risk so push the odds in sharply?

[burdo77]

For example, a horse is trading at the top of the range 3min from off, a Huge bet comes in it drops to the bottom of the range which is about 7 ticks , I lay assuming it was manipulation, it instantly goes up 3 ticks, I am in a green position. Then bang! It breaks the support with another huge bet and it just keeps going. It happened to me during the week, in hindsight I would of taken my 3tick green.

[burdo77]

Are you suggesting that a huge bet that drops the price significantly in a 3mile race should be considered manipulation rather than smart money whilst in a shorter race eg 5furlong, it should be considered smart money?

[steven1976]

I'm saying the market has to assess their exposure and whether they feel they have enough time to safely sell on their position for the exposure they are holding.

[burdo77]

Ok, thanks for your time.

[tomallen123]

The off course bookmakers place bets in the betting ring to lower the prices so that the returned SP is lower, meaning they have lower liabilities off course.
It looks like they leave this as late as possible and the bookies who take the bets probably just hedge in straight onto the exchange which might be why you often see a huge rush of late money on some horses.

[megarain]

tomallen123 - This was the case historically, but, the off-course firms, now, v v v rarely play in on-course mkts.

The only time they do, and they are v v v far between occurances, are when they are BOG something, which is a bogey, and it has drifted, from say 7/2, to 8/1. Then they would play.

Other than that, they have found, it better to pump money directly into the exchanges - and, as the 'green-grocer bookies' now, cant hedge, they reduce the price on their board, like a puppet on a string.

I have nothing but contempt for current on-course green grocers - they are total wimps, not seeing, their living is being destroyed/ and with it, the v nature of betting rings.

everyone is to blame, from, racecourses pricing themselves/the ancilliary spend on the racecourse too high, to bookies not wanting to bet to reasonable margins, to punters not acceepting, that Betfair 2.0, is not evens .. it should be, 10/11, and they should be happy to take that, without comm/PC etc etc etc.

One day, case models will be written by Harvard students, about how the paper trail on racecourses evaporated.

In a few yrs, u will see more and more racecourse owned totes, with 27% + take-outs / less risk taking bookies .. punters also need to show some degree of far-sightedness, but -- greed kicks in.