Leopardstown - 14:00 - Christmas Hurdle - Voler la vedette

[Iron]

Im pretty sure It's just normal contract law Jeff, that applies to any buiness, the bookmaker argument doens't really come into it i dont think.

The T&C's are nearest thing to a contract between Betfair and its users.

The T&C's clearly state that, if a customer exceeds their exposure limit, then the bet will still stand.

The T&C's also make no mention of Betfair being able to cancel lays that were obviously made in error.

The only thing that Betfair has on its side as far as the T&C's are concerned is the bit that essentially says 'Betfair have the final say and our decision is final'. But I'm not convinced that a judge would say 'I see Betfair have violated the spirit and the letter of their agreement with customers, but as the T&C's make Betfair judge, jury and executioner, I have to respect their decision'.

If you go into a shop and see am item that should be worth 100-00, priced for 10p,
then the shop, if they notice their error can refuse to sell it to you for that price.

Let's say you buy a Ming Dynasty vase in a shop for a tenner. The shopkeeper realises just as you're walking out of the store that the piece of rubbish he thought he was selling you was worth many thousands. AFAIK, he would be guilty of robbery if he were to force you to hand back the vase in exchange for your money back. Yet surely for Betfair not to honour bets placed and accepted in good faith, in accordance with the rules, is little different...

IBM made a palpable error when they wrote a contract with Bill Gates saying that they'd put his operating system on every computer that they ever built. The fact that someone screwed up in a business transaction doesn't mean that the law will excuse them of the consequences of their stupidity!

Jeff

[freddy]

Well Jeff we will have to agree to disagree on this one , most companies T&C are full of incostitancies and are generally to be taken with a pinch of salt and the law overrides them anyway.

but if any court made Betfair pay out then it would have implications far beyond the world of gambling,
and the way business is done would change forever in an instant.
it would mean a hell if alot more red tape thats for sure and im not sure we really need that .

and as for the Ming Dynasty argument, Betfair winners were not out of the door they were still at the till .

[andyfuller]

Betfair will not reveal technical glitch details

BETFAIR on Saturday said they would give no further details regarding the exact nature of the "technical glitch" which resulted in the exchange voiding bets worth £23 million.

One Betfair customer, who had less than £1,000 in their account, was faced with that potentially massive payout after an automated betting system, or bot, attached to their account was able to place the rogue bet.

Betfair promised that a "highly technical" explanation of what occurred would be published after internal investigations were completed but the Racing Post has been told that willno longer be the case.

Interim chief executive Stephen Morana said in a statement on Friday that the decision to void all in-running bets placed on the Leopardstown race was taken in accordance with their rules and said it was "similar to the palpable error rule enforced by other bookmakers".

That resulted in some of the exchange's users questioning whether they were liable for their errors.

Clarifying Morana's point, Betfair spokesman Tony Calvin said: "Certain legal provisions are needed to protect online businesses such as ours, otherwise they would not be viable.

"Stephen mentions ‘palpable error' because it is a concept many punters will be familiar with. We aren't specifically invoking that same rule but we are saying a business such as ours needs to have the ability to protect itself - legally and contractually - to be viable.

"This is why our terms specifically say we can void markets/ bets if there is a technological failure. It is clear, concise and obviously very much needed."

Calvin continued: "In our case, in our industry, Stephen - and we - thought a reference to the traditional bookmakers' equivalent of ‘palpable error' would help people to understand the point."

http://www.racingpost.com/news/horse-ra ... 70383/top/

[Iron]

Sounds fishy.

If the problem causing the phantom bet has been repaired, as Betfair claim, why can't they tell us about it?

Jeff

[LeTiss]

I sometimes wonder if occasional discrepancies could be caused by dishonest members of staff?!

When I was at Ladbrokes, a number of employees were dismissed for attempting to defraud them.

I wonder if BF employees could infiltrate the system by throwing lay bets from a dormant account, even though that money doesn't exist, due to staff having the power to override the system? As soon as the bet is a winner, just transfer the money into their own account. If it's dormant, the account holder will never know. If the bet goes against them, just defraud other customers by wiping their account and claiming it's your fault for not having tight enough internet security installed

I know I'm cynical, and it sounds far fetched, but I saw some extraordinary, elaborate frauds by Ladbrokes shop managers, so I know how good people can have their heads turned. I'm not suggesting this is the explanation at Leopardstown, I'm just saying I reckon we'd be surprised how some BF employees have the power to distort the picture if they were that way inclined

[Iron]

That sounds quite plausible Andy. And if that happened, maybe the person concerned had thought that Betfair would try to sweep the incident under the carpet to avoid bad publicity, rather then bring in the police.

IMHO, if Betfair have nothing to hide, they should hold a press conference, and answer openly and honestly probing questions from journalists. That would be the best way to dampen speculation and put the matter to bed IMHO.

Jeff

[LeTiss]

I was just throwing a very unlikely suggestion into the mix, but the more I think about it, the less far fetched it seems

Perhaps they'd got away with it a few times, and decided to go for it big time, transfer the money and sail off into the sunset.

Once again, going back to Ladbrokes, a shop manager ( a former policeman) discovered a flaw in Ladbrokes banking security that wouldn't be noticed for 2 weeks. When security came to arrest him, he was gone, nowhere to be seen. They eventually heard from him 3 months later, when he sent a postcard from Miami

[Euler]

I don't doubt that a freakish problem could occur without human intervention, but they should go to some length to explain it or allow an authority to confirm what they have said.

The insider thing does concern me though because of their attitude to people who have been defrauded. They don't seem to care or do much about fraud but put a lot of effort in to spot evasion of charges, doesn't sit very well IMHO. I'm astonished that fraud hasn't become a key issue.

You also have this general issue that when a site crash wipes out peoples accounts they have historically turned a blind eye, but the first occasion they have to pick up the bill it suddenly becomes an issue. They previous said they couldn't do anything about the prior because of various precedents, all of which apply to this issue.

I didn't expect them to realistic try and settle this market but they must accept some acknowledgement and care of similar opposing issues that affect their customers in equal proportion.

[andyfuller]

Betfair needs to win back confidence of punters

One of the reasons Betfair was so revolutionary when it was first established in 2000 was that for people who liked placing a bet, there was a simplicity about the process that made them feel good about the venture. Once you possessed basic computer skills and had familiarised yourself with the elaborate mechanics of the website, it enabled you to feel that, while still gambling, at least the cards weren't so heavily stacked against you.

The beauty of the betting exchange was that it took the traditional bookmaker pretty much out of the equation. Against another punter whose opinion carried the same weight as yours, you were entitled to a certain degree of confidence. And, helpfully, Betfair stayed out of it, merely asking for a small slice of the winnings for the service of bringing two customers together. Such a simple concept and yet so brilliantly radical.

Over the years, however, that confidence has been steadily eroding and the calamity that struck the site during the running of the Christmas Hurdle at Leopardstown on Wednesday, when the mare Voler La Vedette was erroneously laid to lose €27.5m at odds of 28 to 1, has dramatically hastened that process and enhanced the feeling that a legal action against Betfair may be imminent, if not on this occasion, then over some as yet unforeseen disaster in the future.

We now know that the bet was placed by a UK-based operator with less than £1,000 in his account and that a "technical glitch" somehow allowed him to evade his exposure limit and run up potential liabilities in excess of €700m. But if we accept that even in the best systems, glitches can still occur, the hard truth for Betfair is that when swift and decisive remedial action was required it was found wanting on nearly every level.

The first question is an obvious one: as soon as the offending bet appeared on the screen, a mind-boggling €25m available to be picked off at 28 to 1, it was immediately obvious that something was amiss, so why was betting allowed to continue for the duration of the race while the winner's odds hardly deviated? Had they acted quickly, Betfair could have spared themselves a whole lot of subsequent trouble.

At the time, it was patently obvious what would happen. The in-running market would be declared void and all bets, even those placed in the 60 seconds before the market went ballistic, would be struck off. Those who thought they had made a killing were in for a dose of reality and it was hard to feel sympathy. The old saying that if something seems too good to be true, then it probably is, is more applicable to gambling than any other walk of life.

Yet their misfortune clearly begs serious questions. In its statement on Friday, Betfair cited "palpable error" as one reason why the bets were voided and it was an unfortunate term to use. In bookmakers' circles, "palpable error" is cited whenever a bet is placed at wrong odds and it is always settled at the correct price. To punters it can be a source of irritation: if they make a mistake they pay for it; if the bookmaker messes up it is "palpable error."

And harsh as that seems, in one way it is understandable that the bookmaker holds all the cards because if he ultimately loses, the entire system breaks down. That doesn't apply to Betfair, though. We assume they are entirely separate worlds. So whatever the reason for voiding all in-running bets on the Christmas Hurdle, "palpable error" should not have been among them.

And, for Betfair, there is a critical lesson here. The initial confidence its customers enjoyed is in danger of being shredded. They

hear that the offending bet was placed by a "bot", a computer programme that can strike or lay bets, and you would be surprised at the number of people who have been using the exchange for years and still have no idea what a "bot" is or the functions it performs.

They hear too that Betfair employs its own "bots" and, for all its insistence that they are designed for the benefit of the customer, the perception is still created that the exchange isn't the straightforward place for betting they once imagined. And when that trust is compromised, when people begin to suspect the odds stacked against them are too great, they lose faith in the business and its share price tumbles.

Not that it spells disaster for Betfair, of course. While its market valuation plummets, there's unlikely to be a stampede to rival exchanges where market liquidity remains too low to take full advantage of its embarrassment. Yet it shouldn't underestimate the level of anger and confusion unleashed by last week's disaster. In a sense it is in danger of becoming the Ryanair of gambling websites: punters still using the site but feeling unfulfilled and wishing heartily they were someplace else.

For Betfair, and its incoming chief executive, the challenge that faces them is a stiff one. Once it enjoyed almost total trust among a grateful customer base and it must now work its socks off to win that back.

Source: http://www.independent.ie/sport/horse-r ... 77056.html

[Iron]

I agree with the article.

Hopefully the new CEO Breon Corcoran will get back to basics, and say 'Let's keep this company great by doing the things that made it great in the first place!'

Jeff

[superfrank]

...it is in danger of becoming the Ryanair of gambling websites: punters still using the site but feeling unfulfilled and wishing heartily they were someplace else.

+1

good article.

the "palpable error" quote in the statement was obviously a mistake, they seem to struggle do anything right these days. i suspect it's the culture in the organisation that is ultimately responsible for these PR cock-ups.

[andyfuller]

Sean Boyce has moved his thought more in line with my view of who are we actually betting against which as I said earlier is the key point in all this despite it seeming as though it is just a trivial point:

Exchange or Bookmaker? A £23 million Question?

In my last post I looked at the inclusion of ‘palpable error’ references in Betfair’s public statements on the Leopardstown in-running fiasco. Why would Betfair want to align itself with a defence previously relied upon by ‘traditional’ bookmakers? Well, the answer to that might lie in how some backers may be keen to define Betfair as exactly that. A bookmaker that has taken their bets and is now not paying.

Unthinkable? Read on.

Most of us think of exchanges as being quite different models to bookmakers. We tend to think of bets existing only once they are matched by other bets. As Greg Wood puts it in his recent Guardian piece;

…the truth is that the £21m worth of 28-1 offered about Voler La Vedette was a mirage. Wishing it otherwise will make no difference. You cannot win – or lose – what is not there in the first place and even the most opportunistic ambulance-chaser is likely to take one look at this fact and point to the door.

That was my starting point too. An exchange simply facilitates the matching of our bets with one another, doesn’t it? After some deeper thought though I’m not so sure it’s that simple. This is the $64,000 or, more accurately, the £23,000,000 question. What are the key differences between the bookmaker transaction and the exchange transaction? Did Voler la Vedette backers bet with a ‘mirage’ , or did they bet with Betfair?

Betfair describes itself in much of its publicity as a person to person exchange which matches peoples bets with their opposite counterpart. The adverts liken it to a couple of guys in the pub disagreeing about the likely outcome of a football match and having their opinions matched up in a bet. Therefore, as Greg argues, if the other person’s money does not actually exist then all bets are off, right?

Well, maybe. But then again, maybe not.

Betfair has also described itself as being just like other bookmakers. With the sole distinction being its method of risk management. An alternative description of the exchange, and one used by Betfair itself on occasion, is that they take bets at their discretion and manage their risk by passing on (most of the time) that bet to its opposite equivalent. This line has been adopted by Betfair when arguing that they should be treated in exactly the same way as bookmakers. In other words your bet is matched by the exchange and then the exchange goes on to deal with its liability.

Seen in this light, the Voler la Vedette bets look very different. A backer might argue that his bet was accepted, not by a rogue trader bot but by Betfair and it’s entirely the company’s own lookout what they do with it.

The fact that the layer of a bet on the exchange is considered the same as the backer and that neither are leviable or taxable would certainly give weight to this interpretation and would place the ball firmly in the operator’s court.

In this scenario the music stopped playing and the exchange found itself holding, much to its surprise, a £23 million parcel.

Betfair of course may argue that they would never have taken the bets had they known that the hedging facility they were relying on was a mirage caused by a technical failure. The punters in turn might argue ‘that’s your problem, pal’.

The issue is clouded of course by the fact that Betfair does treat some bets as a normal bookmaker would and stands them in their entirety (in the case of multiples for example) and by the fact that their own bots are active in their own markets too. And, further, by the fact that some hedging into its own markets can also occur based on bets taken on the multiple front, or elsewhere.

At this point, if we accept we are looking at Betfair as a bookmaker with specific liability management techniques, Betfair might then be keen to invoke the traditional bookmakers’ palpable error defence. ‘OK, we took the bets but look the odds were clearly wrong’, being the logic. Which may explain the appearance of words that hitherto had not crossed an exchange operator’s lips; ‘palpable error’.

The other point to make here is that if another bookie invoked the rule in similar circumstances he is likely to succeed in getting the price changed to the ‘real’ price. Maybe SP for example. He is less likely though to succeed in an attempt to get all bets voided. Of course the bookie will normally actually have a palpable error rule in place which specifically allows this. A bookie is also unlikely to have allowed its customers to create their own prices as an event was taking place and to have played at those prices himself.

If a rogue bot manages to post imaginary funds into an exchange who is responsible? The backers might argue their bets were matched by Betfair, not by thin air. Betfair may argue that they didn’t want to match those bets and did so under the false impression that they could match against the rogue bot’s funds. Who’s problem is that? Where does responsibility sit?

This really is becoming a fascinating story. Should such an event come under the palpable error definition? Is Betfair covered in such an event by its rules, given the lack of a palpable error clause? Is Betfair only obliged to honour bets matched up with cash or do they function as a bookmaker who simply chooses how much liability to pass on? Who is liable for what most would agree is an error in staking? Was the staking error a ‘technological fault’ that would warrant voiding the market? Is that argument undermined by Betfair’s own activity in its markets? Where did the fault lie? Is an exchange different to a bookmaker in terms of liability? Are we looking at a risk management failure rather than an error?

Lots of questions and a long way to run. For us disinterested bystanders its fascinating stuff. One thing’s for sure by the time this process is completed we’ll know a lot more about how an exchange defines its activity compared to a bookmaker and a lot more about what goes on between consenting robots behind closed doors!

Source: http://boyciesblog.wordpress.com/2012/0 ... r/#more-85

[cambalache]

the problem is all betfairs they are serving as intermidiares guarranting transparency so they must stand by what they approve mistake or no mistake if they give the customer a bet reference number it should mean the wager must stand otherwise what would be the point.thats what I argued to ibas when i had a similar problem it was a small bet but on principle I persued it, ibas agreed with me and the had to pay up and they compensated me on top so if anyone has a ref number for that race on your log you will have a case and they will have one to answerto.happy punting.

[Iron]

Hi Cambalache

That's interesting.

Why did Betfair void your bet?

Jeff

I argued to ibas when i had a similar problem it was a small bet but on principle I persued it, ibas agreed with me and the had to pay up and they compensated me on top so if anyone has a ref number for that race on your log you will have a case and they will have one to answerto.happy punting.

[andyfuller]

One other thing that I don't think has been raised is does the person have more than one account. It was only stated he had less than £1,000 in his account that placed the bet.

Was this a test account for testing a strategy that turned out to be programmed incorrectly? Are other funds available to the client?