How do they make money from horse racing multiples?

[Mr.Mayors]

Hello everyone,

do you have any idea of how do Betfair make money from bets on horse racing multiples?

They do not charge any commission and settle the bets after the SP. Since the SP is regarded "fair value" then where does the profit margin come from?

I'm just curious since I would suspect them to trade with their customers' money as one source of the profit.

Any insights?

cheers,

MM

[MarkWraith]

They take 5% out of the SPs then hedge that on the exchanges. See:

http://promo.betfair.com/betfairsp/FAQs_multiples.html

[Mr.Mayors]

This sure explains everything

Thanks!

MM