Betfair

[Omm]

I was searching around online and came across betfair jobs, as they are based locally to me I thought I would have a look. The start of there job intro goes like this:

About Betfair
Betting makes sport more exciting and Betfair makes betting more exciting.
 
Betfair is a passionate, forward-thinking company where things are always happening. Sport happens minute-to-minute, in real-time, and that’s how we like to think too. We want people who are always asking ‘what’s next?’
 
Betfair currently runs three distinct products – the world-first/world-famous Exchange (pioneered in 1999), a huge Gaming platform (including live poker dealers, bingo, a casino and hundreds of slot machines), and new to 2013, a traditional Sportsbook. As these all evolve though, the lines are becoming more and more blurred, and our dream is one fully integrated product.
 
I'm intrigued by the bold part, I've spent the last few months around Blonde and specifically TFT and I'm sure it's been mentioned before that Befair can't be all things to all people. How can their sportsbook and exchange be becoming more blurred? Why would a revolutionary product like the exchange need a traditional  sportsbook? From what I've seen the products don't even know what the other is doing. I'm not as clever as some on here and may be way off the mark but I just don't get it, why do they need a fully integrated product?

[bobby1]

The exchange model's fault was that it's client base cannibalised each other leaving the fat cats full and a lot of the mainly rec punters skint or betting less. The Sportsbook is more mainstream and easier to understand (in theory anyway but they have even made a mess of that) and a big majority of their punters were just bet to win punters not lay to lose/traders so only needed a Sportsbook to bet in. It's also easier for them to to get legislation in some territories for a sportsbook when getting the Exchange legislated was much harder. (AndrewT might know a lot more about that)

The bit the cunning geniuses missed tho was that by making the winners pay Premium charge and getting the reg punters to land on the sportsbook  they have lost a lot of layers and directed the punters away from the exchange. So what they are left with is an exchange with a lot of markets left unseeded and a really poor sportsbook.

[vegaslover]

Whilst they ended up buying them all it certainly wasn't the first exchange

[AndrewT]

The main reasons for starting the sportsbook were that potential new ice-creams were put off by a betting site that looked like a spreadsheet and that didn't offer any promos such as enhanced odds or money back specials. Punters love those sorts of things - pay 6 places on the Grand National, money back if Man U beat Liverpool, etc.

Betfair could never offer any of those as it wasn't them laying the bets. Therefore it lost out on acquiring ice-creams to Paddy/Bet365 etc. Not only can you make more money from these guys on sports, but cross selling them to casino makes a load of money as well (Betfair's games as a % of revenue is much lower than competitors).

The legislation issue is also a factor, as countries will generally have some form of existing legislation in place for sportsbooks but then go 'what's an exchange?'

[redarmi]

The main reasons for starting the sportsbook were that potential new ice-creams were put off by a betting site that looked like a spreadsheet and that didn't offer any promos such as enhanced odds or money back specials. Punters love those sorts of things - pay 6 places on the Grand National, money back if Man U beat Liverpool, etc.

Betfair could never offer any of those as it wasn't them laying the bets. Therefore it lost out on acquiring ice-creams to Paddy/Bet365 etc. Not only can you make more money from these guys on sports, but cross selling them to casino makes a load of money as well (Betfair's games as a % of revenue is much lower than competitors).

The legislation issue is also a factor, as countries will generally have some form of existing legislation in place for sportsbooks but then go 'what's an exchange?'

The biggest problem with this though is that it means that the ice creams that are on your site stop betting with your customers on the exchange.  Effectively you are competing with what are, in some cases, your best customers that have helped to make your exchange the business that it is today and provided the liquidity to keep it going and now they are trying to take those customers away.  When Betfair introduced the premium charge their justification was that it was costly getting all of these recreational punters to keep feeding the sharks so it was only fair that the sharks contributed a bit more towards their marketing etc that they were benefitting from.  Then they go and launch a sportsbook.  Who are they marketing for now?  When anyone goes to their site now they are offered the Sportsbook first and the exchange is like an afterthought yet they haven't rescinded the premium charge.  The only thing that is keeping the exchange layers going is the fact that the Sportsbook that they have put up is just so incredibly badly thought out that it is probably easier for the average punter to understand what is going on on the site that "looks like a spreadsheet". 

Betfair had one of the best products introduced on the internet ever basically.  They have made huge profits from it and when they wanted to cross sell casino and poker etc nobody was really that bothered because we understood the modern shareholder requirements for growing profits but Betfair made the key mistake of taking their eye off their main business and thinking that they were in the leisure gaming business and that 365, Paddy Power and Ladbrokes were their competitors when actually they had no competitors in the business they were in.  They swapped an effective monopoly in a market, that if they continued to develop it properly could have been worth billions, to compete (badly) in an overcrowded leisure gaming marketplace that has huge barriers to entry.  The exchange can offer so many things that the modern bookmaker can't.  It can offer betting in running without the need for lots of traders, it can offer best prices on almost every competitor, it can make a profit from the bad odds compiling of the big bookmakers without having to take any risk and it wants to trade all of these market advantages to be able to match a Paddy Power moneyback offer for a quarter of the stake on a third as many markets.  It makes me want to cry.

[Matt.NFFC.]

So what about Betdaq?  Is that any better than Betfair?

[redarmi]

Not now that they are owned by Ladbrokes imo but they were and they charged less commission and no premium charge.  Must admit over the years I have had some good experiences with Betdaq but exchanges are a game of liquidity and BF always had the most.

[DungBeetle]

Yep - interesting stuff.

Exchanges are so liquidity based that is effectively acts as a barrier to entry.  I lost count of the time a decade back when the betfair regulars would grizzle that they were going to a new exchange due to betfair incompetence but they never acted due to rotten liquidity elsewhere.  Liquidity trumps all.

I think with the premium charge and the sportsbook Betfair simply got so incredibly greedy that they trashed their wonderful product.

Such a shame.

[Omm]

The main reasons for starting the sportsbook were that potential new ice-creams were put off by a betting site that looked like a spreadsheet and that didn't offer any promos such as enhanced odds or money back specials. Punters love those sorts of things - pay 6 places on the Grand National, money back if Man U beat Liverpool, etc.

Betfair could never offer any of those as it wasn't them laying the bets. Therefore it lost out on acquiring ice-creams to Paddy/Bet365 etc. Not only can you make more money from these guys on sports, but cross selling them to casino makes a load of money as well (Betfair's games as a % of revenue is much lower than competitors).

The legislation issue is also a factor, as countries will generally have some form of existing legislation in place for sportsbooks but then go 'what's an exchange?'

The biggest problem with this though is that it means that the ice creams that are on your site stop betting with your customers on the exchange.  Effectively you are competing with what are, in some cases, your best customers that have helped to make your exchange the business that it is today and provided the liquidity to keep it going and now they are trying to take those customers away.  When Betfair introduced the premium charge their justification was that it was costly getting all of these recreational punters to keep feeding the sharks so it was only fair that the sharks contributed a bit more towards their marketing etc that they were benefitting from.  Then they go and launch a sportsbook.  Who are they marketing for now?  When anyone goes to their site now they are offered the Sportsbook first and the exchange is like an afterthought yet they haven't rescinded the premium charge.  The only thing that is keeping the exchange layers going is the fact that the Sportsbook that they have put up is just so incredibly badly thought out that it is probably easier for the average punter to understand what is going on on the site that "looks like a spreadsheet". 

Betfair had one of the best products introduced on the internet ever basically.  They have made huge profits from it and when they wanted to cross sell casino and poker etc nobody was really that bothered because we understood the modern shareholder requirements for growing profits but Betfair made the key mistake of taking their eye off their main business and thinking that they were in the leisure gaming business and that 365, Paddy Power and Ladbrokes were their competitors when actually they had no competitors in the business they were in.  They swapped an effective monopoly in a market, that if they continued to develop it properly could have been worth billions, to compete (badly) in an overcrowded leisure gaming marketplace that has huge barriers to entry.  The exchange can offer so many things that the modern bookmaker can't.  It can offer betting in running without the need for lots of traders, it can offer best prices on almost every competitor, it can make a profit from the bad odds compiling of the big bookmakers without having to take any risk and it wants to trade all of these market advantages to be able to match a Paddy Power moneyback offer for a quarter of the stake on a third as many markets.  It makes me want to cry.

This makes sense, but you make it sound so simple, if it's like that why did no one at Betfair realise they were making a mistake or is it a case off them all being yes men and nobody challenging the bosses.

[redarmi]

Yes and of course it is simple in hindsight to point out what you think they did wrong.  I think the biggest issues came when the founders decided they wanted to exit the business and take some cash. At that point they had to find someone to run the business but nobody had any experience of running a sports betting exchange successfully except those guys so they had to decide where to hire from and the natural thing was to get gaming guys in but gaming guys are used to big margins and fleecing mugs and this is a different beast.  The natural thing to do when you go into a new role is to look for ways to make a mark and a sportsbook seems such an obvious fit (as do games, casino, poker etc) but someone with a good understanding of the exchange business could have seen that there was a long way to go still with that business but instead they went down the route that the new management understood but that misunderstood the innovative culture of the business and its customer base and I just feel they never got close to exploiting the full potential of the exchange business because either a) they didn't understand it or b) they were too lazy to go through the education process with their customers to allow them to.

I will give you an example.  Arbers are good for Betfair.  They create turnover and liquidity on the exchanges.  They are also bad for their competitors as we have seen by their decision to ban them because they reduce their profits.  If I was the CEO of Betfair I wouldn't just be welcoming arbers I would have a staff whose whole job was to spot opportunities that were -EV for the big bookies and I would be setting up markets to exploit those.  So When Victor Chandler offer 6 places on the Masters I am going to have a 6 place market too and then I would be explaining to my customers in great detail how to exploit it.  Last year when Hills screwed up badly offering 5 places on the Supreme Novices I would be offering a 5 place market myself to allow the arbers to go and get a pony in 20 different shops and let the value punters take the value from them whilst I sit back and make a nice commission.  That way you have two sets of punters happy, you get the commission and Hills are pissed off because they have done their bollocks on the market.  Now next time they want to offer something daft to nick all the punters they will have think twice because a huge slice of it is just going to go straight to Betfair and the sharp punters there.  All of those firms out there that offer arb alert services would be out of business because I would be offering it to my punters free of charge.  Instead of charging my best punters a premium charge I would be saying to them will you guarantee me liquidity in some of these markets, lets work as partners and I will get you money on at great prices you wouldn't have access to yourself and I will charge you a bit less commission to do it and we will use that money to pay these guys that are running around 20-30 shops on Cheltenham morning.  Instead of doing that and making the whole market bigger at the expense of the bigger firms they have decided they want to join the bigger firms in recycling the dole money and not only that they haven't got an original idea in their heads about how they are going to do it.  Instead they just ape other firms offers and ideas.  It just seems such a waste to me and like a lot of positive energy and momentum has been lost now.

[Omm]

Wow, great education there Redarmi, never wanted to offer your services? Does seem such a shame that it's gone down this route. Also now that Betdaq is owned by Ladbrokes there may never be a rival exchange in the guise of what you have mentioned.

[redarmi]

Wow, great education there Redarmi, never wanted to offer your services? Does seem such a shame that it's gone down this route. Also now that Betdaq is owned by Ladbrokes there may never be a rival exchange in the guise of what you have mentioned.

Yes.  I can't think of anything that I would love more than to work there looking at that kind of thing to be honest.  It would be a dream job.  On a couple of occasions I have sent in CV's for specific jobs they have advertised and have never even had a response which I find quite disappointing given it is not like I have no experience but I am guessing that my experience doesn't really fit in with what they are looking to do these days and it is certainly true I don't really fit into the stereotype of a corporate exec these days so maybe it was for the best.

[treefella]

i remember the days of . Flutter.com with fondness. never even took my losing lays from my bank account.  then got transferred over to betfair