Long term prospects of Betfair/exchanges

[pythonic]

It is this that I think about the most.........do you think bookmakers have bought exchanges in order to crush them, or is this a more sustainable model for them to run? After all, profit is almost guaranteed by way of commission (and PC!). I know the bookie model is also guaranteed profit, but there is massive variance involved in that, and the need to employ analysts to set the prices.......exchanges seem like a much better business to run IMO.

The exchange is a very reliable and riskless cash cow for PaddyPower/Betfair, but it doesnt grow so they focus on other things.
Maybe that could change if they promoted it more but for the time being they just run it with low priority and pocket the commission.
But I think that the exchange is there to stay and If they would just shut it down then someone else would take over very quickly.
Even unfriendly UK legislation would just mean that the exchange would move to perhaps Malta or somewhere else.

[Dallas]

Exchanges will always be around now, bookie's realised they couldn't beat them and that they were going to go away so done the next best thing and bought them.
Now they've gathered them in their arms and have control they aren't going to market them or push them but they can cut them off at the knees and stop them growing.

If they decided to close them and force people to their SB the idea of them is out there now and another will pop up and take its place very quickly. So now there in the control of bookies, it's in their interests to keep them running all be it hidden from sight from the average joe

But even he's made his own exchange now so its not to well hidden

As for legislation to ban them that won't happen either, online bookies based oversea's sprung up so punters didn't have to pay tax on winnings which crippled the UK high st bookies who couldn't compete, the Labour Government had to then abolish the betting tax or risk the whole high st betting industry going under.
So any attempts to ban or even heavily tax it would just see it get move offshore and users will quickly find a way to still access it

[Kai]

What Dallas said is spot on IMHO. I understand the irrational fears of a trader whose main income comes from Betfair, but no chance they actually shut down a profitable business for no reason. PP Betfair may not have enough genuine effort to grow the exchange (because there's obviously more space to grow their sportsbooks instead) but I'm sure they're happy to at least maintain the status quo and hang on to that monopoly. Maybe they'll put more effort in once they fully exhaust the sportsbook growth but that's a never-ending battle so I wouldn't hold my breath.

Like Euler has already said a hundred times by now, there does seem to be real space for someone bold and capable to swoop in and take things to the next level, many have probably considered the possibility but obviously nobody has decided to actually take that risk on. If someone does show up and manages to innovate and improve things further then PP Betfair would still be in a great position to react, and they could probably just copy them without actually doing any of the work or taking on any real risk, unless something remarkable and groundbreaking happens that they can't follow up on. Then they may be in trouble and may consider abolishing the premium charge structure to keep up.

[greenmark]

I stumbled on this.

https://onlinelibrary.wiley.com/doi/ful ... jems.12310

Its a weighty article, so I'd read it when you have time and enthusiasm.

But here's on quote which might reassure about the longevity of the Exchange model.

"Betfair attracted sophisticated high rollers, drawing them away from bookmakers, for whom they were the least profitable customer segment. In fact, bookmakers would often restrict the most successful high rollers from doing business with them. These high rollers were delighted to join a platform that enabled them to take on the lay side of the market without restrictions. As they gravitated toward Betfair, they brought liquidity to the exchange while simultaneously improving the profitability of bookmakers."

[wearthefoxhat]

Good chance the exchange model will disappear if Jeremy Corbyn gets into 10 Downing Street. This has been a fear of mine for a few years now and I am a centre left voter.

Gordon Brown giveth

http://news.bbc.co.uk/sport1/hi/front_page/1207748.stm

and Jez would likely taketh.

What makes you think Corbyn would interfere with the exchange? I've never heard him mention anything about betting?

I didn't realise Corbyn was 70 years old and by all accounts (unless it's fake news), is getting more and more forgetful and reliant on his advisors around him. It could be, he may not remember what he said last week let alone a couple of years ago.

Corbs.GIF

[acecard]

As for legislation to ban them that won't happen either, online bookies based oversea's sprung up so punters didn't have to pay tax on winnings which crippled the UK high st bookies who couldn't compete, the Labour Government had to then abolish the betting tax or risk the whole high st betting industry going under.
So any attempts to ban or even heavily tax it would just see it get move offshore and users will quickly find a way to still access it

But with regards to legislation, Betfair have left so many countries recently for what I can only imagine are legislative issues.......what makes the UK so different that it would be less likely to happen to us here?

[greenmark]

No Tory government would harm the exchange model.
What about Corbynite Labour? Dunno, if they're really dim/idealogical then maybe they would shut it down.
If we arrrive at a Corbynite government its going to be even more intriguing than a BoJo government.

[Dallas]

As for legislation to ban them that won't happen either, online bookies based oversea's sprung up so punters didn't have to pay tax on winnings which crippled the UK high st bookies who couldn't compete, the Labour Government had to then abolish the betting tax or risk the whole high st betting industry going under.
So any attempts to ban or even heavily tax it would just see it get move offshore and users will quickly find a way to still access it

But with regards to legislation, Betfair have left so many countries recently for what I can only imagine are legislative issues.......what makes the UK so different that it would be less likely to happen to us here?

Betfair was founded here and is a multi-million pound UK company who's shares are traded on the London stock exchange.

The main reason other countries refuse or make it very difficult by way of cost's and taxes for Betfair to obtain a gambling licence is mainly down to their own local gambling industry etc worried about their profits declining and for some countries they also don't like the idea of money flowing out of their country through gambling/betting hence Spain and Italy have there own BF exchanges just for their citizens.

[acecard]

As for legislation to ban them that won't happen either, online bookies based oversea's sprung up so punters didn't have to pay tax on winnings which crippled the UK high st bookies who couldn't compete, the Labour Government had to then abolish the betting tax or risk the whole high st betting industry going under.
So any attempts to ban or even heavily tax it would just see it get move offshore and users will quickly find a way to still access it

But with regards to legislation, Betfair have left so many countries recently for what I can only imagine are legislative issues.......what makes the UK so different that it would be less likely to happen to us here?

Betfair was founded here and is a multi-million pound UK company who's shares are traded on the London stock exchange.

The main reason other countries refuse or make it very difficult by way of cost's and taxes for Betfair to obtain a gambling licence is mainly down to their own local gambling industry etc worried about their profits declining and for some countries they also don't like the idea of money flowing out of their country through gambling/betting hence Spain and Italy have there own BF exchanges just for their citizens.

Hmmmm interesting........perhaps this is a big reason for the apparent decline in liquidity on the BF exchange that I hear so many veteran traders talk about......not necessarily because less people are putting money through but rather because of changes in legislation which mean countries like Spain and Italy for example have their own BF exchange. Australia too. Perhaps the liquidity is pretty much the same, just we in the UK no longer see it all???

[ANGELS15]

I was thinking the other day that in recent times there has been a drive towards controlling problem gambling. A recent example would be the lowering of the bookies fruit machine stakes to a maximum of £2. I wonder if a future government may decide to do something with staking for betting perhaps setting a maximum stake. This would impact on exchange trading. Mind you I couldn't see 'high rollers' who work in the city, top industries who donate to and support the various political parties being told they can only bet say maximum £50 on a race! This would kill events like Royal Ascot, Cheltenham etc so lets hope it doesn't happen!

[iambic_pentameter]

I can't recall the exact phrase Euler used on Twitter recently, but it was something along the lines that the longer something has been in existence, the more likely it is to continue.

[ruthlessimon]

I can't recall the exact phrase Euler used on Twitter recently, but it was something along the lines that the longer something has been in existence, the more likely it is to continue.

I've been looking for that quote too

It's an interesting one, because it kinda invalidates a core trading premise (incoming off topic remark ). "If you're not constantly working on your edge, you'll lose it" - yet, "the longer something has been in existence, the more likely it is to continue", basically the opposite - & I'm inclined to (nervously) agree with the latter

[Emmson]

Lindy Effect!

[Euler]

Rather than a one off quote, I've edited my original response, I made that comment after reading 'algorithms to live by'

It's worth reading that book.