Smarkets's skullduggery

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Euler
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You can't build a long-term viable business by ignoring regulators, licensing and other forms of compliance. Just wouldn't work.

But that said, I don't think the exchanges have been anywhere near as aggressive as they could have been. The betting industry hasn't really been that disrupted by exchanges.
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ShaunWhite
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vide0star wrote:
Tue Nov 13, 2018 11:03 pm
A "pure" exchange isn't possible, at least, not until the exchange market is an order of magnitude bigger...... but you've already seen those markets continue to get softer as we take the exchange retail flow away from them.
This where comparisons with the stock exchange break down. Financial exchanges are large partly because there's one per asset type per jurisdiction, and it's practices are controlled through legislation. They only provide services to brokers who in turn deal with the retail side. Sports exchanges spread themselves thinly by trading everything under the sun, to anyone who'll turn up and completing against each other in a free market free for all. There's not much similarity.

What's clear is that the idea of a sports exchange has never had mainstream appeal to retail customers or been appropriate for them, and the reasons are obvious and well documented. Even the mighty Befair had to conceed defeat and launch Sportsbook. Sports 'exchanges' should stick to what exchanges do best, that is providing specialist wholesale services for the businesses operating at the retail end. Just as the financial exchanges do that you want to emnulate.

The message seems to be though that if you want a big exchange, everyone should stick to one; and when the competitors have faded away, have the solidarity to apply the necessary pressure to the remaining one, via affirmative action, to maintain an equitable relationship.

This half-rice-half-chips plan to appeal to 'pros' and 'punters', backers and layers, vicars and tarts and all and sundry just seems to be a rehash of an old idea rather than a step change towards a brave new world.
Jukebox
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For clarity - Is the definition of a "market maker" someone who offers money to the market - or is it someone who offers money to the market but doesn't trade out?
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PDC
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Jukebox wrote:
Wed Nov 14, 2018 2:08 pm
For clarity - Is the definition of a "market maker" someone who offers money to the market - or is it someone who offers money to the market but doesn't trade out?
Depends who you ask, I think.

For example, assuming Euler's activity is in general the same as in his YouTube videos I wouldn't class him as a market maker.
Jukebox
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Thats why I asked.
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PDC
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I would say it is neither of what you suggested, for me this definition is what I think of when talking about a market maker: someone who buys or sells at specified prices at all times.
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ShaunWhite
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PDC wrote:
Wed Nov 14, 2018 2:34 pm
Jukebox wrote:
Wed Nov 14, 2018 2:08 pm
For clarity - Is the definition of a "market maker" someone who offers money to the market - or is it someone who offers money to the market but doesn't trade out?
Depends who you ask, I think.

For example, assuming Euler's activity is in general the same as in his YouTube videos I wouldn't class him as a market maker.
I'd have thought that if money is offered and it's taken then that's market making. The fact you then at some point later have a 'bet' on the other side shouldn't affect it. For me it's flashing speculative offeres that are rapidly withdrawn that isn't market making.
spreadbetting
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A market maker would generally be considered someone who 'makes' a market, i.e. prices up all the runners, generally that would involve sticking up prices rather than taking but could just as easily be either side of the spread as there will always be a price that's worth taking as well as laying if you're pricing up.

Back in the olden days the market's efficiency relied on hundreds of smaller market makers all filling in the gaps to contribute to the vibrant market prices but in their quest for extra profits the exchanges have ensured they've been driven away. In Betfair's case they introduced x-matching to sweep up the crumbs the smaller MM's would try and grab by either filling empty prices or trying to take advantage of overround/underround books. In smarkets case they seem to have barred entry to smaller MM's by ring fencing API access to in house or preferred MM's , bet placement limits and no doubt X-Matching also in place.

We're continually told 'pure' exchanges aren't viable yet that didn't appear hinder Betfair rising to their £1.5Bn valuation in six years pre PC,X-matching etc. Maybe they were simply doing things right in those early days as it's hard to imagine the novelty of the exchanges is the reason behind that 2006 valuation but it's easy to see their continual tinkering and greed is behind any current decline.
Trading96
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spreadbetting wrote:
Wed Nov 14, 2018 2:58 pm
A market maker would generally be considered someone who 'makes' a market, i.e. prices up all the runners, generally that would involve sticking up prices rather than taking but could just as easily be either side of the spread as there will always be a price that's worth taking as well as laying if you're pricing up.

Back in the olden days the market's efficiency relied on hundreds of smaller market makers all filling in the gaps to contribute to the vibrant market prices but in their quest for extra profits the exchanges have ensured they've been driven away. In Betfair's case they introduced x-matching to sweep up the crumbs the smaller MM's would try and grab by either filling empty prices or trying to take advantage of overround/underround books. In smarkets case they seem to have barred entry to smaller MM's by ring fencing API access to in house or preferred MM's , bet placement limits and no doubt X-Matching also in place.

We're continually told 'pure' exchanges aren't viable yet that didn't appear hinder Betfair rising to their £1.5Bn valuation in six years pre PC,X-matching etc. Maybe they were simply doing things right in those early days as it's hard to imagine the novelty of the exchanges is the reason behind that 2006 valuation but it's easy to see their continual tinkering and greed is behind any current decline.
Top tier football and Horse Racing are the most popular betting markets in the UK.

Why use Betfair for football or any exchange when you can use certain bookies and bet to near 100% overround with no commission and high limits. Prices are so close to BF, even on the day of the game when Betfair (used to) come into its own.

Bookies have adapted to Betfair, Betfair hasn't responded. So is dying.

For racing Betfair doesn't have each way liquidity which alienates plenty. This has always been a problem to be fair.
xitian
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Dallas wrote:
Mon Nov 12, 2018 6:47 pm
about 2 weeks ago Peter did over 1/2million in matched bets on a Saturday afternoon
Hang on, just to clarify - so let’s say an afternoon is 5 hours to give round numbers. That means Peter was matching 100,000 per hour, or approximately 30 matches per second sustained over 5 hours. If those are matches, how many unmatched bets did he place? Also is he self-matching at all to get those numbers?

No wonder Betfair servers are struggling at this time. It’s Peter bringing it down!

Any idea what his take/offer ratio was in that half million in an afternoon?
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Euler
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50 races, 10k a race isn't a huge amount.

Betfair was reluctant to give me any information on my activity, but when I started trading seriously on Betdaq I asked them to check my account to see if I was aggressively taking prices or adding liquidity to their exchange. On average I offered 85% of my positions to the market. I haven't gone through that exercise recently, but I'd say if you offer you benefit from the spread as well as any net positive strategy you have found, so that's why I do it.
xitian
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Euler wrote:
Wed Nov 14, 2018 9:09 am
vide0star wrote:
Tue Nov 13, 2018 11:03 pm
There's a principle in market making called adverse selection (https://en.wikipedia.org/wiki/Adverse_selection), which says for all things being equal, you're more likely to get filled when you're wrong than when you're right. Adverse selection happens in all financial markets but it's particularly acute in sports. Think goals, team sheets, red cards, inclement weather, etc, etc. This makes sports market making extra difficult.
In essence, I think that's probably the most eloquent explanation I've seen of why the PC or similar exists. I've struggled to put it into context, but that actually does it quite well.

The problem I have with Betfair's implementation is that they must know that I offer most of the time in the markets, but I get treated like a Viking warrior who is out to rape and pillage. Contrast that with Betdaq who have done everything possible to encourage me to be active. It just feels like Betfair have let their corporate objective overcome their objectivity.
But I’m surprised you’re not more critical of Smarkets’ new 1% turnover rule. Surely that’s faaaar worse than 40% tax. At £500,000 turnover in an afternoon like Dallas mentioned you’d have a bill of £5,000 rather than a tax of 40% of your profits at Betfair.

Are Smarkets’ going to put you on their Market Maker fee structure instead? Well I’d like to hear about it if they do, but I doubt they will.
xitian
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The only way we’re ever going to get fees down for winners is through industry competition, but if tiny competitors to Befair can’t even come up with more attractive fee structures than Betfair, what hope do we have?

The smaller competitors are basically saying the idealistic betting exchange can’t be done. They either can’t make enough money doing it, or they can make more money doing it the way Betfair are essentially doing it (but be even more ruthless).
LinusP
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xitian wrote:
Fri Nov 16, 2018 11:18 pm
The only way we’re ever going to get fees down for winners is through industry competition, but if tiny competitors to Befair can’t even come up with more attractive fee structures than Betfair, what hope do we have?

The smaller competitors are basically saying the idealistic betting exchange can’t be done. They either can’t make enough money doing it, or they can make more money doing it the way Betfair are essentially doing it (but be even more ruthless).
I think the problem is that there very few people who fit in the winner category, it’s only when an exchange has been running for a while that they realise this. To put it bluntly winners just take money out of the pot.

Betfair wants users to win lots and lose lots, paying commission in between, however without PC what is the incentive for me to play strategies that pay commission?
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Naffman
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Just read about it again and genuinely can't believe it, say you're trading a horse at 6.0 and stake about £3k on both sides...if the horse wins you pay 1% not on the turnover (3k) but 1% on 3k x 5 (6.0 or 5/1) so that's £150!!! Even if the horse loses you'll still pay £30.

Absolute joke of a company, had high hopes for them too but this is worse than Betfair and Matchbook's PC put together!
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