Tony Clare of BetFair (The Sporting Exchange) to me:
Dear Mr. Masse,
Thank you for the questions you submitted to tonight’s Q&A session. The session is intended specifically to address questions from Betfair customers. We therefore don’t feel it would be appropriate to include your questions in that session, although customers have asked similar questions which we intend to answer at that time.
I hope you’ll understand if I answer your questions offline:
For each of 100 trades made on BetFair, how many are made by real-people “punters” and how many are made by algorithm-advised BetFair Malta?
Since the launch of Betfair multiples 40,002 hedge bets have been placed by our Maltese entity. During the same period we have settled 515,210,543 bets on the exchange. If you consider bets hedging multiples not to be bets placed by “real-people punters” then 0.008% are placed by Betfair Malta and “only” 99.992% are placed by other customers. I would suggest that that’s probably not an accurate way of looking at it though. The bets placed by Betfair’s Maltese entity aren’t initiated by the team based on any view of the events in question; they’re placed in response to orders placed by customers on multiples. I’m afraid that, as is often the case, the reality is rather dull. It’s hard to see how any rational person would describe Betfair’s advertising as anything other than a factual statement. Even if you are matched against a Betfair Malta hedge bet that can only happen if no other customer is offering more competitive odds.
To answer your question “Where and when does BetFair take the role of a bookmaker?” [...]There is a trading team based in Malta which manages the risk around the multiples product. They have software which tells them what the risk is associated with a potential result is and suggests what hedge bets can be placed to mitigate that risk at current exchange prices. They then place the hedge bets to manage the risk. They place the bets using the same software as everyone else using the site and respecting any in-play delays.
The multiples product is run under Betfair’s Maltese bookmaking license and is regulated by the LGA there. Therefore the team has to be based in Malta. The operation is an arms-length operation – there is no special access to any functionality or data from the exchange. Betfair Malta is charged commission on winning bets in the same way as any other customer in order to comply with relevant regulation and law.
Betfair does offer a service to allow customers to place bets via telephone. Those customer orders are processed by telephone brokers. These brokers are sometimes mistakenly referred to as “traders” by customers which clearly has the potential to cause confusion. The only transactions placed on the exchange by these brokers are on behalf of customers based on their instructions.
There are no Betfair traders seeding markets or taking the opposite position to customers other than the activity mentioned above.
I hope this answers your questions,
Regards,
Tony Clare
Previously:
40,002 bets too many….an exchange, or its associate companies should not be allowed to trade in its own markets.
"and “only†99.992% are placed by other customers" – How many of those were bets placed by bookmakers, spread betting companies and their clandestine agents?
The tone suggests that Betfair are wounded over today’s climbdown; still they can be pretty sure that none of their friends in the press will run with the story.
I think we should also put the matter into some sort of historical context; noting, from the midas oracle archive, that the multiple betting operation has only been in operation for two months. It is also interesting to note that Betfair desires “to be the biggest online betting company….†one assumes that the fullfilment of such a desire, will see a corresponding increase in the amount of trades which the company performs on its own exchange? And what was the value of the bets that the Maltese operation have placed to date?
“BetFair Multiples – in the Racing Post, page 89 – Thursday, January 18, 2007
I would appreciate if a U.K.-based Midas Oracle reader informed me or sent me excerpts. Thanks. Will make up to you. I heard that it means that BetFair is going to become a bookmaker, but I can’t believe my eyes.
Betfair previously only accepted single bets on match results forcing punters wishing to make multiple match bets – such as trebles and accumulators – to go to traditional firms like William Hill and Ladbrokes.
But now, in a radical move, the Hammersmith based company are ready to accept multiples. In a major shift in strategy, Betfair itself will act as the bookmaker offering odds taken from their person-to-person singles football markets.
The company claim they will invariably offer better odds than High Street rivals even allowing for five per cent commission. Steve High, Betfair’s product manager, said: “Our aim is to be the biggest online betting company.â€
What is alarming is that what Betfair have said publically has literally more often than not proven to be the opposite to the reality.Â
If there is money to be made by front-running winning accounts, beating the clock etcetera, there are people who will vote for that to happen over the course of time.Â
The ‘public’ statement above also does not tally with the account on here from Graham ‘Sharp’ Minds about his experience during the recruitment positions for the jobs betting into the Betfair markets as an internal Betfair trader.
First of all, let’s get those figures into a better perspective, 515,210,543 bets by normal users, a large number of these bets are from people trading many times in the same market. 40,002 by betfair, if betfair are placing large trades in the market then for every large bet they place they will be getting matched up by many smaller bets. I think many people would be much more interested in not knowing how many bets betfair have placed but how many of their bets have been matched by betfair.
Also betfair multiples only operate in a limited number of markets, e.g. tennis, football, so it is wrong to compare it to the number bets placed on the whole exchange as whole.
So the big question is, of all the bets placed on these markets that are traded by betfair malta, what percentage of them are matched by betfair ? I bet it is a lot higher than he misleading 0.008% given above.
betfair multiples has been running for just over a year, that is still a significant 100 large trade placed into the exchange a day on average. I hazard a guess at them being large as otherwise it would be pointless placing them.
Can Tony Clare confirm or deny that betfair has recruited experienced odds compilers from the betting industry and traders from their own customer base with the purpose of boosting the GP on the bets taken by betfair Malta ?
BetFair Q&A:
http://www.midasoracle.org/2008/03/19/betfair-q-and-a/
Graham,
"Can Tony Clare confirm or deny that Betfair has recruited experienced odds compilers from the betting industry and traders from their own customer base with the purpose of boosting the GP on the bets taken by Betfair Malta?"
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I am going to send him that question right away… Stay tuned…
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Thanks for the question…
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Still no answer from BetFair to that question:
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"Can Tony Clare confirm or deny that Betfair has recruited experienced odds compilers from the betting industry and traders from their own customer base with the purpose of boosting the GP on the bets taken by Betfair Malta?"
"Even if you are matched against a Betfair Malta hedge bet that can only happen if no other customer is offering more competitive odds."
This would suggest that the hedge team are only layers. This ignores the fact that the hedge team are also engaged in backing, and therefore directly competing with Betfair’s customers for the best-price in the market.
"The bets placed by Betfair’s Maltese entity aren’t initiated by the team based on any view of the events in question; they’re placed in response to orders placed by customers on multiples."
The bets are placed so that Betfair can hedge its risk when it needs to. When it does not need to, it simply banks the profits from the multiples.
"They place the bets using the same software as everyone else using the site and respecting any in-play delays."
That is really a matter for a regulator and not Betfair to determine.
"The multiples product is run under Betfair’s Maltese bookmaking license and is regulated by the LGA there. Therefore the team has to be based in Malta. "
Unless the multiples operation is making significant profits, there is no actual reason why it should be based in Malta. Unless, that is, Betfair is keen to keep it at arms length from the UK’s gambling commission.  A 2003 paper published by the UK’s Department of Culture and Media stated that betting exchanges should be subjected to specific duties: They would not be able to initiate bets in any way on the exchange – in that they merely construct a controlled market; and are not a party to the bet. They may not permit their customers to identify themselves to each other, either through personal contact or otherwise.
- They must display and disseminate their betting rules.
- They must consent to having their play and payment systems checked by someone authorised by the Gambling Commission.
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