It simply beggars belief that people can have had matched bets removed from their account when nothing has gone wrong. Will there be a new department to judge the fairness of the [BetFair Stating Prices] returned in every race every day? What is unfair? Under the official SP? Or 20 % under?… or 30 , 40, 50 % under? Surely a bet that is matched is sacrosanct unless something has gone wrong, like a late suspension. Why do people have to email in to have their accounts adjusted back to the right amount? Surely it should be automatic.

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Cited by the Irishman, who didn’t publish the deep link —shame on him over 3 generations.

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Previously: BetFair Starting Price + Grand National fiasco

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Speaking of the Grand National fiasco, I think that the solution is not simply calling in more short-sellers (“layers”). Maybe BetFair should invent a reverse SP system, aiming at attracting the unsophisticated short-sellers (“layers”), so as to balance the takers (“backers”). What does Chis Hibbert think of the Grand National fiasco?

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BetFair:

Settlement of Grand National win market

Betfair Customer Services 05 Apr 18:35

The reconciliation of the Betfair SP for the Grand National win market resulted in prices which we believe were significantly unfair for backers of some horses, most obviously the winner. Therefore we unreconciled the Betfair SP to return what we believe were fair prices. As a result of unreconciling bets after the race, some matched bets (which would have been winning bets for customers) became unmatched bets. In addition, some customers may have traded in-play based on bets they believed had been matched. If you believe that you have been disadvantaged as a result of this, please contact us at bets@betfair.com. We will look at our records to determine the amount you should be due and provide compensation accordingly. Please be aware that this may take some time and it is unlikely that we will be able to address all enquiries until next week.

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BetFair:

Payments to customers in relation to Grand National win market

Betfair Customer Services 07 Apr 12:05

Following our decision to roll-back the initial Betfair SP reconciliation for the Grand National win market, some customers were left in a worse position than had that initial SP stood. We are in the process of assessing which customers were disadvantaged by the roll-back and by how much. All affected customers will receive payments from Betfair to reflect this. In other words, if a customer would have been in a better position had the initial SP reconciliation stood, then a payment will be made by Betfair to the customer to reflect this, irrespective of whether the customer has contacted Betfair. No customer will be left in a worse position following the roll-back than would otherwise have been the case.

Thank you to those customers who have already emailed the bets@betfair.com address with details of circumstances in which they believe they have been disadvantaged. This has helped us to confirm that our calculations match the expectations of those customers and we will look to respond individually to relevant customers.

The decision to roll-back the initial SP reconciliation was taken following extremely high level of demand from Betfair SP backers in the Grand National win market. Had the initial SP stood, the prices returned on several horses for those backers would have been much reduced from what they could reasonably have expected. As a result, Betfair made the decision to roll-back after the race, to reflect an SP overround as close as possible to 100%, which is typical of the Betfair SP in the normal course. We believe that this was an exceptional case and don’t anticipate a reoccurrence, but obviously the result of the roll-back was that some other customers were left in a worse position than had the initial SP reconciliation stood.

We will begin to make account credits today and expect all payments to be made to affected customers within the next 48 hours.

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Andrew Black:

Steve,all fair comments. I’m away from the action now [he is on a sabbatical] – I’ve been in the mix on this one though [he co-created the BetFair SP].

I think (hope) that this is a one-off. The BSP was, bizarrely, a victim of its own success – having moved along quietly doing relatively little turnover for a few months [*] it suddenly burst into flame. The win market for the National yesterday was nine times bigger [**] than any BSP market we have ever had before, and almost all the new business was business to back. It was always going to be big but the BF planner didn’t envisage or plan for this sort of scale [***] (it would have been easy to have alerted more layers). The demand for Comply or Die bust a hole in the tissue and the price died.

This was a mistake – no question – but I have some sympathy as the numbers were way higher than my expectations too. Hopefully the guys can paper it over – BF will surely be the financial loser here and not the customer. I see it as a one-off mistake – BF must learn from it and make sure it doesn’t happen again.

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[*] Sports betting volume peaks some times during the year for regular, recurring events (SuperBowl, March Madness, World Series, Kentucky Derby, etc.) —and at some occasions (the Olympics, the World Cup of Soccer, etc.).

[**] “nine times bigger”… Interesting number. But how does Grand National 2008 compare with Grand National 2007, for BetFair, in terms of revenues?

[***] “didn’t plan”… Does BetFair have enough “layers” (short-sellers), who could be alerted, next time? Probably.

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Grand National @ Wikipedia

[Kentucky Derby @ Wikipedia]

Grand National @ BBC Liverpool

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BetFair has hired a TV-famous horse racing pundit: John McCririck.

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YouTube Video

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Previously:
- BetFair Starting Price
- BetFair SP vs. MSR

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See the comments about this BetFair SP “fiasco”, on Midas Oracle, on other posts…

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Take my sub-title as a follow-up (in good spirit) on Robin Hanson’s comment, here.

I’ll go first —after acknowledging Steve High, the inventor of the BetFair SP. (For those who first want to read the explainer on the BetFair SP, Midas Oracle is here to help.)

1. In June 2000, a BetFair team paraded in the street of around Russell Square in central London, in a mock funeral, to mark “the death of the bookmaker”. In hindsight, their publicity stunt was too cocky, since BetFair’s market share today has reached 5% only. On the other hand, the introduction of the BetFair Starting Prices will probably be the true killer ap.
2. BetFair’s Stating Prices and Robin Hanson’s Market Scoring Rules have one thing in common: they were invented for one particular reason (to rebel against the BetFair exclusion in the making of the traditional Starting Prices, in one case, and to solve the thin-market problem, in the second case), but both approaches endend up in discovering simplified trading —you just indicate the direction of your bet, and the amount of money you bet (you do not set your own prices, but you trade anyway).
3. People with memory will remember that the executives of the prediction exchanges marketing in North-America have often complained that people find trading too complex. Well, innovation (here, exchange SP) was the solution. The Britons –not the Americans– discovered the trick.
4. As David Perry (of Consensus Point) and Adam Siegel (of Inkling Markets) know better than I do, MSR (which I view as “simplified trading”) has helped their respective prediction market firms attract a new kind of users —people who are completely new to event derivative trading (and who would not recognize it if this term were spelled out to them).
5. Once BetFair SP is up and running, the next logical step would be to take it… offline (where the costly bookmakers are). I foresee BetFair SP booths (with vending machines inside) in the future UK betting landscape.

What is SP betting?

SP is an abbreviation for ‘Starting Price’ and until now has been more widely associated with traditional bookmaking. The method by which SPs are set for each runner varies in different countries. Traditionally in the UK the Starting Price for any horse in any race has been determined by the on-course bookies who determine an aggregate price or odds. Not surprisingly, their Starting Price is edged towards them making a profit.

There has recently been a lot of debate across the industry as to whether this is a fair way of calculating the SP. Many people argue that the SP should account for bets placed on the selection off-course (in betting shops and online) as well.

Betfair’s Starting Price is different. It’s based on bets placed by both backers and layers in any market – there is no margin for profit built in – and that’s why we think it will give you much better odds.

Why Betfair Starting Price?

Unlike other bookmakers’ Starting Price, the Betfair Starting Price will be determined by balancing bets from customers who want to back and lay, so because it’s other customers placing the bets and because there is no margin for profit built in, you are far more likely to have better odds than the bookies’ SP.

The Betfair Starting Price will be calculated exactly to ensure the fairest and most transparent odds possible for both backers and layers. The Betfair Starting Price does not need to account for a profit margin but instead is calculated at the start of an event by looking at the relationship between the amounts of money requested at SP by opposing customers and by looking at unmatched Exchange bets.

How do I place a bet at Betfair Starting Price?

Firstly, you need to have the new ‘Betfair Starting Price’ box ticked above the market view. This will bring up a new column in the market view allowing you to back at SP. If you have the ‘Back & Lay’ box ticked you can also lay your selection at SP. You then just need to click on the relevant box marked “SP” according to which bet you want to place. Clicking the Market Depth box will bring up the white columns indicating the next best prices you would have previously been able to see in the Full View. Leaving all boxes un-ticked shows you the equivalent of the Express View. (Note that when you click on the name of a selection now, it opens up the betting slip to back it. If you want to see the graphs and trading table, you must click on the new graph symbol to the left of the selection.)

When will I know what odds I have been matched at, and my potential winnings?

You will be informed of the odds at which your bets have been matched once the market is turned in-play and the event has started. At this point your bet will be matched against customers who have placed an opposing bet. The actual SP will then be displayed in the middle column on the market as long as you have the “Betfair Starting Price” box ticked above the market.

Your Bet Manager is now split into three colour-coded sections. These are Unmatched Bets, Matched Bets and SP Bets. Any SP bets that were showing in your Bet Manager before the race started will be moved to the Matched Bets section once the race is in-play.

How is the money matched?

The basic principle of matching bets on the Exchange is maintained for SP bets. Backers are matched against layers. In the case of Starting Price bets, we are matching Starting Price backers (who have specified a stake) and Exchange backers with Starting Price layers (who have specified a liability) and Exchange layers.
For further details on this please see SP – Detailed Workings

Which markets will we offer SP betting on?

To start with, we will only offer SP betting on British Horseracing win markets. Moving forward, we plan to offer it on Place markets, Irish, US, Australian and South African horseracing as well as other sports.

What is the minimum stake for an SP bet?

The minimum stake for a back bet at SP is £2 (or the local currency equivalent). The minimum liability if laying is £10 (or the local currency equivalent).

Is there a maximum stake for SP bets?

No.

Who am I betting against at SP?

The party against whom you are betting when you take the SP option is consistent with the main Terms and Conditions that govern your use of the site. For example, if you are a UK customer, then any SP bet you place will be matched against another customer(s). But if you are an Australian customer betting on a non-Australian event, then your counterparty is Betfair.

If I am laying at SP, how will I know how much I am risking?

In a normal Exchange market, if you are laying you are asked to specify the backer’s stake you would like to try to win and your liability is calculated for you.

In contrast when placing an SP lay bet layers are asked to specify a liability (rather than a backer’s stake). This is because the SP won’t be known until the off, so customers have to specify the liability they desire so that we can ensure they have sufficient funds in their account to pay the backers we match them with should the selection go on to win. Backers and layers at SP will therefore not know how much they could win until the start of the event. Backers at SP specify their stake as normal and this amount will reduce their “available to bet” balance as usual.

How are the bets being settled and when?

Once the reconciliation process has taken place, SP bets are just like normal matched Exchange bets. They will be settled along with every other matched bet.

Who is taking the risk, Betfair?

Betfair takes no risk (except if the website isn’t working, please see Betfair SP Rules for further details). We balance backers and layers. Our customers take the risk.

Is it linked to the Exchange, and how?

All available money at the time is balanced to determine a fair price. This includes customers who have elected to back or lay at SP and any unmatched Exchange demand.
For further details on this please see SP – Detailed Workings

Does Betfair see what is happening with the SP bets?

The process of determining the SP takes place in the short period of time between the race being suspended and the race going in-play. During that period no one at Betfair has any influence in how the price is determined. No one at Betfair has access to any privileged information on SP markets.

How can Betfair guarantee to match a £50k SP bet?

In order to match that amount of money at 1.01, we would only need £500 of layers’ liability. Unless the selection is genuinely a 1.01 chance there is a very high probability that there will be enough layers to guarantee a match. However, we don’t guarantee a price. In practice though a large amount of money placed to back at SP will be likely to result in a price projection that is attractive to layers, and vice versa.

Will there be unmatched SP bets if the money isn’t there?

In theory, there could be unmatched SP bets. We don’t actually guarantee a match. But this would only happen if the price is 1.01 or 1000 – the two extremes of our SP. If 1.01 were the final SP, then some backers might be unmatched. If 1000 were the final SP, then some layers will be unmatched. However, we expect this to be very rare.

What are SP odds limits?

SP odds limits is a new feature that allows you to specify either the minimum odds you are prepared to accept for an SP bet, for back bets, or the maximum odds you are prepared to offer for a lay bet. Traditional bookmakers don’t offer this type of bet, but Betfair has created an SP system that will. You just need to select the set odds limit option when placing the SP bet and specify the minimum acceptable odds for back bets or the maximum acceptable odds for lay bets. If the Betfair SP falls outside the limits specified, stakes are returned and the bet is not matched. This enables Betfair to calculate the minimum profit you will make on the selection if the result goes in your favour.

SP Backers Min Profit Calculation
(Min Odds – 1) x Stake = min profit

SP Layers Min Profit Calculation
Liability / (Max odds – 1) = Min Profit

See the Setting SP Limits section for further details.

If I specify a limit on an SP bet and the calculated SP is equal to my limit am I guaranteed to be matched?

No. To include all SP limit bets which have a limit exactly equal to the SP in the reconciliation process and match them could result in an imbalance between backers and layers. Therefore where an SP is calculated that is exactly equal to backers’ and/or layers’ limit SP bets none, some or all of those bets may be included. In this event SP limit bets with identical limit prices will be matched on a first come, first served basis as is the convention in Betfair’s Exchange markets. Lay bets with a higher limit and back bets with a lower limit will definitely be matched.

Why does my profit & loss not reflect my SP bets?

The profit and loss will only reflect your SP bets once the event has started and the bets have matched at the Starting Price.

The projected profit and loss cannot be displayed using the ‘what if’ feature within ‘More Options’ because there is no price upon which to base the calculation at this stage.

What changes will I see in market view?

If you are an existing customer who gets the current ‘Full View’ you will get the equivalent of the Full View (Back & Lay and Market Depth selected). Similarly, if you get the ‘Express View’ you will again get the equivalent (no checkboxes selected).

Any changes to your preferences will be stored.

Can I request to ‘Take SP’ on an unmatched lay bet if my liability is less than £10? (Minimum liability)

Yes, but at the off if the liability on the bet is less than £10 the bet will be cancelled and will not be included in the SP reconciliation.

For example: As an Exchange layer I decide to lay a horse for £5 @ 2.0. It is trading at 3.0 so my bet is unmatched. I then request to ‘Take SP’ at the off if my bet is still unmatched at 2.0. The system will allow this request but if unmatched at the off it will lapse. Also, if a customer for example asks to lay £50 at 1.5, convert to SP if unmatched, and £40 gets taken leaving £10 lay at 1.5 the balance will cancel at the off. It will not convert into an SP lay bet as the revised balance at the off was less than the minimum £10 liability allowed for SP bets.

Can I place SP bets on your Multiples product?

No. There is no immediate plan to offer SP betting across Multiples.

What is the commission rate payable when betting at SP?

As an introductory offer the SP bets will be priced with the same commission rates and discounts as conventional Exchange bets. This offer will be valid for several months, at least, and continue throughout the spring racing season. In detail, the pricing calculation is performed as follows: SP bets become matched bets once the reconciliation has been performed at the start of the event with commission charged on a customer’s net winnings in each market. The commission on SP bets will therefore be calculated in exactly the same way as normal Exchange bets.

Can I cancel or amend my SP bet?

It is not possible for you to cancel a bet you have placed on the site at SP. This is so that we can provide an estimate of the Starting Price based on money committed to betting at SP. If bets could be cancelled, this estimate could be manipulated by placing a large bet and then cancelling it. If, however, you have an unmatched Exchange bet with the option “Take SP” selected you can still cancel this up until the time of the off.

If you have specified a limit on your SP back bet you can reduce the minimum odds you are prepared to accept. If you have specified a limit on your lay SP bet you can increase the maximum odds you are prepared to offer. You will not be allowed to increase the odds on a limit SP back bet, or reduce the odds on a limit SP lay bet as this would allow customers to amend their bets to levels that would be highly unlikely to be matched, which would have the same effect as cancelling which is not allowed, as explained above.

Can SP bets be placed using Betfair Mobile?

Not currently…but watch this space!

Are my SP bets highlighted in Current Bets, Betting History and on My Statement?

Yes. Your bets will show in Current Bets at SP along with any odds limit you may have set.

Will the new functionality affect Multiples / Coupons / Line / Range or Asian Handicap betting?

No. You will see no changes to the market views at all and will still see the old Express & Full Views where relevant. This currently only affects odds markets.

What does the functionality under “Coupons Pages” in More Options allow me to do?

These options will not appear in More Options unless a Coupon is selected on screen. This is what the options are with a brief description of what they do.
- Display stake selector = Displays a stake selector in the market header.
- Display best prices only = Displays the best prices for each selection.
- Display averaged odds = Displays prices averaged around the values specified by the customer in the stake selector.

What happens to my SP bet if there is a subsequent non-runner?

Please refer to the SP Bet Rules section.

What can I do with an unmatched bet in SP markets?

By default unmatched bets ‘lapse’ and are cancelled at the start of the event.

You can still choose for this to happen if you wish, and unmatched bets will have “cancel” as their default. However we have added two new alternative options:
1. You can choose to “Keep” the bet once the market turns in-play if it is not matched prior to the off. This provides another opportunity to get your bet matched, although there is still no guarantee you will be matched as the price may never reach the level you have requested.
2. You can also choose to convert your unmatched Exchange bet to an SP bet if it remains unmatched at the off by selecting the “Take SP” option.

Please note again that you can cancel an unmatched Exchange bet as normal, whichever option you have chosen.

Also see the Changes to Exchange Betting (Non SP bets) section.

#2. Many traders (the short sellers) are unhappy with one option (the automatic canceling of “all lay keep bets”) that the BetFair SP team authoritarianly introduced without asking their customers first.

Steve High (BetFair Product Manager – Starting Prices)

It was a big day for me yesterday, with Betfair finally launching the SP mechanism. I kicked the product off over 2 years ago, but it was a year and a half before we started work on it (the Betfair roadmap is permanently backed up). It is a very big piece of work – in many respects the biggest single add-on to the exchange since it was launched over seven years ago – and it needed planning to a high level of detail. Step forward then Steve High, mastermind of the accumulators product and a man who is extremely capable when it comes to dealing with tough mathematical or logical challenges.

I told Steve that I’ll be taking all the credit if it all goes well but I’m publicly blaming him if it doesn’t, which seems like a good plan. In reality Steve is responsible for virtually all of the logical design with me doing little more than plant the first seeds. There is a long list of honourable mentions – too long to go into, but suffice to say there were several people who really went the extra mile and it was one of those projects that had real commitment and momentum behind it.

It launched quietly yesterday and I would expect it to creep along for a while, gradually picking up turnover as it goes. We need to make some performance tweaks and at some point we need to strip the page down a bit as it’s pretty cluttered right now. I believe that in time it has the scope to become an important product, and it could serve as the foundation stone for a variety of advances further down the line.

For me it may be the final significant contribution I make to Betfair’s product. In a week’s time I take a nine month sabbatical (staying on the [BetFair] board as a non-exec) and how I will serve the company after this break isn’t clear. It’s taken a long time to build, but right now I believe Betfair has a truly outstanding product team which has rapidly become one of the finest assets in the company. They don’t need me any more, and it’s great to be saying that. My main concern in my sabbatical is that I’m going to pine for the office – it’s become so much of my life and it’s a genuinely friendly and fun place to be. [...]

A £10 bet on the seven winners at the traditional SP would have returned £471.20. But at the Betfair SP, with the maximum commission rate factored in, backers would have netted £596.22 – a difference of some £125.02.

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BetFair:

SP as it should be

Some of you might have heard that Betfair has been developing a Starting Price product to rival the traditional SP system that offers a better and fairer price that you can take at the start of a race. Well the rumours are true. And in the next few weeks we will be introducing the option of betting at a Betfair SP. It’s been a long time in development and has been a difficult problem to solve. We’re not going to reveal too many details yet, but we can tell you that you will be able to back or lay at Betfair SP, and that we’re confident that it will out perform the traditional SP by offering significantly better odds.

Keep Unmatched

As part of the same site enhancement, we will be offering the option of turning your unmatched bets in-running, with an option called “keep”. When you place your bets you will be able to select to turn them in-play if they have not been matched by the start of the race. We’ll be revealing more soon so watch this space.

[...] From next month we’ll be giving customers the opportunity to back or lay a horse at [Starting Price]. There’ll be guaranteed matching in all but the rarest of circumstances, no stakes limits and the option to set price limits should punters wish. As an added feature, we’ll also be introducing something known internally as ‘bet persistence‘. This allows customers to have their bets automatically turned in-play if they’ve not been matched before the off.

Originally conceived as a concept for attracting new customers to Betfair, the SP facility looks like it’s also going to appeal to the savvy, more sophisticated users if the recent roadshows and customer testing sessions are any guide. There are several features to the new product that customers can opt into by clicking a series of check boxes above the market view or listed under more options. These include displaying the predicted SP on Betfair from the moment a market begins to trade right up to the off of the race. For new customers a simple interface showing ‘back only’ current odds or SP buttons will be displayed.

The new Betfair SP market will run separately from the main exchange market up until the point of reconciliation at the start of the race. At the off, the backers and layers of SP bets will be matched with each other and with exchange backers and layers to determine the accurate price of the Betfair SP. This will then be displayed within a few seconds of the off as soon as the race is turned in play. For customers wanting a high degree of detail they can have it – the SP can be returned with up to six decimal places. For the vast majority, two decimal paces will suffice and this is what will be displayed on the site.

One important feature of the SP bets to note is that once placed, they can’t be cancelled. However, price sensitive customers can set limits to their bets so they’ll only be struck if a required price has been matched. For instance, someone wanting to back a horse early in the morning before heading off to work can say they’ll take the Betfair SP as long as it is 4.5 or above, knowing it’ll only be matched if the SP is that price or bigger.

We anticipate that the returns will compare favourably with the current industry SP and from the outset the full returns for every horse will be displayed on the site.

Any customer not interested in the SP function can simply leave the tick box unticked and they’ll never see it. [...]