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I outlined serious flaws in the Malta Lotteries And Gaming Authority in my LGA article a few weeks ago. In recent days a regulator much closer to home has come into the spotlight. (The following appears in moreorless the same format in the Alderney Gambling Control Commission article on my own site.)

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The Alderney Gambling Control Commission oversees remote gambling within the states of Alderney in the Channel Islands. In the blurb on the homepage we find the following:

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The Commission ensures that its regulatory and supervisory approach meets the very highest of international standards.

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Excellent.

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So, does this have any practical relevance to the player?

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As reported at Casinomeister, in early July 2008 a player deposited at one “PKR Casino”, receiving a signup bonus in the process. The next day he was tempted to re-deposit with another bonus invitation, after which he cashed out his balance.

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Three days later, the casino revoked his bonuses on the basis of “bonus abuse”:

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After a thorough review of your account it is evident that you have abused the PKRCasino Reload bonus. You have now been permanently banned from PKR and all funds gained by abusing the reload bonus have been seized.

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Since the player had infringed no terms, he appealed to the Alderney Gambling Control Commission. A week or so later the Commission released the following quite breathtakingly atrocious findings:

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You made two large deposits, $200 and $500. The first deposit of $200 is the maximum eligible amount for a first time deposit bonus. The second deposit is again the maximum eligible amount for reload bonus.

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As soon as the bonuses were cleared you requested a withdrawal, each time within five minutes of clearing the specific bonus.

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You did not engage in any play between the first withdrawal and the second deposit when the reload bonus became available.

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The only game you played was casino hold em.

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The vast majority of the bets you made were the minimum $1. This is quite a small bet amount when compared to the amounts that you deposited. Only the basic main bet was played, never the side bet (AA bet).

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The total amount you bet on the account was $20,002.00, this reflects the $10,000 bet to claim the first deposit bonus and then a second $10,000 to claim the reload bonus. It is clear that as soon as the bonus was released no more games were played.

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Play only occured while a bonus was pending.

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The Commission has thoroughly investigated your claims and are found to be in agreement with PKR Limited’s decision to exclude you from their site. On obtaining details of your game play it’s apparent that you have abused the bonus scheme that was offered to you.

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In accordance with sections 9 and 10 of PKR Limited’s terms and conditions, of which you agreed to adhere to at all times, they are more than within their rights to close your account and seize all funds

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Here is section 10 of the above-mentioned terms and conditions:

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PKRCasino reserves the right to withhold any bonus payment if it believes that the promotion has been abused and/or where the terms of the offer are not fulfilled, or any irregular wagering patterns are found.

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So, according to the Alderney Commission:

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The player played no disallowed games.

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The player made no disallowed wagers, or disallowed wager sizes.

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The player did not wager less than the stipulated amount.

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In short: the player broke absolutely none of the rules of the contract.

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PKR does not define “abuse”, nor “irregular wagering patterns”; PKR does not, in fact, state that it must be unequivocally sure about this apparent abuse, only that it must believe that the undefined indiscretion has occured. And if PKR Casino believes that something which they cannot define may have happened, they reserve the right to confiscate players’ money.

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This must count as just about the most vague, inadequate and frankly risible condition you could find in a contract. Why not just say “we’ll keep your money if we don’t like your name”? Or “…if there’s a ‘y’ in the month”? Or “…on Tuesdays”?

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Would such absurdities be any more ludicrous than guesswork about a non-defined activity?

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And yet, the Alderney Gambling Control Commission endorses this condition.

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This is a precedent-setting move, as it sends a message out to players that casinos under Alderney jurisdiction may confiscate their legitimately-earned funds with absolute impunity, safe in the knowledge that the AGGC will do nothing to stop them.

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As such, I would like to ask the AGCC the following questions:

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1) Since a straight observance of all the stated rules is not acceptable to you, precisely what would a player need to do to earn his full cashout at one of your licensee casinos WITHOUT incurring your displeasure? Which additional rules would you have a player observe?

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2) You appear unhappy with the playing of just the one game; how many, and which, additional and unstated games would one need to play to earn a full cashout, and why do you not require that the casino list them?

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3) You appear unhappy with issues of betsize; what betsize is acceptable to you, and why do you not require that the casino list it?
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4) You appear unhappy with strict observance of the required wagering; how much additional wagering do you consider acceptable and why do you not require that the casino state this?

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5) You appear unhappy with the timescale of withdrawals (“within five minutes…”); how soon after requirements are met is acceptable to you for withdrawing, and why do you not require that the casino state this?

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6) You appear unhappy with the lack of play occuring outside of bonus requirements; how much additional play is acceptable to you, and why do you not require that the casino state this?

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Lastly,

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7) Why in the name of heaven can a player abide by all the given rules and not be paid in full?

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I hope that at some point the AGCC will address these points, as it seems clear that a player who simply follows the stated rules is guilty in their eyes of an indeterminate indiscretion.

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There is nothing new about incentivising bonuses – they occur even in the UK banking sector. Take a look at the Alliance And Leicester esaving account:

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Earn 6.50% AER (variable), this rate includes a 0.88% bonus payable until 31 August 2009

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The bank uses a bonus to boost the customer’s interest, giving them a nice, catchy headline rate. They may lose money on the bonus, but the idea is that the new customers they’ll gain will more than compensate for the loss. If the customer shamelessly empties his account when the bonus period expires and goes elsewhere, the bank does not confiscate the bonus funds. If they did, it would put them in quite monumental breach of UK law. And at the end of the day, why would they? – they should still make money overall.

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The exact same marketing concepts govern bonuses offered by online gambling operations: “give ‘em money and you’ll make money”.

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So if a profit-motivated customer of a UK bank cannot have his funds unfairly confiscated, why can similarly focussed customers of an operation under the jurisdiction of the Alderney Gambling Control Commission be subject to such outrageous treatment?

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Well, here’s where it get’s interesting.

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The answer is that there is nothing in Alderney law which prevents it.

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In the UK and across many, if not all, other EU countries, trading standards legislation does not recognise the legality of anti-customer clauses in contracts – take a look at the Unfair Terms in Consumer Contracts Regulations 1999:

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If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail…An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer…The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term.

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One example of an unfair term is given as:

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“…giving the seller or supplier…the exclusive right to interpret any term of the contract

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You can see how this legislation would make it difficult for a business to hold customers to clauses like “we reserves the right to withhold any bonus payment if it believes that the promotion has been abused”.

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Unfortunately, there is no trading standards legislation in Alderney, and as such nothing that protects the consumer from unfair practice – take a look at the “fair trading” section of the States Of Guernsey trading standards page of the Guernsey government website:

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In March 2000 the States of Guernsey approved the introduction of legislation relating to the sale and supply of goods and services, unfair contract terms, misrepresentation and the disposal of uncollected goods. This legislation is at the stage of preparation and subsequent introduction

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I spoke to the Guernsey trading standards office yesterday, and they confirmed that this is still the case – this legislation, though in the pipeline, is still not in place in 2008, fully eight years later!

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I also spoke to the State Office of Alderney, and they confirmed that the same applies: there is no trading standards legislation in Alderney.

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So where does this leave the player, on the receiving end of an outrageous decision issued by the Alderney Gambling Control Commission?

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During my afternoon of phone conversations with the various Channel Islands public bodies, the Alderney Greffier pointed out that there is an appeal process listed in the 2006 eGambling Ordinance (see page 21, “appeals”). However, she acknowledged that this is a potentially rocky path:

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Acceptance of the appeal request is down to the court itself.

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Alderney solicitors charge upwards of £400 an hour, making the pursuit of anything other than very large sums completely self-defeating.

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Exactly what would happen as a result of a successful appeal is by no means guaranteed in terms of customer satisfaction.

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Lastly, in the case of an appeal against unfair contract terms, when there is no actual law prohibiting such terms in the first place, it requires quite a stretch of the imagination to think that the court might find for the customer on that basis!

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As such, appealing against a decision from the Alderney Gambling Control Commission is most likely an exercise in extreme pointlessness.

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None of this should even be remotely necessary; an ostensibly respectable and competent governmental body should not be taking decisions based on what a customer might have done in relation to undefined, and frankly undefinable, terms – this is grossly unprofessional and grossly unfair. Vague talk about “bonus abuse” is the stuff of the lowest level of online casinos; it’s unthinkable that a governmental regulatory body would talk in the same manner. A serious regulator needs to take fair and balanced decisions: did the customer break any clearly defined rules? If so, he should not be paid. If not, he should receive his money; if he does not receive his money having broken no rules, then action against the operator should be forthcoming, up to and including the revocation of the operator’s license.

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Not so in the case of the Alderney Gambling Control Commission. What did they say? It bears repeating:

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it’s apparent that you have abused the bonus

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What is the lesson that players can take away from all this?

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Well, take your chances by all means; a lot of the Alderney-based casinos are decent operations so you’ll probably be alright. But remember that if you are NOT alright, if you accept a promotional bonus, on the casino’s specific invitation as part of their marketing campaign to snag your deposit, and you cash out only to then find you’re the subject of ill-defined accusations of unacceptable behaviour you apparently may have indulged in, then you can expect no quarter given from the Alderney Gambling Control Commission on the basis of their performance in this case.

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This was, I think, a test case for the AGCC, the first one of its kind that’s been in the public domain.

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What a shame they fell at the first fence and set standards in online gambling back about ten years.

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What is the point of “regulation”, if the reality is this?

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BetFair:

Improvements to Betfair’s bet matching logic today, Monday 14th July:

What’s changing?
We’ve improved the code that matches bets. As well as matching backs against lays as we’ve always done, we’ll also try to match your bet against bets on other selections in the market. We‘ll give you an improvement over the price you‘ve requested where possible, and we‘ll match you against whichever bets get you the best price.

For example in a tennis market:

Roger Federer is 1.9 to back, 2.1 to lay.
Rafael Nadal is 1.8 to back, 2.0 to lay.

If you try to back Federer at 1.9 or less, previously we would have matched your bet against the customer looking to lay Federer at 1.9. Both bets would have been matched at 1.9, even if you‘d asked for a shorter price. In theory we could do even better than that though: we could match you against the customer trying to back Nadal at 2.0 (backing one player at 2.0 is of course the same as laying the other player at 2.0). Our new bet matching process will see which match gets you the better price. In this case we would get you 2.0 by matching you against the Nadal backer (who is offering a better price than the layer of Federer).

When placing a new bet you will only ever be matched by the new process if doing so gives you a better price than you would otherwise have got. We will match your bet at the best price possible that’s a valid increment on Betfair’s odds ladder, as we explained in our update of 6th June.

Does this only work for 2-runner markets like tennis?
No. The new matching logic works for any number of runners in a market. An example with a 2-runner market is probably easiest to understand, but the principle is the same for markets with 3 runners or more. For example if a football market looked like this:

Spain 2.3 to back, 2.5 to lay
Germany 3.9 to back, 4.0 to lay
The Draw 2.9 to back, 3.0 to lay

Then if you want to back Spain we could match you with customers looking to back Germany and the Draw at 4.0 and 3.0 respectively, which would result in you being matched at 2.4, a better price than you would have got had we matched you against Spain layers (who are only offering 2.3).

Which markets will this affect?
We’ll introduce the new code on Monday 14th July, but initially matching will be done exactly as before. As explained earlier in the year, introducing best execution across selections wasn’t possible without significant change to the existing code that matches backs and lays, so we will need verify that performance is as expected for the existing matching process before enabling the new functionality. All being well we’ll enable the new code for a small number of markets to ensure that everything is as it should be later on Monday. We’ll announce which markets on Monday. Again if all is well we’ll roll out to a wider range of markets on Tuesday.

We’d expect to match across selections on the same range of markets as we currently do:

Match Odds in Basketball, Boxing, Cricket, Ice Hockey, Rugby League, Rugby Union, Snooker, Tennis and Volleyball, Greyhounds win markets, Darts match odds, correct score and handicaps and Soccer match odds, HT/FT, correct score and unders/overs.

Horse racing will not be covered for now, due to the possibility of non-runners, and the new process isn’t applicable to markets where runners can be added (for example “Next manager” markets), where runners listed might not take part (e.g. First Goalscorer) or where the runners in a particular “market” are treated independently (e.g. Accumulators).

What about bets placed in error?
We’re aware of a concern that this change might make it more likely that customers would match bets placed in error, for example asking for 1.2 when you really wanted to back at 2.2. One consequence of the change we’re making is that any bet you place is more likely to get matched – making it easier to get a match is the whole idea. Being realistic though, if you had placed a bet in error like that in the past, in the vast majority of cases you would have been matched (against lays on that selection). There’ll now be far, far more circumstances where you would have been matched anyway , but instead you’ll now get a better price, than situations where your bet would have been unmatched and you might have had the chance to cancel. On average we would expect customers who place bets in error to be better off as a result.

On a related point, we’d also expect this change to make it more difficult for people who place “trap bets” to get matched (a trap bet is an offer that is only likely to be matched if another customer places a bet in error). While putting up “trap bets” is against Betfair’s terms and conditions and we close the accounts of persistent offenders, on an exchange where any customer can ask for any price it’s difficult to eradicate this practice. In most instances where a trap bet is the best price available on a selection, customers will in future be matched at better prices against bets on other selections rather than matching the trap bet.

How will the change affect liquidity?
We would expect the change to be beneficial to liquidity. Obviously if we have opposing customer bets in the system that could be matched, whether on the same selection or across different selections, the best thing for liquidity is to match them.

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Further to the above, we’ll be enabling the improved matching on the following markets later today.

Football:

Czech Republic U19 vs. England U19
FC Inter vs. MyPa

Tennis:
Andujar vs. Hanescu
Minar vs. Rochus

Greyhounds:
11:28 Sheffield
11:48 Oxford

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The Authority may order the suspension or cancellation of a license if…the license holder has failed to meet commitments to players.

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This is important, because the ultimate purpose of any gambling regulatory organisation is to ensure protection of its licensees’ customers, the players.

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On the face of it, this appears to be a pretty serious organisation; it’s a governmental body, and one located within the European Union as opposed to some Caribbean or Costa Rican outpost; it’s got a snappy website whose contacts page lists an email address for player complaints; the LGA also moves on the international circuit: they attended the 2008 International Casino Exhibition in London this year, and will be attending the European iGaming Congress and Expo in Barcelona in a few months. It’s fair to say that the LGA folk don’t exactly hide away behind closed doors.

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So, does the LGA ensure that its licensees “meet commitments to players”?

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No.

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In fact, the Malta Lotteries And Gaming Authority appears to do nothing whatsoever for the players.

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As reported in the Malta Independent Online “Gamer demands £66,000 payout” report, and discussed in reasonable detail at the Winneronline forum, in late 2005 a player racked up £66,000 of winnings at Malta-based operation “Bingos”, which the casino subsequently refused to pay, citing “software error”. The LGA initiated an investigation, and along the way reported that there was no software error. Beyond that, they made no ruling; rather extraordinarily, they told the player to take legal action against the operator in Malta, and apparently offered some guidance with this task.

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Before the matter came to trial, and after the player had spent a lot in legal fees, the casino in question offered a payment settlement which the player accepted. This would almost certainly have come with a non-disclosure agreement, as the player made no further comment and the exact final details were never reported.

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Why did the player have travel to Malta and take expensive legal action? And why did the LGA advise him to do this while they were still “investigating”? A regulator’s job is to investigate a case and rule on it, not encourage the complainant to sort it out himself at his own expense while their investigation is ongoing.

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This is not regulation, this is passing the buck – and it’s grossly unprofessional and unacceptable. The LGA has at its disposal the right to suspend or revoke licenses “if the license holder has failed to meet commitments to players”. They have absolute power in this regard. Yet, they prefer to let the player divest them of their responsibilities and do nothing of value.

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All that said, at least in the above case the LGA appeared active to a degree. More recently, even this has been almost totally absent.

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A year ago, in July 2007, sportsbook “Betchance”, LGA license Class 2 no. 189, started showing signs of trouble – voided bets, delayed payments, bizarre excuses, general lack of communication, promises of payment from “new investors”. In short, Betchance was in financial strife. Players complained to Bill Dozer at Sportsbook Review, and you can read a summary of the unfolding story on his Betchance news page. Bill’s most recent comment, as good an overall summary as any, reads thus:

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Betchance is no longer pretending to take bets or allowing players to look at their balance. The book’s homepage gives players the message that the “operation is suspended for technical problems” and it “apologizes for any inconvenient..” The Malta-licensed sportsbook baited players with large deposit bonuses and advantageous lines and pricing. Some players have been pursuing their funds from betchance for nearly one year. History suggests, despite what betchance offers or arranges with players, the book will continue to stall and will not pay. Multiple players have stated that their opinion is the book will only pay if somehow leveraged to do so by The Lotteries and Gaming Authority of Malta and will hold out hope for their full balance. The LGA issued small payments to players on behalf of no-pay sportsbook Playbanks in March, months after the book had closed.

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The Betchance issue is also documented by Bookmakers Review – the full list of Betchance articles can be found on the Betchance update page. Some of the comments bear quoting, if nothing else for their amusement value:

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Betchance told us “not to make a fuss out of nothing.”

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Followed by:

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Betchance informs its customers to be in negotiations with new investors, practically admitting being broke.

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The LGA tells Bookmakers Review that new shareholders have been officially approved and they have now provided capital to BetChance. “The situation will really be solved in the next few days,” said a spokesperson for the LGA. [24 October 2007]

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Followed by:

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A Russian player received an e-mail from a representative of betchance.ru saying that it will take four more weeks to get paid as the company is trying to obtain a bank loan. [2 November 2007 - what was that from the LGA about resolution "in the next few days"?]

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Betchance has apologized for the delayed payments claiming that all problems have now been solved. [February 2008]

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Followed by:

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Three months after scam bookmaker BetChance said all problems had been resolved, players who have been waiting up to 8 months to get paid continue to be feeded with the usual worthless babble that all payments will be made within few days.

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Now take a look at the LGA licensees page, and select “class 2″.

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Betchance is still fully licensed by the LGA. The license has not even been temporarily suspended – an entire year has gone by in which Betchance has “failed to meet commitments to players”, the reason given for which the LGA may revoke or suspend licenses.

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Yet they have done nothing.

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I will briefly mention one more case, in which I am involved myself. The full details can be found in my Interwetten: confiscation of more than £5000 article. Several other players have posted mirror complaints in the Interwetten confiscating winnings discussion at Casinomeister.

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In summary, Interwetten offered a very generous bonus promotion, which they subsequently claimed was a “mistake”, in spite of the fact that the promotion played out exactly as it had been advertised.

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The complaint was initiated four months ago. I have, to date, received two communications from the LGA: one form response, and a subsequent acknowledgement of receipt of the complaint. The latter was received after a flurry of complaints about the LGA’s lack of response in the Casinomeister discussion, and it seems at least two other players received the same response at the same time as I did.

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Beyond that, the silence from the LGA has been total.

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Could there be an explanation for the LGA’s complete failure to do anything for its licensees’ players?

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CEO Mario Galea joined the LGA in 2004. Previous to this he was owner of Bell Med. Bell Med is the company which supplies hosting facilities to online gambling operations in Malta – see the Bookmakers Review article on the matter.

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Mario Galea sold his shares in Bell Med four months after being appointed to the LGA.

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Why did he not sell them before being appointed? The conflict of interests is very clear: as owner of BellMed, Galea received fees from those same companies that his new company sought to regulate.

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Even after selling his shareholding in BellMed and apparently divesting himself of all interest in the company, the fact remains that Galea is still in charge of regulating companies with which he had, at one time, a business relationship. It’s one thing removing a technical conflict of interest, but the human factor remains: one is “regulating” ones former colleagues and business partners. This is an absurd situation: why appoint to the top position of a regulatory operation the one person more closely associated than anyone with the operations to be regulated?

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One final points bears adding to the mix: according to sources at BookmakersReview, I can reveal that as late as last year, people on location in Malta alleged that Mario Galea was still very much involved with BellMed. I cannot corroborate this myself, but have permission from BookmakersReview to quote them.

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Either way, in or out, there is a clear conflict of interests at work here.

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Why do the people of the Malta Lotteries And Gaming Authority do nothing for their licensees’ customers?

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Presumably because they simply don’t want to.

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Answer these questions below this present post or here.

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3 August 2007

Integrity in Sports Betting Issues Paper Consultation Co-ordinator Gambling Commission Victoria Square House Victoria Square Birmingham B2 4BP

Dear Sir/Madam,

INTEGRITY IN SPORTS BETTING ISSUES PAPER – BETFAIR RESPONSE

I am writing on behalf of Betfair in response to the Commission’s “Issues” paper of May 2007 but have restricted this response to those questions in the paper on which Betfair has a strong view. The questions from the Commission’s paper are reproduced below in italics, followed by the Betfair response.

• What evidence is there of the incidents giving rise to concern about the integrity of sports betting in Great Britain?
• Are additional measures necessary and appropriate to uphold integrity in sports betting in Great Britain and if yes what are they?
• What is the detailed breakdown of their cost?

The evidence suggests that incidents giving rise to concern about the integrity of sports betting in Great Britain are few and far between. This is perhaps contrary to the perception created by the media and skewed somewhat by the ‘purge’ that is taking place in British horseracing.

Betfair believes that the internal measures it has in place, together with its formal agreements with sporting regulators are necessary but sufficient to uphold the integrity of betting through the Betfair exchange. The cost of ‘policing’ a sport is not something Betfair is able to comment on, but by way of comparison, Betfair’s integrity department (which covers all sport globally) is 7 strong with an annual budget of around £250,000.

• Should each type of bet in each sport be risk-assessed? If so, by whom?
• Do you consider some types of betting to present a greater risk of the integrity of sport than others?
• If you consider some types of bets to be riskier than others, should further measures be taken to regulate them?
• Should the Commission require the gambling industry to offer only certain categories of betting opporunities?

A risk assessment of each bet type is something which any betting operator would carry out as a matter of course. A betting exchange is reliant on the confidence of its customers that the markets it offers are fair, so will not want to offer a market which is perceived as open to corruption.

Some types of bet do present a greater risk to the integrity of a sport and they are generally those bets that occur within a sporting event as opposed to the outcome of the event itself.

In these cases it is perhaps the performance of one player that could be influenced for commercial gain. However, the vast majority of these types of bet have historically been offered by the spread betting firms (‘player performance’ indices most obviously) who will not be regulated by the Commission.

It is Betfair’s stance not to offer markets which pose integrity and/or perception concerns for sporting regulators. What might constitute such a market can be established through consultation with the sports and historically Betfair has taken the decision not to offer certain markets after such consultation. Betfair would always advocate a voluntary code of conduct between betting operators and sports governing bodies in this matter.

Restrictions imposed on betting operators in this area by the Commission (or any veto given to the sporting regulators) would obviously put UK licensed operators at a competitive disadvantage against operators not licensed by the Commission. In addition such restrictions would be undermined by the fact that they would not apply to spread betting firms and nor would they apply to betting operators in other EEA States who (pursuant to s.331 of the Act) would be allowed to advertise a betting market into the UK that a UK operator was not allowed to offer.

• Would integrity in sports betting be improved if there was a single source of results for each UK sport and if so, how do you suggest this might operate?

In short, no. The final result of any event is almost always taken from the governing body. The collection, presentation and distribution of sports results is an entire industry in itself. The speed with which results are available has to be balanced by accuracy and Betfair considers the data providers in place now, to be more than adequate. In Betfair’s experience customers do not have concerns with the sources used to settle markets providing the details of those sources are clearly stated within the operator’s rules.

Please let me know if you have any questions or require further clarity in relation to any of the above.

Yours faithfully,

David O’Reilly Legal Counsel

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The UK’s Gambling Commission is keeping this issue under review. (PDF file)

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International Leaders in Sport conference, Auckland, New Zealand. April 3-4th 2008.
Keynote speech, April 4th. Mark Davies, Betfair.

“New Understandings in Sports Betting”

Minister, ladies and gentlemen… Thank you very much for your kind invitation to speak to you today. I have once before been asked by sport to address it, as a member of the bookmaking industry, and it was apparent when I got there that they expected me to tell them that sport was their business, and making money out of it was ours. I can tell you that those who spoke to me afterwards said that they left the conference surprised to hear that a bookmaking operation could hold views so different from what they expected. I hope to be able to break down a few perceptions today.

A number of perceptions have grown in recent years in relation to betting and sport which I believe are completely false and misleading, the first of which is that sport suddenly has a new problem as a result of sports betting on the internet.

Betfair is at the forefront of this debate for one very good reason. When we launched the business back in 2000, we did so under the bold slogan “revolutionizing betting”. By that, we meant not just that we planned to revolutionise the experience for the customer, by allowing him better choice, better value, and – for the first time – control over what he did; but, crucially, that we were going to transform the way that betting worked with regulators, both in the sport and government sphere.

The basis of our model was the business that the founding team had come from, in the main, which was the business of finance. I used to trade bonds at JPMorgan, and I can tell you that what our customers do is exactly the same as what I used to do in my previous life, with the single exception that where I had to pore over balance sheets and income statements, they pore over form and team-sheets. It could be argued – indeed, it has been – that they will therefore know a great deal more about the underlying mechanics of their markets than I ever knew of mine; but the principles are exactly the same. You express a view of value about a given outcome or a given currently-traded market price about an outcome. The extent to which this is true was really brought home to me when I was asked to speak at the Swiss Futures and Options Association’s annual gathering at Birkenstock – you can see I get all the good gigs – which was attended by all the leading exchanges of the world: The Chicago Board of Trade; the Swedish stock exchange, whose platform powers another eleven stock exchanges worldwide, the London Clearing House and representatives of the LSE, Nasdaq, and many more. My presence there was an irritation to many: what place had a sports betting exchange at such an event, people wanted to know. But by the end, they were so ready to accept that what happens in the sports betting world and what happens in their world is actually identical that they wanted to know why we weren’t taxed on the same basis.

So we came to the sports betting market saying this: why is it so opaque? And by that, we didn’t mean just, “why is it not clear what the customer is charged?” but “why doesn’t anyone know who is betting? The City had gone through the Big Bang in 1987: the sports betting market was continuing to exist as it had done for most of its legal history: with the power in the hands of a few, and everyone else ignorant of what was going on.

We sought to change that, and at first, people welcomed it. But the more successful we became as a company, the more people – led to a large extent by our commercial competitors – started to change their tune, for a very simple reason: that with transparency came issues which people had never been able to see clearly, and so had always wanted to believe didn’t really exist.

Before I go on, I want to give you a couple of analogies.

The first is perhaps a little high-brow. In his philosophical work Being and Nothingness, the French author Jean-Paul Sartre debates whether anything actually happens if we aren’t there to see it. The example he gives is of a tree falling in a forest. How can we know, he says, that the tree actually fell, unless we saw it happen? Just by virtue of seeing it lying down rather than standing up, he says, we assume it has fallen over. It is an absurdist argument which exists to enable philosophical theorising; but everyone would accept that in reality, you don’t need to witness something to be able to acknowledge that it has happened.

The second analogy is rather closer to home. As I understand it, the speed limit in this country is 100km/h. I would imagine that it was long-suspected that people broke this limit, particularly on the main highway. People observing cars drive past would have had a perception of this, but no evidence for it. Then, one day, someone came up with the idea of a speed camera, and a number were installed. The following week, a number of cars would have been recorded as speeding. Would anyone seriously suggest that what caused the cars to speed was the camera? It is self-evident that the camera did nothing but produce the proof of an existing fact.

The reason for these analogies is this: in recent years, there has been a growing clamour from the media and from sport that there is more corruption today than there ever was, and the cause of it is betting. In same cases, they even claim that the cause of it is Betfair, on the grounds that you will find very few corruption stories in the last seven years that do not mention Betfair, which has led some to argue that if the words ‘Betfair’ and ‘corruption’ appear in the same paragraph, that must somehow be evidence of the fact that Betfair is the cause, and corruption the effect.

Betfair takes a very different view. Our view is that we are the speed camera, showing you something that you never knew was there. We are shining a light into the darkness, and people give us a hard time for having a torch.

Why do we think that? Because the level of transparency which Betfair has brought to the sports industry is unprecedented. Every single bet placed on Betfair is recorded, to the second. Every click of your mouse; every movement of funds in and out of your account – we know where it has come from, and we know where it is going. As I mentioned, we brought financial markets best practice to the sports betting market. We came into a world that was entirely opaque, and made it entirely transparent. If there was anything hiding in the murk, it can now be seen.

An interesting example of this came in August last year, when a match at the Poland Open in Sopot between Nikolai Davydenko and Martin Arguello-Vasallo raised eyebrows, when Arguello won by default after Davydenko withdrew while leading. You cannot fail to have read about this: not an article about tennis and the ATP now appears without mentioning it. It was all over the press not just for days, but for weeks; and it continues to be brought up, as the ATP’s investigation into what happens continues.

Now, there are a number of things to note about this incident. The first is how it came to light. As I mentioned, we are fully aware of all the betting details on Betfair; but what I didn’t mention is that everyone looking at the site can see bets betting placed, and can see the prices moving in a free market. The 40 or 50,000 pairs of our customers’ eyes that we have on our markets at any one time can all see exactly what is happening to the odds. And our forum allows sports punters to discuss what they can see.

Davydenko’s lawyer criticised Betfair for having sought publicity from the incident but the reality is that we were called by the media, not the other way around; and the reason for that was that what was happening was in the public domain. Everyone on our site could see that the World Number 4 had started at $1.20 and moved out by the end of the first set to $2.28, even though he won it with no apparent difficulty, and was paying $3.75 after losing the opening game of the second set on his serve. And well before he actually pulled out through injury, hundreds of people on our forum were speculating that he must be about to pull out.

I cast no aspersions here: it is entirely possible that the player was carrying an injury and some group of people were aware of the fact. There is no consistent rule across sports, as things stand, against insider trading- the rights and wrongs of which can be debated later perhaps, but it might be worth me mentioning as an aside that we don’t make the rules; we just help to enforce them once they have been made. So I am not suggesting that the match was corrupt. We, as a company, made a decision to void the bets on it, because we felt that the betting itself was not fair. It was clear to us that the betting was leading events, and not the other way around. But I would also mention here that another fallacy of this position was that it served us to do so. A number of people commented at the time that it is all very easy for a bookie to void bets when a result is going against him. But this misunderstands the whole business proposition we have: we are set up like a stock exchange, matching up supply and demand, and taking a cut in the middle. This means that we have no exposure to the result, or, to put it another way, we don’t care who wins. We make money if the event happens, regardless of the outcome, and we make no money if the event is voided. It is also worth mentioning, as an aside, that while many were crying foul about the movement in prices, we also, of course, had full access to the information as to who was betting. The complete audit trail created by our systems and our Know Your Customer checks mean that we know exactly who was behind the bets.

So, we voided the market, at a cost to us. But what happened next is perhaps the most striking of all. One after another, big players around the world came out and said that they had been approached to throw matches. One after the other, they said that they knew of players who had, or had themselves, been offered money by people who wanted them to rig the result. In several instances, these offers were made before the advent of internet-based sports betting.

Now, for me, the big question is, Why did it take a company that stands for transparency to make a stand before anyone mentioned that there was a problem? If we had not voided the bets on the match, would tennis be better or worse off? Is it helpful to know if you have a problem, or would you rather remain ignorant of it until it kills you?

The answer, with some in sport, would appear to be the latter. One sporting body, unconnected with this case, which we approached with a view to signing an information-sharing agreement, actually told us directly that they didn’t want information because they were frightened about the level of corruption it would reveal. Time and again, since the Poland Open, we have been told (although not by the ATP, I should add, who were among the first to embrace the information-sharing agreements we have pioneered) that we are causing sport a problem that didn’t previously exist. And yet, the evidence is there for all to see: we made our stand after people had been approached. Once we made our stand, people started to come out and talk about things. And yet a sizeable number of people want to return to where we were before we blew the whistle.

The reality of this point of view is that it is childish. Corruption is something that no-one here wants to see, and every one of us wishes didn’t exist. But it does exist. And, we cannot, like children confronted by a monster, hope that if we close our eyes, the monster will disappear. Even less can we credibly say that all the time we were sitting with our eyes shut, the monster that stood before us wasn’t there, and that it was only the person that told us to open our eyes that put it there.

The nature of sport is that it produces clear-cut results, and where there are clear-cut results, there is money to be made speculating on the outcome. This, again, is a basic truth. You may not like the fact that for some people, this is the sport; and I accept that for many, in a perfect world we would simply have no betting at all. Some sports bodies still struggle to accept just how great the demand for betting is. For example, I went to talk to the IOC about betting about eighteen months ago, and they, in line with many others I have met (to be fair to them) were totally incredulous that anyone would want to bet on who would win the 100metres in Beijing. Again, I accept that this is not the Olympic ideal, but it is a fact that they do, and rather than close our eyes to the fact, we should work with it. Because the reality, strange as it may seem, is that for many people, having a bet on the 100metres final retains their interest. If that hundred metres final comprises six Americans, a Jamaican and a Cuban, there will be plenty of people won’t give a monkey’s who wins it, unless they have had a bet to make them feel involved.

Again, I accept that this is not what sports bodies might want in a perfect world. But we don’t live in a perfect world. And if you want to live in the real world, you have to accept that there are plenty of people with strong opinions who want to express them through a bet. Plenty of people don’t accept this. Just this week, the coach of the Brisbane Lions AFL team, Leigh Matthews, showed that he is among those who don’t. Described as “certainly neither a wowser nor a saint, and having no intention of ever becoming either”, Matthews is a four-time premiership coach and was named Player of the 20th Century. He told a press conference just a few days ago that the Australian Football League should sever all ties with the bookmaking industry. Let me quote him: “The one thing that really annoys me is any thought that whatever we do as a game has something to do with people betting on it. I hate that,” he said. “I would prefer that nobody bet on the AFL. Then all innuendo would not exist. It’s one of the unfortunate progressions in the evolution of the world that betting agencies now bet on everything. I think that’s really unhealthy, really unsavoury and really unfortunate.”

As I say, I can understand this view in the ideal: he would rather no-one bet on the sport. But what I do not accept is that betting companies offering bets on the sport is what makes people bet on it. If the legal betting companies offer bets on the sport, it is because there is demand for bets on the sport – and if that demand were not offered in a regulated environment, it would be filled in an unregulated one. So while I do not argue with Matthews’ picture of the ideal, I struggle with the argument that he follows it up with. Again, let me quote him directly: “I think [the AFL] should say to the betting companies `you want to bet on the footy, fine, but don’t include us. Don’t ask us to have rules and regulations that pander to people who might want to bet on a game.”

For me, this view is absurd. It is essential that there are rules in place, and essential that there is a mechanism for those rules to be upheld. The AFL’s own experience of having named information of who is betting on its sport has been that it has been able to help players with addictions, and drive out a problem which could, unchecked, lead to corruption. Having no rules or no means of enforcing them is precisely what leads to problems – not just here but in any walk of life. And yet Matthews’ criticism was taken up by the press. They argue that when people were caught breaking the AFL’s rules preventing players betting as a direct result of the agreement the AFL signed, the sport was shown in a poor light. It wasn’t the fact that rules were being broken that was troubling, but the fact that it had become apparent. It should, wrote one commentator, be all about perception, rather than reality. In other words, it would be better to sweep things under the carpet.

I think, in contrast, that we should accept that the demand of people to be able to bet on a clear-cut result is a fundamental reality, and in itself is not a problem. The trouble is that where there is money to be made, there are also people who would seek to corrupt. Sadly, this, too, is a basic reality of the world we live in. So we must protect against corruption, which means having rules and regulations in place, and a proper means of policing them.

The idea that corruption must be rooted out is uncontentious. The question is simply how we do it. In my view, agreement on this is hindered because many people think that betting causes corruption. But betting in itself is not corrupt. Corrupt betting is corrupt, but corrupt betting is not really betting at all, by definition: it is merely getting guaranteed financial reward through securing a fixed outcome, which isn’t the same as backing your analysis of a given contest and speculating on the chances of a particular outcome at all. In other words, the key part of the phrase ‘corrupt betting’ is not the betting part, but the adjective that precedes it: or to put it another way, corruption is corruption, through whatever channel it happens to manifest itself.

This is an important point, because the first thing that must be done if the battle against corruption is to be won is to work out who is on whose side here, and what tools we have to fight with. At the moment, the perception exists in sport that betting is the cause, rather than on occasions (and by no means on all occasions) a facilitator, and the inevitable next step in sport’s logic is to blame the betting companies for their problems. And this means that we have a fundamental issue, because the betting companies – by which I mean the legal, regulated, and co-operative betting companies – are actually a tool in the fight.

You can accept that betting for betting’s sake is not in itself the problem, and that 99% of people who make money out of the sporting result, through betting on it, would never consider affecting that result to suit. But that still leaves us with an issue: using the money being generated by that 99% of people to make money out of a corruptly fixed result clearly is a problem. But here we must consider what added ingredient is needed to allow someone to do that – to turn betting from a pastime into a facilitator for corruption. Put simply, “How do you corrupt?”

If you or I decide we want to rig the outcome of a horserace, or a rugby match, or any other sporting event, it isn’t immediately apparent how we would do it sitting here. We can very easily have a bet right here, and right now, on almost any sporting event taking place in the world at the moment; but what we can’t do, sitting here, by ourselves, is affect the outcome. For that, we need the collaboration of the people involved.

Now, there’s a story about Winston Churchill which goes something like this. Winston Churchill, apparently a few the worse for wear – as was his wont – allegedly once approached a lady and asked her if she would be prepared to sleep with him for £1million. She thought about it for a moment, and said she would. He then asked her if she would be prepared to sleep with him for a tenner, and she was horrified. “What do you think I am?” she exclaimed. “Madam,” he replied, “we have established what you are. We are now just negotiating the price.”

As was true of Winston and his target, so is true of sportsmen and corruptors. When I talk to people about corruption in sport, and protest at the idea that internet betting in particular has increased corruption just because the sums of money involved are that much greater, I think of that story about Winston Churchill. Because as far as I am concerned, either you can be corrupted, or you can’t. If you can’t bribe a sportsman or a group of sportsmen to rig a result, then you can’t get a result fixed. And what that means is that the heart of the problem in the issue of corruption in sport is not betting, but is sportsmen willing to be bought.

I realise that pointing the finger at sport, from what appears to be the betting side of the fence, might seem somewhat inflammatory. But the most important point I want to make is that when we consider whose side of the fence is whose, we are currently getting it absolutely wrong. The betting industry doesn’t want bad apples as customers any more than the sports industry wants bad apples participating; and just as more than 99% of your participants are clean, so are more than 99% of ours. Our less than 1% can do the buying; your less than 1% can deliver the goods. The challenge for us both is to rid ourselves of the 1%, and the best way to do that is to work together.

Put another way, the simple fact of the matter is this: if we are to draw a line – not to say dig a bloody great big trench – between sport and corruption, as obviously we must, then the first and most important thing is to understand that the legal betting industry is on the same side of that line as the sports industry. And I say this not just because it serves our purpose for sport to be clean, although it does: if people don’t have confidence in the fairness of the result, they will not bet. I say it because we were set up as a business philosophically because we are lovers of sport. And, having set up something which was designed, in part, to bring complete transparency to the market; and then having set out our stall to share information with sports to help them deal with problems that exist, it has been extremely frustrating to find ourselves attacked as if we are the cause of the problems. If ever there was a case of shooting the messenger, this is it.

In fact, the finger pointing from sport to betting, and to Betfair in particular, has been so great that there are calls around the world for betting to pay sport, because sport now has to deal with integrity issues which betting has caused. Let me say straight up that Betfair has never been against paying sport on the basis of a commercial agreement which recognises that sport is putting on a show and Betfair is benefitting from that. This is not the same as saying that sport ‘owns’ the product, but it simply recognises that there ought to be a symbiotic relationship between the two industries. And we are not suddenly coming to this party under pressure: I spoke at the Sport Accord conference in Madrid in 2003 and told the 80 or so delegates there from sports bodies all round the world that the two things they should expect from a bookmaker in the 21st century were information about what betting was taking place on their matches, to allow them to police their sport better; and a financial contribution to acknowledge that they were putting on the show. But I do have a fundamental problem with betting being asked to pay to ‘clean up’ something that exists whether they are there are not. The integrity of sport is the domain of sport, whether Betfair, or Ladbrokes, or any other betting company in the world exists or not.

In fact, I would go further than that. Imagine a world where bookmaking is illegal. Take Betfair, and Ladbrokes, and William Hill, and everyone else you care to mention, and close them all down. What happens to sport’s problem then? Does it go away, stay the same, or get bigger? Clearly, it gets bigger – and if you doubt that, let me give you two reasons why.

The first is best exemplified by Hansie Cronje. No-one in New Zealand will be unaware of the scandals that affected the world of cricket in the late 1990s – an era, incidentally, which preceded internet betting, and in which cricket was not alone in experiencing problems: floodlights went off in top-flight UK football matches for reasons which at first were not apparent. Talk to the ICC about those times in cricket and they will readily acknowledge that their problems came from the Indian sub-continent, where – no surprises – bookmaking is illegal. And the source of floodlight failures, too, was eventually traced to Far Eastern illegal betting syndicates, but only because someone was eventually caught red-handed with his hands more or less on the switch.

The second reason is this: tell me why betting was legalised and regulated in the first place, if it wasn’t that it existed illegally and unregulated, and if, being illegal and unregulated, it was not seen to be causing problems which could not be dealt with? The whole basis of regulation is that regulating makes it more difficult to corrupt.

Betfair took the level of regulation a significant step further. I have already talked about our audit trail, but what I didn’t mention was that any sports regulatory body in the world can have the information gathered by that audit trail from us, free of charge. In fact, we can deliver it, via our Bet Monitor technology, in real time – as Stewards not so very far away in Victoria will tell you. In other words, we are providing, without any obligation, information which would otherwise be unknown about betting that is taking place all over the world – information which makes it easier to know what is happening, not harder. And it seems to me that asking the legal, regulated betting market to pay to clean up problems of integrity in sport is like approaching a High Street pharmacy and asking it to pay for the fight against cocaine-smuggling on the grounds that their business is in drugs. The difference between the legal, regulated market and the illegal market is the difference between chalk and cheese. And asking Betfair, or any other well-regulated, well-run global brand, to pay for problems which are seen to originate in the murky world of unregulated, illegal, bookmaking seems to me to be entirely missing the point.

To illustrate my point a little further, here’s the page from Wikipedia on match-fixing. You will see if you look at it more closely that it claims that cheating on sport started with the Ancient Olympics, and with battles between gladiators. When I once mentioned this on a radio interview, I was taken to task over it by a journalist from a British national newspaper, the Guardian, who accused me of being disingenuous. The amount of match-fixing today, he said, was of a completely different proportion, and the sums of money involved were much greater.

Even aside from my story about Winston Churchill, I would take issue with that. First of all, on what empirical grounds can anyone justifiably claim that there is more match-fixing today than there was before? Isn’t the perception that there is simply born of the fact that we can see it better today than we could a decade ago? Are there more diseases these days, or do we just diagnose them better?

To go back to my earlier analogy, are there more speeding cars, or are we now in a position to clock them? Did people start taking drugs to improve their sporting performances the week after drugs testing came in, or were they taking them before we had tests, and just doing so undetected? Was Jacques Rogge, the President of the IOC, justified when he commented during the Athens Olympic that, “Each positive test is a blessing for us because it’s eliminating the cheats and protecting the clean athletes. The more we find, the better.” I would say absolutely he was.

In truth, the basic fact is that it is simply not possible to make any judgment whatsoever on what the level of corruption in sport was before we had a means of tracking it, just as it is impossible to know how many athletes in the past used performance-enhancers to bring them medals. We might think that in a bye-gone era, the world was a nobler place; and on the whole, we might be right. But if the Chicago White Sox were throwing the World Series in 1919, and Liverpool and Manchester United were colluding over a result in 1915 – on that occasion, not for a betting return, incidentally, but to ensure survival in the top division at the expense of Chelsea, who consequently went down – and if these are scandals we happen to know about because someone happened to sing about them, then how can we possibly make a judgment about the bigger picture?

The challenge now is to take the attitude that Jacques Rogge has to drugs testing and apply it to betting, not being fearful of instances we find to occur, but to be confident that transparency is rooting out the corruption and tipping the risk/reward ratio dramatically in favour of the regulator and away from the corruptor. For that, we first need to draw on another of Mr. Rogge’s pronouncements in Greece. “You have 10,500 athletes in the Olympic village,” he told the world’s press. “You do not have 10,500 saints. You will always have cheats.” We have to acknowledge that the only people who can corrupt sport are the players, and we have to educate those players about how they will be caught and how they will lose their livelihoods and their reputations when they are. And to do that, we first need to educate sport about how they can do the catching: the only way to know whether players are corrupted is to have the names of the people behind the bets, and then use forensic analysis to make the often easy links between the bettors and the participants. Any attempts to look at the betting quantum and make judgments on it are absolutely doomed to failure, and the only people who will gain anything from doing so are the media. So sport needs to put itself in a position where it has access to named information, wherever it can get it. If it is not doing that, it is not using the tools available. I find it amazing that any sporting body would turn down named information from a betting operator willing to provide it with no strings attached, and yet, from the top down, there are plenty who do.

Don’t get me wrong. I am not trying to suggest that sport is riddled with corruption. I am an optimist, and I hope and expect, like everyone here, that 99.9% of sport is played for the Corinthian ideal of winning. But it is clear that sports – perhaps because they are being told so by the media – now feel that they have a problem which they feel they didn’t have before. The immediate reaction is to point the finger, rather than take steps to do something to tighten regulation in a manner which perhaps should have happened years ago, and it is not difficult to see why this has happened. It is easy enough to make what appears at first a logical jump: betting has increased; corruption has become apparent; therefore betting is causing corruption. It’s like saying, “it’s raining, and I don’t have an umbrella, therefore I will inevitably get wet”.

But what if it’s pointed out that there is no reason for you to go outside? Suddenly, the argument falls apart. And what if you understand that the increase in betting has moved in parallel with the increase in transparency? Suddenly, the logic doesn’t hold there either. But that growth in transparency of betting has led people to believe that there has been a growth of corruption, and the result is that sport is setting itself against the very people it should be working with. Again, I can understand how this is happening. Many in sports regulation genuinely don’t see that this problem is not new, like a patient diagnosed with cancer who insists that he felt fine yesterday and still feels fine today. But understanding why we are where we are doesn’t mean we should continue to plough the same furrow. We have to get out of it before we dig it so deep that we’ll never be able to do so. As a first step, that means understanding that transparency is not to be feared, and the people who bring it should not be resisted and looked at suspiciously. And second – away from words and onto concrete actions – it means sport starting to use the tools provided for them by betting operators who want to work in partnership, which would make it easier to combat the problems facing them than any other measure. Use the audit trail, link betting to names, and root corruption out of sport.

Understanding this, and acting on it, would allow sport to make the most of the commercial advantages that the betting market brings. I am not talking specifically about betting companies paying them directly for commercial agreements, although that is precisely what Betfair is doing voluntarily in Australia with the AFL, NRL, and cricket among others; we have done it with British greyhounds, and Irish horseracing; and we have committed to doing it elsewhere. I am also not talking about sponsorships coming from the betting companies, although it is interesting to note that just last week, Reinhard Rauball, the President of the Bundesliga in Germany, affirmed that the ban on foreign gambling advertisements would cost German football between €100 million and €300 million every year in lost revenues. I understand that even if we got to the point where regulators and betting operators were working in partnership to stop corruption, many sports would prefer to keep at arms length from betting companies in other areas, and I fully respect that. Rather, I am referring to the notion that betting plays a significant role in helping sports to internationalise their marketplaces, and ultimately, we now all compete in the global village.

In other words, although sports today recognize that they need to embrace a modern, global audience, they spend a lot of time working against the very sorts of organizations which might help it to achieve one.

Let me give you an example. There is a racing newsletter published in Australia called BetAngel. It is dedicated to a whole new audience who, since the arrival of Betfair, trade the sports markets as if they were the financial markets. Their March edition began with the words, “Wind back nearly eight years ago, when Betfair started and I joined them, I had no idea what Cheltenham was all about” – before going on, for eleven pages, to lay out the best strategies for punting on Britain’s premier Jumps Racing festival. In a similar vein, Betfair this year had e-mails from all over the world eulogising about the up-to-the-minute coverage and ideas being distributed far and wide by Betfair Radio on that same Cheltenham Festival – from Cyprus, Belgium, India, Singapore and – yes – New Zealand. The extent to which we are broadening the appeal of British horseracing is incontestable if you look at our international audience and the 85 or so countries from which we list customers. By virtue of the mechanism by which we pay to British racing a percentage of the profits which we achieve on British racing, it is fair to say that today money is coming in from the four corners of the earth which just a few years ago was staying firmly put.

Betfair is committed to paying sports bodies a percentage of the profits achieved on betting on events run under their jurisdiction. But if the betting markets continue to be seen as a problem, then they cannot at the same time be seen as an opportunity, and sports worldwide cannot make the most of that commitment. In contrast, if we could get sports administrators to realise that we do not threaten their integrity in a regulated and open environment; if we could get them to work with us, on commercial terms, and not against us; if we could get them to understand that the utopian world of no betting on sport is exactly that – utopian – and that the sensible thing is to work with the regulated market to ensure maximum transparency and minimum outlets for those would corrupt; if we could do all these things, then it wouldn’t be a question of sport putting on the show and the betting industry benefitting. It would be a question of sport broadening and maintaining its audience; of sharing in the first derivative market which stems from it – the betting market; and of the two industries working together to ensure that every tool is used to keep both the underlying commodity and the derivative market clean.

So I am here today to try to give you a new understanding of sports betting. I want you to understand that as far as we at Betfair are concerned, the regulated betting industry today is not some backwater of corruption in smoke-filled rooms, but a modern leisure industry which engages its customers and allows them to get involved on a participatory level that enhances their enjoyment; that it is an industry which harnesses those customers, and wants to do so in partnership with sport rather than at the expense of sport; that what sport today should expect from a modern bookmaking operator, as I told Sport Accord back in 2003, is a financial return which recognises that sport is putting on the show and seeks to demonstrate the good faith that leads to partnerships that leads to everyone growing the cake; and – entirely unconnected with any commercial agreement – they should expect information on what betting is taking place on their product, and – and I cannot over-emphasize this enough – by whom, in order to allow it to fulfil its role of policing the sport.

There are plenty of issues facing sport today, as there always will be. But feeling it has to fight betting should simply not be one of them. Sport has to fight corruption, using every tool it can; and the betting companies, who also, like the sports bodies, have brand names to defend; and, in a way that sports do not, more often than not have market values and share prices to protect, have to fight it too. So in conclusion, let me say it one more time: the legal and regulated betting companies around the world want to work with sport, not against it. But they need sports to recognise that it isn’t betting that causes problems, but corruption. I hope we can fight it together.

Thank you.

Mark Davies of BetFair

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Mark Davies (Managing Director of Corporate Affairs of BetFair)

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The best text that I have ever read about sports betting.

It’s that kind of speech that the US Congress should hear.

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The Winston Churchill joke was lame.

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Took me like one hour to read it in full, but every sentence was worth my effort.

All the issues he raised were known to me, but it was fine to see them all gathered in one place.

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I’m still persuaded that the Winston Churchill joke was lame.

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… asks ABC News (4 pages):

[...] NewsFutures creator Emile Servan-Schreiber believes that prediction markets like his are the “future of journalism.” [*] “It gives people the news of today and lets them give you the news of tomorrow in a probabilistic fashion by asking them to take bets on what is going to happen,” Servan-Schreiber said. [...]

While the money earned on NewsFutures isn’t real, Servan-Schreiber argues that prediction markets are an incredibly valuable tool. “I think of them as a brain,” he said. “You take a bunch of individually stupid neurons and put them together. Through massive interaction emerges intelligence. It’s the same thing with the market.” “The market really is smarter than the average player in there, and sometimes smarter than anyone in there, even the best player,” he said. This aggregation of many people’s opinions, Servan-Schreiber argued, produces an “incredible probability that the market prices really corresponds to the probability [of the event occurring].” [...]

“If you know nothing, you don’t participate,” he said. “It’s self-selection all the way. If you think you know something, and you don’t, you get eliminated very quickly.” [...]

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[*] Prediction markets are one of the many futures of journalism, I would say. Like Emile, I’m bullish on prediction market journalism. But, as I implied in my previous post (where I cited extensively the meager but smiling Mike Linksvayer), PMJ is not for everyone —it should be the response to specific needs.

An other little remark. If I agree that prediction market journalism has a future, I would say that it won’t pass by the so-called “mainstream media”. Indeed, look at their first page, where they cited prediction markets and their prices/probabilities: ABC News didn’t link to those prediction markets.

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Here’s my own short selection of NewsFutures prediction markets…

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Some delegates from FL or MI will be seated at the Democratic Convention.

© NewsFutures

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CERN will find the Higgs particle first.

© NewsFutures

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Microsoft will buy Yahoo! in 2008.

© NewsFutures

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Plenty of sports prediction markets here: baseball, basketball, hockey, auto-racing, American football, golf, tennis and soccer.

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I am a researcher employed by a leading award winning UK based independent production company, that specialises in factual programmes. We are currently researching the online poker industry, for a forthcoming documentary that will look at the broader issue of the regulation of the online gambling industry.

I am interested in hearing from people who were or are involved in any disputes with their online poker provider. I would be particularly interested to hear from persons involved in the recent incidents at Absolute Poker and Ultimatebet. And I am keen to track down anybody with inside information relating to the recent Betfair heist (not least the player who goes under the name “Chillindude”).

All information received will be treated in the strictest confidence and anonymity will be afforded to anybody that wishes to appear in the programme, but does not wish their identity to be known.

In the first instance, please contact me at the address below, so that we can arrange a meeting.

Email: pbenckendorf (at) web.de

Bet Matching Forum Q&A Session 19/03/08

Betfair Customer Services 17 Mar 11:50

As announced last week we’ll be hosting a Q&A session on the forum this Wednesday evening (19th March) between 6pm and 7pm (UK Time). The purpose of this Q&A session is to answer questions regarding BetFair’s new bet matching logic. To help us get through as many questions as possible you can send them in advance to livechat@betfair.com. Unfortunately it is not possible for us to respond to each Email individually but we will attempt to answer all questions raised via the live Q&A session.

We realise that customers would appreciate the chance to have questions answered on other topics too, but we want to focus this initial session on just the new bet matching logic to ensure that we answer as many questions as possible. For those customers who have questions for Betfair that aren’t related to this topic we’ll be reintroducing regular forum Q&A sessions over the coming weeks. We’ll post more information about those sessions nearer the time.

We hope you find this session helpful and informative

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Betfair Customer Services 19 Mar 18:00

Welcome to the Betfair livechat.

Answering the questions this evening are Mathias Entenmann (MD of Betfair’s UK and Ireland business); Mark Davies (Betfair’s MD Corporate Affairs) and members of their teams.

We have received a number of questions in advance which we will start to answer now. If you have any questions which you have not already submitted, please email livechat@betfair.com and we will attempt to answer between now and 7pm (UK time), when the session ends. Please note that you will not be able to post in the relevant forum section.

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Betfair Customer Services 19 Mar 18:02
Chatname – Lee (Genuine Scouser)

Do Betfair employ traders to bet in their markets?

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.

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Betfair Customer Services 19 Mar 18:05
Chatname – NB

- Why did you choose not to announce this significant change to your clients? Was it in the hope that we just wouldn’t notice?

Betfair frequently makes changes to it’s software and we always have to weigh up the balance between keeping customers informed against inundating them with information. In this particular case we’d agree that we’ve done a poor job of assessing the reaction of some customers and communicating appropriately, for which we can only apologise. We’re committed to doing a better job of communicating with customers in future, and this Q&A is the first step in that process.

- You appear not to be using the new bet matching engine on those events that run under the Australian wallet. Is there a particular reason as to why not?

Events run under the Australian wallet are processed on hardware located at our office in Hobart, Tasmania. If we make a change to the software on the UK exchange it isn’t just a case of choosing to switch Australian wallet markets on or off. We have to install the software on the Australian exchange itself. Keeping both systems in sync imposes an overhead, and it’s an unnecessary overhead if, as in this case, there are further changes imminent. We’ve made the decision that our efforts are better spent getting to the complete solution we want in the UK, with price improvements and those bets we could match across selections displayed, and then to look to implement that for the Australian exchange just the once.

- When the SP product was released you announced it in advance and couldn’t advertise it enough. Why then did you not announce this fundamental change with the same enthusiasm?

Announcing and promoting Betfair SP has had a significant effect on the amount of new customers we’ve been able to attract to Betfair. Once we have the ability to offer price improvements to bets matched across selections, and we can display all the bets we could match, we’re very confident that the vast majority of customers will recognise that as beneficial. Even then that’s still not going to be something that’s going to make a compelling advertisement.

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Betfair Customer Services 19 Mar 18:07
Chatname : CLYDEBANK29

- My understanding of the new cross bet matching logic is that it offers neither best execution or common pricing in most circumstances. Is this correct? (By common pricing I mean that if one of my bets is matched using this method it will be matched at that price by another customer).

That’s not correct I’m afraid. The majority[b1] of the bets that have been matched by the new logic so far have been matched at prices where no price improvement would have been possible. While there’s inevitably a temptation to focus on situations that aren’t typical, most Betfair markets aren’t hugely volatile, for example soccer match odds markets. For those markets where prices are more volatile, for example in-play tennis, as I’m sure you’re aware the vast majority of the betting activity takes place on the favourite, so the proportion of bets matched across selections is relatively small.

- What commitment do you have to introduce best execution and common pricing on this new cross bet matching logic? and if you are committed to providing it why have you introduced this change before it delivers either best execution or common pricing in most circumstances? (By common pricing I mean that if one of my bets is matched using this method it will be matched at that price by another customer).

Our developers are already working on providing price improvements when bets are matched across selections. The only factor limiting when we’ll introduce this is how quickly we can develop and test it.

We introduced the current change even without the ability to offer price improvements because we considered it an improvement over the previous situation. One of the biggest barriers to becoming a regular Betfair bettor for new customers is the concept of an “unmatched” bet, an experience they won’t have had when placing bets with our main competitors. Anything we can do to address that and give them a better chance of getting a bet matched immediately helps the long-term growth of our markets. Clearly for customers who’ve been with Betfair for some time, and for whom unmatched bets and what to do about them are second nature, that isn’t going to be obvious.

- Can you understand why some customers think that because this new matching logic doesn’t offer best execution or common pricing in most circumstances that they view you effectively as a player in the market skimming overbroke situations and who is beating the in running delay and therefore cheating on your own exchange to achieve this? (By common pricing I mean that if one of my bets is matched using this method it will be matched at that price by another customer).

I’d suggest that focussing on the in-play delay is missing the point, although it’s easy to understand why a customer might mistakenly come to that conclusion

The purpose of the in-play delay is to prevent someone watching an event either live at the event, or using pictures with a shorter delay, from selectively matching orders on one side of the market or the other following a price changing event(like a goal or break of serve). As the process only matches opposing customer bets, and no bet is matched by this process selectively based on anything that’s happened in the event being bet on the in-play delay isn’t applicable.

Backing one selection is (and has always been) equivalent to laying the other selections in the market. In-play bet matching takes place as soon as the in-play delay has expired on a newly submitted bet request. If we have a bet request to back a tennis player, say, then it would clearly be unfair to match a request to lay that player as soon as the in-play delay expires while imposing a 2nd delay on a customer looking to back his opponent.

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Betfair Customer Services 19 Mar 18:14
Chatname : askari1

- How much money has the engine / arber made for Betfair so far? If commercial confidentiality prevents you from quoting a figure, could you give some indication in terms of the total turned over on a typical event e.g a televised tennis match and / or the typical post-game commission taken by Betfair?

The biggest market the new code has operated on was the televised tennis match between Andy Murray and Roger Federer a couple of weeks ago. Approximately £6.85 million was matched in the market, and the amount accrued as a result of our inability to offer a price improvement when bets were matched across the two players was £882.91 . Obviously in well-traded markets like a big tennis match the amounts won and lost by customers are much less than the headline volume figure too, but as a percentage of what’s won or lost in each market the amount is small.

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Betfair Customer Services 19 Mar 18:18
Chatname : askari1

- Please could you give the company’s working definition of the terms ‘best execution’ in cross-matches and ‘of holding a position’? According to these definitions, does ‘holding a position’ differ from ‘holding a liability’? Do you apply the same definition to ‘best execution’ in the case of cross-matches as you do to matches in the case of single-runner sub-markets?

“Best execution” means never less than the price you requested, with the prospect of a price improvement where we can do so, if we can deliver that.

By “holding a position” we mean taking an outright position against a customer, rather than matching opposing customer bets.

The definition is the same for bets matched across selections. As and when we have the means to provide a price improvement we will.

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Betfair Customer Services 19 Mar 18:20
Chatname : astonvillain

Hi,
how can betfair users be assured that in the case of a market which suspends with a delay such as football, that betfair owned bots will not match bets which are out of line at the time of suspension? there is a big trust issue here.

The times at which Betfair will match bets across selections are identical to the times at which regular matching (backs vs. lays) takes place. If the market is “active” (not “suspended”) and there are opposing customer bets that can be matched then we’ll match them. If the market is “suspended” then no matching takes place, either backs vs. lays or across selections.

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Betfair Customer Services 19 Mar 18:21
Dear BetFair,

I hope you will answer the following:

Q. Why did you feel it unnecessary to inform your vast customer base of the changes to the bet matching algorithm in advance and take feedback; or accept that a trial period may have been a more appropriate way to introduce the changes?

It’s Mark here. I made that call and the judgment was based on the fact that I saw this as a product enhancement which was a benefit to users, and we do not announce every one of those every time. It was doing what we have always said we do – using our technology to match demand between customers – and it was just doing it more broadly than directly backer to layer. We have frequently made the statement that we are a bookmaker which is using technology to match demand, and to my mind this fell directly into that.

I think that if you consider a situation where a 100% book saw backers all sit and look at each other (for example, in a two-outcome event, I think it is daft that two backers, one of each outcome at 2.0, should not be matched), that is easy enough to understand. I also feel that in a situation where there is, say, a backer at 2.0 and a backer at 1.98, it is silly for us not to match those bets: we were doing so at the price requested, not worse; and therefore the customer matched was getting the best price that we could offer them, bearing in mind the limitations of our technology currently preventing us from giving a price improvement. If we left a backer at 1.98 and a backer at 2.0, people would think we were daft; and equally, if the price was matched by another customer seeing the arbitrage, the initial customer would only be getting the same price.

I accept that I did not consider the difference in-running, as it relates to people mistakenly posting the wrong price, which would take the book over-broke by a significant margin. But I did not think we needed to make an announcement about the fact that we were using our technology to match bets. That is the business we are in.

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Betfair Customer Services 19 Mar 18:22
alexe
19 Mar 18:13

Didn’t anybody at BF imagine this will drain quickly the markets?

Absolutely not – we expected this to increase liquidity and make it easier for our customers to get bets matched. On markets where we’ve had this in operation, that’s exactly what we’ve seen happen – the markets have been more efficient.

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Betfair Customer Services 19 Mar 18:23

Andy Fuller: I will email this question but if you read it here first please reply BF – what have you done with the money you have collected from clients unfairly as you admitted to earlier today?

Under our UK bookmaking licence, these revenues are legitimate profits and have been treated as such. The amounts involved are not what some people were speculating and some people have suggested that the money made should be donated to charity. However, be assured that we will be donating to charity this year far in excess of what the bet matching process has made!

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Betfair Customer Services 19 Mar 18:24
Chatname : lippy

Are these changes an attempt to boost betfairs profits for an impending IPO?

There are no plans for a Betfair IPO.

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Betfair Customer Services 19 Mar 18:25
Chatname – Get On MASSIVE

Do you ever plan to stop the skimming and give best execution to your customers and if so when?

Betfair has always given a price improvement to bets placed wherever possible, and that approach has never changed. We’d like to be able to offer price improvements across selections too and it’s something we’ve been working on, but it’s much, much more complex than many people imagine , and we don’t have a way of giving customers that improvement yet. We’re hopeful that we’ll have that in place in the next few weeks.

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Betfair Customer Services 19 Mar 18:27
Dear BetFair, I hope you will answer the following:

Under current UK regulations you are not required by law to inform your customer base of changes in advance, but under FSA regulations and European Law you would be. Given the strength with which you defended the GC’s consideration that exchanges should be FSA regulated when the Gambling Bill was first drafted, don’t you think it would have been wise or prudent to satisfy the most basic of FSA regulations too – and advise your customer base of material changes to the bet matching algorithm: the key component of the exchange software we all trade on, and one which matches wagers totalling billions of pounds in the UK today.

I am not sure you are correct here: what we were doing here is entirely in line with our licence and what we have always said we do. If you look at repeated statements made about what we are, I (this is Mark) have always stated publicly on behalf of the company that the best definition of a betting exchange is a bookmaker which uses technology to manage its risk perfectly. This is what we were doing here: matching bets in a manner which meant that we, as an operator, had no exposure to the outcome of the event. People have always described Betfair as P2P and told me that our description of the company in these risk-based terms was spin. The reality is the opposite: Betfair is a many-to-many system where demand between customers is matched such that the operator of the exchange does not have risk to the outcome of the event. It is precisely on this basis that we have always been licensed as a bookmaker.

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Betfair Customer Services 19 Mar 18:30
Chatname : MoreTea

- Once it was established that best execution was no longer being provided in the new system (in conflict with your own T&Cs and help area), why was it not turned off immediately and an apology made, and why is it still running now?”

- Why did you make a material change to your product which breaks your own terms and conditions and the description of your product in the help area without announcement or warning?”

There was no change to our existing matching process – if a bet could be matched against an opposing bet, that would be done giving the best price available. Adding cross-matching gives another chance to get a bet matched – something we thought, and still think, is an improvement that benefits the vast majority of our customers.

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Betfair Customer Services 19 Mar 18:33
Chatname – Getting Better

Can you confirm that you will not be applying the new matching process to markets such as horse racing that have a reduction factor? If you did I fear that you would be open to abuse on occasions where there was a known or likely non-runner.

Yes, we can confirm that the new bet matching process will not be used on horseracing markets any time soon. If this changes we will let you know in advance.

Betfair Customer Services 19 Mar 18:37
Magician: Specifically did the GC APPROVE this change to the matching algorithm – or where they simply made aware of it and did not grant or reject formal approval

We did not seek Gambling Commission pre-approval for cross matching before we launched it because we don’t believe that this was required. However, we were in dialogue with the Commission in relation to the licensing status of cross matching and we would always be happy to address any questions the Commission has on any part of our business.

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Betfair Customer Services 19 Mar 18:37
Feck N. Eejit
19 Mar 18:33
Have they answered mine yet? “Why do horse racing people all wear funny clothes?”.

John McCririck here… just stopping by Betfair towers, on my to the Ivy, looking for a new gig, what do you mean by funny clothes?

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Betfair Customer Services 19 Mar 18:39
the man marcus
19 Mar 18:31

£882 on a 6 mill traded game?

yeah right

We expected to make more money as a result of this change because we believed it would make our markets more efficient and increase the volume matched – the amounts retained through the odds differential are much much smaller than all of the forum speculation would suggest.

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Betfair Customer Services 19 Mar 18:40
Chatname Frog

Questions:

1. Is it true that Betfair have started matching bets across selections while not offering best execution? e.g. if two customers want to back different selections in a two outcome event at 1.9 Betfair would lay both outcomes at 1.9 and pocket the overround for themselves.

This is what we were doing but we have announced today that we would take it down until we can deliver best execution as you state it. However, I (this is Mark Davies) think that ‘best execution’ is moot in its definition here. Best execution for me means the best price at which we can execute the bet; and it is not trivial to offer a price improvement on a cross match.

Given the situation I have already suggested, where you have two backers of a 2 outcome event, one at 2 and one at 1.98, I believe that we ought to be matching those bets. Ideally, we should be matching them at 2 and 2, but our technology is not currently able to do that. For me, we should therefore match the bets at the prices asked for.

If you think about there being three options here: that we don’t match those bets; that we match them at the prices asked; or that we match them at the ‘best execution’ you suggest (by which you mean giving the price improvement implied), then clearly the philosophy of the company is to do the third of those. This is what we are working towards. In my judgment, it was better in the interim to do the second, than to leave it at the first. However, clearly many of our users disagree, and this is why we have rolled back to where we were. Personally, I think the second point is a better place to be than the first. I accept that bot users who previously benefitted from that arbitrage will disagree. But, looking back to the early days, many (and I think you were one, frog) objected to bots coming in and taking that arbitrage. You could argue – I would – that it is fairer that we should take that arbitrage, and pay tax and levy on it, than that someone should have a free lunch. However, it is clear that customers disagree and would prefer to leave that arbitrage to the bots. We have therefore decided that we will not match those bets until we can do so with the price improvement.

2. If (1) is the case, is this permanent or do Betfair guarantee they be implementing a best execution algorithm for this in the future?

I think I have answered that above.

3. If (1) is the case do Betfair guarantee that they will never change the current policy of best execution for bet requests on the same selection? For instance if I put in a request to back a horse at 2.0 and there is someone offering 2.5 on Betfair on that horse will Betfair never back it at 2.5 with that person and lay it back to me at 2.0?

I think that goes very much against the philosophy of the company as we set it up, and I would resist it very strongly myself.

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Betfair Customer Services 19 Mar 18:41
Chatname – flapjack

- When will you introduce best price execution on the new matching system for all bets?

We are working on it but it will take a number of weeks.

- On another forum recently, someone made the comparison between Betfair and the bankers in the current Natwest adverts, i.e. you are not remotely interested in what your customers want or what is in your customers’ best interests? Are you aware that this is how a lot of people see you?

We have read all the criticism. Some of it is unfair, in my view (this is Mark here); some of it pointed out things that we had not considered. Unfortunately you’ll never please everyone. I hope that your assessment that ‘a lot’ of people see us like that is an exaggeration. I think we do spend a lot of time listening to customers, and working to produce a product that they like, and if the perception is that we are not remotely interested, I think it is a misconception. I think we spend a great deal of time listening to customers’ feedback.

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Betfair Customer Services 19 Mar 18:43
Chatname – The Magician

Where some users or third party developers informed about this proactively from betfair. Is it betfairs future intention that when changes are made ALL users received the same information regarding the operations of the betting markets

No, customers were informed preferentially. We made the decision that we would answer inquiries individually, and the first question was submitted by a third party developer which was then disseminated more widely. We’ve recognised that we should have communicated this issue to the customer base more broadly, a misjudgement for which we can only apologise, and we’re committed to doing a better job of communicating similar issues in future.

Betfair Customer Services 19 Mar 18:44
Another question to Betfair: To ensure people do not make figures up and blow things out of proportion – you say you made £882.91 on the biggest market, but can you confirm that was the biggest takeout you have had from a single event? If it was not can you state what the biggest take out has been and on what event. I think this is important to stop people thinking you are exploiting this situation any more than they already think you are.

TIA. andyfuller

I (Mathias) can assure you that the example given was not unrepresentative or misleading (and cross matching was switched on for the entire market in question). I hope you understand that we have never given out commission data in relation to a market so are not particularly keen to go any further.

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Betfair Customer Services 19 Mar 18:47
Chatname : mugsgame

Hi,

I would like to know your intentions regarding using the new bet matching engine on horse racing markets, particularly in play.

There is no immediate plan to operate the new matching process on horse racing markets. There are a number of additional issues with horse racing, particularly withdrawals. If we match bets across runners in a horse race and one runner is subsequently withdrawn we would have to void the bet on the withdrawn horse while honouring bets placed on those that come under orders. Having the ability to offer price improvements where possible is a higher priority, and we’ll revisit horse racing once that issue has been resolved.

Would it be possible for you to put some text into the market rules window stating if the matching engine is being used?

It’s a fair point to want to know if the new matching process is applicable in a particular market. It’s unlikely we’ll make changes to the market rules tab to communicate that, but we will announce future changes to the matching logic and the markets affected in the Service section of the forum.

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Betfair Customer Services 19 Mar 18:47
Robin Ewe
19 Mar 18:34

Can you assure us that Betfair will never at any point in the future begin actively trading in the sports betting markets other than to hedge the risks from your multiples product?

No – but Betfair is not in the business of risk-taking on sports markets. That said, we’re always looking for better ways to meet the needs of our customers.

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Betfair Customer Services 19 Mar 18:48
Chatname : drifterwins

How much tax will you be paying on money “skimmed” from the new system?

The Betfair bookmaking company (which is separate to the exchange) which operates cross matching pays tax at 15% on its profits (like any other UK bookmaker).

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Betfair Customer Services 19 Mar 18:55
Lori
19 Mar 18:46

to paraphrase:

“We think it fairer that we take the arbitrage and pay tax on it, than those who already pay us commission on it, which we then pay tax on”

I don’t use a bot, and wish that bots were not an inevitable competitor to me when I trade, but they’re still owned by paying customers, and I think the customers in a “customer vs customer” site deserve the money more than the site. At least they don’t have to make decisions regarding voiding markets etc.

Also, not all of arb money goes to bots. Also, why not just have one runner in a tennis match

“Federer win, yes = 100″

Questions to Betfair

How can you convince us that you can remain neutral as an arbitrator when you have skimmed money from the market?

Why do you believe you’re going to be popular taking more money from a market than advertised commission rates?

If cross matching at best execution is so difficult, why not just have one-runner in two horse races and settle at 0 or 100 like many other places.

To the first point, we’re not taking a position – merely matching bets that otherwise would not have been matched. Most of our customers simply want to get bets matched, so we believe improvements in our matching process are in our customers’ interests. Having just one runner in 2-runner races would make cross-matching unnecessary but it’s confusing as most people expect to see both names.

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Betfair Customer Services 19 Mar 18:58
The Magician (1)
19 Mar 18:54

another quick Q.

why dont you add this new matching algo to the horse racing SP calculation (with best execution), it would certainly make it more robust than it currently is

We are considering adding the cross matching with best execution to our SP markets in the future. However, this is a complex calculation and therefore will only be done at a later stage.

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Betfair Customer Services 19 Mar 19:01
Chatname (WH)

Why is giving best execution so difficult?

If 2 people are backing at 2.0 and 1.8 in the same market, it is surely simple to ensure that the person whose request came in first gets the odds they requested and the second person gets better odds than they thought they would get

eg if 2.0 is waiting to back player A and someone submits 1.8 to back player B, then both get matched at 2.0.

if 1.8 is waiting to back player A and someone submits 2.0 to back player B, then A is matched at 1.8, B at 2.2

i cannot see why this is so difficult

It isn’t difficult to calculate for a single instance. Unfortunately Betfair’s bet matching process has to be able to calculate this across multiple markets for thousands of bets each second, and it would be an unacceptable customer experience if doing so caused any delay to the bet matching process. The existing bet matching process has been refined over years, and making fundamental changes to that means coming up with a whole new set of refinements. We’re working on this now and we will have it in place as soon as we’re satisfied the solution gives the performance customers expect.

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Betfair Customer Services 19 Mar 19:02
Thanks very much taking part in this discussion. We’ll continue to answer the questions we receive on this subject, via e-mail, and post the relevant Q&As here for you to read at a later date.

Previously:

- BetFair Malta’s combo market maker (trading algorithm + human market makers) operating on the multiples

- BetFair withdraws / improves its brand-new matching-bet logic, which was (kind of) endorsed by the Chairman of the Midas Oracle Advisory Board.

- One un-hired job candidate and one HammerSmith employee tell all about BetFair Malta’s combo market maker (trading algorithm + human market makers) operating on the multiples.

POLL: should betfair keep the new bet matching logic WITH BEST EXECUTION ?

- K J J – 17 Mar 17:48

I say YES.

Such a system has been long overdue. Say for example, in a market (with now withdrawals) with two runners and one winer, backing Runner A at 1.5 is precisely equivalent to laying Runner B at 3.0, backing A at 2.0 is equivalent to laying B at 2.0.

In tennis this is especially important. How often is one faced with the very frustrating situation when your lay at 2.0 of A comes back unmatched, only for you to see a back of player B at 2.0 for an equivalent/larger volume.

I am going to use a simple example to illustrate.Two runners, with Runner A available to back at 1.38 and lay at 1.45, an Runner B has little liquidity, say backable at 2.5 and layable at 5.0

Now, person 1 (m1) backs A at 1.4 for £1000, comes back unmatched, and keeps his bet on the exchange waiting to be matched.

Then person 2 (m2) backs B at 3.0 for £100.

Now, there are 3 possibilities:

1) the old system which has been in place for years: m2′s back of B comes back unmatched at 3.0 and an overround is created. m2 either realises immediately he can get a better price, cancels his back of at B at 3.0, and lays A at 1.4 instead, or he fails to realise and his back of B is matched by the fastest finger or user-operated arbing bot.

2) The new system without best execution: Betfair superbot lays m2′s £100 back of B at 3.0, and simultaneously lays part of m1′s back of A at 1.4 (the superbot can lay, for example, £214.29 of A at 1.4 to give betfair an instant risk-free profit of £14.29, or any amount between £200 and £250 to give betfair an instant risk-free profit)

3) New system with best execution: m2 is matched at 3.5 on B, m1 has £250 of his back of A matched at 1.4.

Taking m1 and m2 – betfair’s customers – as the set of people whose interests we wish to satisfy, (3) is clearly the best system – it is the PARETO OPTIMAL system since under (3), we cannot make either m1 or m2 better off without making the other worse off.

System 1 is not Pareto efficient because both m1 and m2 could be made better off – m1 could be made better off by having his bet matched as quickly as possible, and m2 by having his bet matched instantly at a better price than requested.

System 2 is not Pareto efficient because m2 could be made better off without making m1 worse off. m2 could be made better of by getting a better price than requested (3.5 instead of 3.0) without making m1 worse off.

So vote for PARETO OPTIMALITY, vote for SYSTEM 3 – THE NEW MATCHING LOGIC WITH BEST EXECUTION.