YouBet – The wonders and dangers of online sports wagering. – (page 2) – [BetFair explained to the Americans] – by Slate’-s T.D. Thornton – 2007-11-28
[…] Betfair, which opened for business in 2000, is best described as day trading for sports bettors. Using Web-based accounts, anonymous users can set their own odds or bid on odds offered by other players. Online “-betting exchanges“-—there are dozens, but Betfair is the kingpin, with a 90 percent market share—eliminate the role of odds-setting middlemen like local bookies and Las Vegas sports books. Instead of wagering on take-it-or-leave-it odds set by the house, gamblers are free to choose among many different price points, striking bets for as little as $1 up to hundreds of thousands. […]
On balance, Betfair offers a number of advantages over traditional sports betting. Compared with bookies and casinos, exchanges keep a much smaller cut of the action, a 1 percent to 3 percent “-vig”- that’-s far less than the standard 10 percent. (In the long run, the exchanges are banking on greater betting volume far outpacing the difference in price: Betfair handles 5 million transactions a day, processing more than 300 bets per second.) […]
Exchanges are also unique in that you can lay odds on a team or individual to lose a sporting event. Naysayers believe that betting to lose is, well, unsporting, and that it is an open invitation for corruption and skullduggery. But this argument is idealistic whitewash. Just ask anyone involved in high finance, where betting to lose is an accepted, ethical strategy—on Wall Street, it’-s called short selling. […]
The most clever innovation, however, is in-game gambling. No longer must you stop placing bets once the game begins. In-game wagering lends itself best to slower-paced sports like golf. When the action is much faster, the limits of technology get pushed to ridiculous proportions, with frantic players punching in frenzied bets that have more to do with market timing than sports. […]
If the United States loosened up its regulations, online exchanges would proliferate here. By creating a market-based framework for stateside sports betting, a chaotic gambling scene would, for once, have some order and credibility. […]
#1. This is the most significant news piece about BetFair I have seen in the American media.
#2. You’-ll have noted that the prediction market approach is completely absent from the writer’-s angle. (TradeSports and InTrade are not even cited.) My view is that this betting exchange approach and our prediction market approach are complementary. BetFair should have both.