30th May 2002 - issue 15

The bookie free revolution is now two years old and has braved the dot com crash to become one of the major success stories of the internet age. Given this success, it is inevitable that further high profile and well funded entrants will continue to be attracted to this market. The latest heavyweight contender looks likely to be www.tradingsports.com which has a new slant on the exchange concept.

The problem that any new p2p sites have is getting to the stage where they have enough members to support a viable market on the events covered. This is made all the tougher because they do not have the luxury of building up their customer base in the way that normal businesses do. If they do not quickly build up an active following, those early members who they do attract will soon lose interest due to the lack of liquidity and drift off. This helps to explain why there have been such a high number of failures in what appears to be a booming industry.

Positioning itself as a business to business (b2b) proposition, TradingSports offers a solution to this problem by offering itself as a vehicle for other participants in the sports, betting and media industries to launch their own bookie free service without having to set up their own infrastructure. Their vision is to have numerous individually branded sites all feeding in to their site. Offers placed by members from all these sites will be pooled together, resulting in excellent liquidity for all. This should enable even the newest p2p sites to instantly offer their members the opportunity to place sizeable bets with minimal spreads, regardless of the size of the site's membership.

The way it will work is that participating sites will direct their customers to the main TradingSports site which will be tailored to their own brand, so that customers may even be unaware of the existence of TradingSports. This will enable participating sites to build their own p2p business and brand at the fraction of the cost of going it alone.

Whilst this concept is not completely new, (Betfair have similar arrangements with Racing Post and others) this is the first time that a site has primarily set up in this way as a b2b proposition. Intriguingly, a key target audience for TradingSports will be the conventional bookies themselves. TradingSports argue that betting exchanges are here to stay, and that bookies need to offer this service as part of their overall package to create a one stop sports betting experience, combining conventional and person to person betting on the same site. This allows the site to retain their most valuable asset, their members. Early signs are encouraging with four bookies already having signed up, two of them being major names in the betting industry.

The format of the site will be one of sports trading, along the lines of Intrade. The reason for selecting this format is firstly that they are looking at an international audience and they feel that the 0-100 points system will be more universally understood than the decimal or fractional odds systems used elsewhere. Furthermore, as they intend to use a variety of medium to promote the concept, eg television, wap phone, etc., they feel that the 0-100 will be a highly visual method of communicating the market status, perhaps in the form of a bar along the bottom of the screen. Finally, as this is quite different from the system used by the bookies it enables them to offer this alongside their core product, as a complimentary rather than a competitive service.

One feature that to my knowledge is currently unique to the TradingSports concept is that in the event of a draw the contract will expire at a value of 50, so that both parties get an equal return, although of course this will usually represent a profit for one member, and a loss for the other, (unless both teams were perfectly balanced when the bet was made.) This makes comparison with odds available elsewhere very difficult, and creates all sorts of opportunities for the bookie free bettor who is able to understand the mathematical implications of this new kind of betting. We will look at this in detail in issue 16, along with a full review of the site once it goes live during the World Cup.