Bet Exchange News February 2005

Betfair has taken a significant step towards the mainstream by signing an exclusive deal with Yahoo! UK & Ireland to operate a new customised betting exchange platform. The Betfair press release states that:

“The innovative agreement is a significant step in making Betfair's revolutionary and award-winning exchange model more accessible to a mass-market audience.

Yahoo! Betting, to be launched in March, will feature a new custom built exchange, offering Yahoo! users an easy to use, consumer friendly betting platform. For the first time, exchange betting features will be immediately available to the more traditionally focused consumer.  Yahoo! Betting will be built and managed by Betfair specifically for the Yahoo! customer base and will be fully integrated with the main Betfair exchange.

The innovative features from Betfair's main website will remain but the site's trademark decimal odds will be complemented with the fractional equivalent, making the betting platform as customer-friendly as possible. The exchange will be accessible throughout the sports and finance sections of Yahoo! as well as across other areas of the portal.

In addition to Yahoo! Betting, Betfair and Yahoo! are also launching a new co-branded exchange at the end of January. As a result, Yahoo!'s customers will be able to take advantage of Betfair's numerous product benefits, including better value and greater betting choice.”

Possible new opportunities for Betfair members

Betfair are also launching a product which will offer other third party operators including bookmakers and internet sites access to some of their markets. This in conjunction with the Yahoo! deal could bring some great opportunities for astute Betfair customers as it is likely to result in some bets getting matched at prices which are unlikely to be acceptable to established Betfair users.

The reason for this is twofold, firstly because of the less price sensitive punter that these arrangements will bring to Betfair and secondly because of the mechanism by which it works. If for example a punter wants to place a bet of £100 on a particular market, Betfair will offer him the best prices at which £100 can be matched. In well supported markets it will be the case that the whole of the £100 can be matched at the top level of odds. However, in many markets the programme will need to go further down the odds scale in order to match the whole of the £100. In some poorly supported markets they may end up having to go to very low odds to get the full amount matched. The significant thing is that the Yahoo! or bookmakers' customers won't get to see the individual bets that make up their total bet they will only see the aggregated odds.

If this seems confusing let's take an example of a poorly supported marketed where layers are only offering odds at two levels. A visitor to Betfair would see that there is £80 available to back at 4.7 and £20 available to back at the much lower price of 2.2. If both these bets were accepted and the selection won it would result in the backer winning £320 equating to odds of 4.2. The value insensitive Yahoo! punter may happily accept this bet in which case the person laying at 2.2 has got a great value bet.

If this scenario unfolds as predicted then it could become worthwhile to offer huge numbers of bets all over the place at uncompetitive odds – bets which in the past would have stood no chance of getting matched, but in the future may well do.