Sportsbetting in the MillenniumDon’t like the odds? Set your own at Betfair
There are several hundred sportsbooks and online casinos on the Net setting odds and taking people’s money, but their days may be numbered. Player-to-player (P2P) wagering exchanges such as Betfair (www.betfair.com) are providing a forum for individual punters to play bookmaker, and the concept is catching on.
Betfair has been growing steadily since it was launched back in June 2000, and the number of bets placed is jumping five percent every month. Mark Davies, Director of Communications at UK-based Betfair, believes that’s because the site offers several features punters won’t find at the average Internet sportsbook, or at land-based bookmakers.
The features he’s talking about are odds that are on average 20% better than regular sportsbooks, the option of staking an opposing view rather than just backing an outcome, and the ability to place a bet during an event. The fact that Betfair is matching up punters who want different sides of the same wager seems almost incidental after all that.
Punters have to do three things when they place a wager at Betfair. First, they have to select the sport and type of wager they want: odds-, range-, or line bets, or specials. Betfair allows bets on anything that will attract punters, from Australian Rules football to the World Series of Poker and everything in between. Next, they decide whether to act as bookmaker and lay a bet for other punters or bet on a particular outcome and back a wager. Finally, punters can set their own odds and the amount of their wager if they don’t like what’s being offered.
And therein lies the real beauty of the site – the chance to get a better deal for yourself. It’s something that will never happen at traditional bookmakers like William Hill or Ladbrokes. After that, punters just have to wait and see if they’ve made any money; Betfair takes a two- to five percent commission on net winnings.
As mentioned, the other major difference between Betfair and traditional bookmakers is the in-play wager, which allows punters to place a bet (or re-place one if it wasn’t taken) after a match has begun. It’s easy to see the appeal of in-play wagers when you hear that Betfair took bets for half an hour after the end of a disputed horse race while judges decided the outcome.
Betfair isn’t just for recreational punters, according to Davies. One punter put $115,000 on a horse-race favorite 10 minutes before the start of the first race at better than starting odds. “There’s not a bookmaker in the country that would have stood for [those odds] … He was matched by 191 punters with us. So there’s no doubt we cater to the serious player.”
$115K is a large wager, but Betfair isn’t particularly worried about having enough punters to cover it. The reason why is probably because Betfair has a monopoly on the P2P wagering industry at the moment. Betfair bought out its largest competitor, Flutter.com, before Christmas 2001 and shut down the Flutter site in January 2002.
Davies doesn’t see that as a problem, however, and argues that it is in fact “better for everyone concerned if that pool of people involved in exchange betting is as big as possible, congregated in one area, rather than being split between 20 different sites because all that does is reduce the liquidity available.”
Not surprisingly, the takeover has been good for business. Betfair is currently matching approximately $160 million worth of wagers a month – an impressive number at a time when revenues are declining at many online gaming sites. Notwithstanding, the question at the end of the day is, can Betfair compete with traditional bookmakers and online sportsbooks? Davies is certain it can, and actually thinks that the real the question is whether they can compete with Betfair as the brand name grows and people become increasingly comfortable with wagering on the Internet.
Betting exchanges are only going to gain in popularity as more punters learn about the wagering options that simply aren’t available elsewhere. Betfair is well positioned to control the P2P wagering industry, provided the cash necessary to match bets keeps flowing and the technology driving the site holds up, but mostly as Davies says, “because there is always going to be somebody out there who has an opposing view.”