2.2 INTEGRACIÓN CURRICULAR DE LAS TECNOLOGÍAS DE LA
2.2.3 Las tecnologías de la información y comunicación y sus usos
There are numerous articles written about betting exchanges, which for all intents and purposes means Betfair. A good starting point is [147], but [148] and [149] have some interesting information. Prior to the launch of Betfair and Flutter, in 2000, the majority of people betting would use a fixed odds bookmaker, on the track, the high street or on the telephone. Betfair and Flutter merged in 2002 [150]. Betting exchanges claim to have brought several innovations.
Better Prices Bookmakers charged an over-round at the time of between 10 and 20%. Betfair charged a commission of between 4 and 5% for most customers, Flutter charged 2.5%. Better still, a customer could choose his own prices, perhaps making
no bet, or his chosen bet, but only at the right price.
Lay Prices Just like a stock exchange where shares are bought and sold, so the betting exchange has back and lay [151]. Lay prices are particularly important in markets with lots of entrants such as horse racing, although less so in football, and not at all in tennis.
Unwind Anytime A consequence of offering back and lay prices is that sometime after placing a back bet a lay bet can be placed, locking in a profit or loss.
In Running Betfair was an early adopter of in play betting, or betting after the start of the match or race.
Winners Welcome Because Betfair does not take risk, it argued that it welcomed win- ners, whereas bookmakers would often close the accounts of consistent winners. The existing bookmakers have fought Betfair ever since. They argued that Betfair offers better prices because Betfair does not contribute to sport, or pay enough tax. They tried to say that offering Lay prices should be illegal as customers should have a bookmaking license. This failed and so they argued that offering Lay markets was enabling corruption; it is much easier to lose a match or race than to win it. Recently attention has turned to spot fixing. This is fixing some small element of the game, such as the number of no balls in one particular over, or the time of the first throw, but which should have little impact on the overall game. Some claim that the increase of in-running betting encourages spot fixing, although probably most famous football spot fixing in the UK is from 1995 [152], long before Betfair started. Co-incidentally 2000 was also the year that football’s minimum treble rule was dropped. Fears over match fixing meant that unless a match was on live TV at least a three match accumulator had to be placed [153]. The bookmakers have launched their own in play betting, and a fast growing business it is. There is a controversy here, namely that most live footage is not actually live, but delayed by a few seconds. Some worry that customers do not realise this.
Figure 2.7 shows how the betting odds have improved for the customer over the last few years. The two high street bookmakers (there is a third, but we do not have any data) show a consistently higher over-round than the online competitors. The exception is Interwetten which is Austrian and probably not competing for UK business. In all cases the trend is been falling. Not included on this chart are Betfair, the leading betting exchange, and Pinnacle Sports, a large international bookmaker. We have data for Pinnacle Sports for last year only, which is the lowest of any at 1.020. Betfair has a very low headline over-round for leading markets often around 1.005, but commission needs to be added to this, and the more one bets with Betfair the lower the commission falls. If we consider a new gambler placing one bet per football match then Betfair over-round for the last few years would have been about 1.037 as he has no discount.
To reduce commission from 5% to 3% would need bets of £20 000 for many weeks. For such a serious gambler the over-round is 1.024. Betfair commission can fall as low as 2%, but this requires bets of £360 000 in one week, followed by bets of £60 000 per week to sustain it. If a gambler who is using Betfair bets on more than one runner in the same race, or takes his bet off before the end of the match then his over-round is likely to be lower than that quoted above.
How much of that fall was attributable to Betfair? The Internet was introducing com- petition from overseas Pinnacle, Victor Chandler (who had moved to Gibraltar by then) and others. The Internet made comparison easy. New bookmakers without the expen- sive high street infrastructure were competing for business. The Gambling Act 2005 had allowed more advertising. It is difficult to know the answer. The large incumbents have fought to restrict Betfair. Whilst Betfair has better prices than most it is not the best. Surprisingly Betfair recently became a bookmaker. Betfair does now contribute to the horse racing levy.
Many of the innovations listed above are associated with betting exchanges and as that may be fair for fixed odds betting, but these were common features of spread betting long before. Most spread betting companies offered buy and sell, even during many matches. Spread betting was common within financial districts as prices would be displayed on Reuters terminals [154].
Models used by bookmakers have had to cope with in play betting. One football model suitable for in play betting is Dixon and Robinson’s [155], as it considers the current state of play.
It is a strange time to be considering betting exchanges. Betfair is currently by far the largest. It does not necessarily have the best prices. It has introduced Premium Fees which are like a tax (of up to 60%) for the most successful customers – winners are not that welcome. And, many would say [147], it has admitted that the exchange model does not work by becoming a bookmaker.