Exchanges and traditional bookmakers compared
Most exchanges make their money by charging a commission which is calculated as a percentage of net winnings for each customer on each event, or market. Gamblers whose betting activities have traditionally been restricted by bookmakers (normally for winning too much money) have found these sites a boon since they are now able to place bets of a size unrestricted by the exchange – the only restriction is that one or more opposing customers need to be willing to match their bets. Moreover, the odds available on a betting exchange are usually better than those offered by bookmakers, in spite of the commission charged, because the middle man is eliminated.
In spite of these advantages, exchanges currently have some limitations. Because exchanges seek to concentrate their liquidity in as few markets (i.e. propositions) as possible they are not currently suited to unrestricted multiple parlay betting. Betfair does offer accumulators but these are limited in number and type: Users cannot determine the outcomes contained in accumulators themselves. Some exchanges also offer multiples but the exchanges act in the same manner as traditional bookmakers in doing so (i.e. they themselves and not a customer act as the layer of such bets) Exchanges also tend to restrict the odds that can be offered to between 1.01 (100 to 1 on i.e. 1 to 100) and 1000 (999 to 1).
A further advantage that traditional bookmakers retain over exchanges is that bookies are better willing and able to allow customers to bet on credit. There are two obvious reasons for this:
- Exchanges operatee on much tighter margins, which lessens their ability to absorb bad debts.
- Allowing customers to bet on credit would likely compromise customer confidence in the financial integrity of an exchange, especially when one considers the effects of the ongoing credit crisis and the close association between betting exchanges and Internet betting in general.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.
July 13th, 2010 at 12:43 pm
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