1st February 2014, 01:56 PM
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Member
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Join Date: Jan 1970
Posts: 4,366
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Betfair are solely responsible for their own downturn in customers and revenue.
They were getting between 2% and 5% commission on ALL winning bets.
That is an extremely massive revenue stream when one considers the turnover on all the races they cover.
That also had no risk whatsoever, a massive money making machine.
However, since it was publicly listed, they could not report expected growth as punters come and go, a bit like sales, customers drop off, and customers join, one is constantly filling a funnel. There was no growth model at all.
So the boffins decided to hit it's very core customers who supply liquidity which is the lifeblood of any exchange.
Short sighted bean counters decided on a Premium Charge.
The growth graph looked hypothetically great in reporting statements to shareholders and the market.
This is business mistakes for dummies stuff. Hit your best customers where it hurts with no discount for loyalty or turnover.
And there has been more fallout than Chernobyl!
1) It was no longer viable to trade (in the traditional sense) on any market whatsoever.
2) The winning traders left for greener pastures at the expense of liquidity and profit - NEVER TO RETURN.
3) The markets lost more than half it's liquidity leaving punters unable to get set on anything greater than 10/1 for decent amounts.
4) Markets devoid of liquidity meant that the prices were only driven by punters, therefore as a market total virtually became 100% on average, with commission on top. Meat was sheared off the bone.
5) Thousands of punters left in droves.
6) Revenue and growth dropped massively and stagnated with no hope of redemption.
Good one Betfair!
However, this does not mean there is not value to be had.
But the bread and butter traders and recreational punters are the ones hit hard. There are ways around everything, but Betfair have killed their own share price and value.
The latest from the bean counters is to offer fixed odds, scoop up the overround and trade out on liability on the exchange to try and restore some liquidity.
Well, that ain't going to work.
Exchange users want an exchange.
Recreational punters (in the main) will use the bookies or tote.
Leaving only the smarties scooping odds anomalies, costing Betfair yet again.
There are none so blind as those who cannot see.
Or to be more precise, a degree should never take the place of knowledge.
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