Betfair Takeover On the Horizon?

[Al Gobbi]

The private equity group behind Formula One motor racing is mulling a takeover approach for Betfair, the online betting exchange which floated on the London market three years ago.


http://news.sky.com/story/1077839/ex...ble-on-betfair

[edmond1]

Hopefully they take it over and remove the premium charges. They should also sell TVG and forget about their quest of operating in the U.S. - not going to happen that easily as you can see - proposed commission rate of 10% is ridiculous. They could then go back and offer more markets (ie. Santa Anita) just like the old days without being blackmailed.

Since the recent acquisition of BetDaq by Ladbrokes the liquidity on US Racing has improved significantly - and remember NO PREMIUM CHARGES and lower commission rates (3%). I do most of my trading here now...... Betfair should definitely be looking over their shoulders.....

[davew]

Why do you feel 10% commission rate is rediculous? There are not any horse racing bets Americans can now make that are that low.

[cj]

Originally Posted by davew

Why do you feel 10% commission rate is rediculous? There are not any horse racing bets Americans can now make that are that low.

I don't think those are the commissions he is talking about.

[Some_One]

Originally Posted by cj

I don't think those are the commissions he is talking about.

The 10% rate has been the rate quoted that the US racing people want for their exchange that I've read in the past, compared to the current 5% on US & UK racing and 6.5% for Australian racing.

[edmond1]

Originally Posted by davew

Why do you feel 10% commission rate is rediculous? There are not any horse racing bets Americans can now make that are that low.

These days traders on Betfair are much smarter now than in the past and value is harder to find - plenty of inside money has now infiltrated these markets. Commission rates range anywhere from 3 to 5% based on your betting volume. Even at these lower rates it's not that easy to profit at these levels. If it was at 10% you would definitely be better off betting at a rebate shop in many cases - trust me. I have said this here many times before - if takeouts were reduced to 5% here Betfair and other offshore sites would go out of business and handle would then go through the roof. And you know what - you would have people actually making money - everybody wins.......

[MightBeSosa]

edmond1, the tracks are not interested in players making money. the players are there to fund pensions, purses, and insider betting coups.

[edmond1]

Originally Posted by MightBeSosa

edmond1, the tracks are not interested in players making money. the players are there to fund pensions, purses, and insider betting coups.

That's why their days are numbered. There's just too much competition out there now where people actually have a chance to win....

[Fager Fan]

Originally Posted by MightBeSosa

edmond1, the tracks are not interested in players making money. the players are there to fund pensions, purses, and insider betting coups.

Remember that the owners put more in this sport to fund it than anyone, including the bettors. So gripe about other things but not purses. Owners do their part and they're losing their shirts.

[DeanT]

Originally Posted by Fager Fan

Remember that the owners put more in this sport to fund it than anyone, including the bettors. So gripe about other things but not purses. Owners do their part and they're losing their shirts.

I, as a horse owner, race for a purse. It is why I buy horses. If I lose too much I stop buying horses, but it has nothing to do about me "funding the sport".

This probably explains it best:

Horse racing, like any other business, has a hierarchy.

• Customers bet, which supplies purses

• A purse is offered, which supplies horse owners

• Horse owners need someone to take care of their horse, which supplies trainers

• Trainers need help, so they supply grooms and vets

Customers allow for horse owners, trainers, grooms, and vets to exist.

In horse racing, it's curious that this supply chain is challenged with spurious statements like "without someone to train or own a horse there would be no horse racing"

However, for its truth one has to look no further than Ontario and its problems. Today, John Wilkinson said, (almost befuddled he had to say it):

“No consumers, no bettors, no industry".

[MightBeSosa]

Originally Posted by Fager Fan

Remember that the owners put more in this sport to fund it than anyone, including the bettors. So gripe about other things but not purses. Owners do their part and they're losing their shirts.

I'm well aware owners as a group lose money. But most enter the game as sport, not a business. The enjoyment of being an owner is part of the payoff.

You could claim that bettors get enjoyment, win or lose, and that may also be true. But winning is better, and while they have PUMPED purses to the moon, what are they doing for us?

[edmond1]

Originally Posted by MightBeSosa

and while they have PUMPED purses to the moon, what are they doing for us?

RIGHT ON !!!!!

[hencicleva]

Originally Posted by edmond1

RIGHT ON !!!!!

Wow, I thought I'd never see this posted. Could it be that purses are actually too high?

Presumably, (and I have no experience or evidence), increased purse money just puts up the price of horses, always leaving ownership as a whole a money losing proposition, because people enjoy it so much. The only win-win group on purses is the trainers, who seem to me to have far too much say in the way this sport is run.

[Robert Goren]

As far I can tell, the only thing the increased purses has done is drive up the price of yearlings.

[DeanT]

Originally Posted by Robert Goren

As far I can tell, the only thing the increased purses has done is drive up the price of yearlings.

A bump in purses is always considered like some sort of panacea. The head of the Jockey Club, said this:

Handle was steady in 2007, while auction sales also remained steady after an all-time record year in 2006. The robust growth in purses was clearly aided by revenue from racinos, but we are optimistic that increased purses will lead to increased handle as these higher purses translate into a more attractive racing product.”

That was in 2007 - where handle was about 35% in real terms higher than today - and in 2013 people do and say the same thing today.

The problem I have with small ball in horse racing, is that not only do the tinkers rarely help change the industry, they deflect from the industry looking at their real issues.

New York is perhaps the best example of pure small ball. Let's raise takeout, which never works, to pay for OTB's that weren't working. This sounds like a George Costanza initiative at Vandelay Industries. If this policy didn't blow up it would've been shocking.

California was not dissimilar. The goal of increasing a purse, say from $30,000 to $32,000 is deemed the holy grail; like it somehow is going to shake the foundations of owner behavior and the sport itself. It was deemed worthy of annoying fans, and bettors when they passed the rake hike.

What really does a $2,000, or $4,000 bump in a purse do? Not much. For large stables it may turn their ROI up from 0.52 to 0.54. For mom and pops, the product itself, reinvestment in yearlings or people moving from other states the benefits are negligible. Is it worth hurting your brand?

NYRA had a nice bump in purses this year with slots. Is Aqueduct the holy grail? Was last year's Saratoga meet that much different than others? Did you hear anyone say "I don't want to race at Toga for a $70,000 maiden special weight, but at $75,000, count me in!"

I don't want to belittle slots in New York, because it is a major development, but as a rule, marginal increases in a purse will not set the industry free. It will help of course, but it's small ball.

Instead of these small bumps in purses, which rarely make a difference in the big picture, and never have, reinvesting in the product - low rakes, better production, fuller fields, betting exchanges etc, might do better. When such things are suggested (I see Steve Crist finally suggested those in New York that others have long been advocating like a low rake pick 5 with slots money - which might help push the narrative) they are usually shot down.

"Purses and only purses" drives the thought in this industry. It's been that way for a long time, mainly, imo, because the people in the control of the sport think horse owners are customers, not customers.

When you target customers who are not your end customer, you lose the people who pay for purses - people like you and me who bet. Then when purses go down, they don't realize and admit their mistake, they do insane things like piss off the customers even more with rake hikes. This business is so ass backwards it's not even funny anymore.