How would you like to trade a market where you get large regular price swings every 10 minutes in the afternoon, seven days a week. A
market where all prices are set purely by supply and demand, few transaction costs, no middle men and you only pay commission if you win? Where you can freely act as a market maker and where you have direct market access and where you can create a spread for others to take?

Betfair has revolutionised the betting market and created an open platform for exchanging risk on sports events. This market is now viewed much more like a traditional financial risk market than an old fashioned betting market. Smart users have realised that there are huge opportunities on Betfair because they can buy and sell risk in much the same way they would in a normal financial market but without the burden of cost or the restricted access that is usually associated with traditional financial markets.

Click here to learn more

Just noticed this thread and had a read through!
Fascinating stuff but far too complicated for me...or is it?
If you have any info Scrip, please forward to muppettrader@btconnect.com
d.

I hope Sporting Options did have segreated accounts.

The others appear to have.

British Betting Exchanges Offer Assurances to Customers


Following the placement of the British betting company Sporting Options under administration, meaning it has financial problems, other betting exchanges were quick to assure customers that their accounts were safe.
In a notice posted on its Web site Monday, Sporting Options said all betting activities the Internet site have been suspended and that two administrators had been appointed to assess the financial position of the company and its business operations. The company statement said it would issue statements to the press and "corresponding directly" with stakeholders and asked that any inquiries to the company be submitted via e-mail rather than by telephone.

"We will endeavor to deal with any queries as quickly as possible, but ask that in the first instance you refer to the information made available on this Web site. Please do not contact us by telephone. This is very important, as it will lead to a delay in the process of dealing with e-mail inquiries as well as the process of administering the company in a timely and efficient manner."

While the Web site offered a link for customers to check their accounts, it noted that "all unsettled markets have been voided."

The company did not explain what events led to Sporting Options being placed under administration.

In light of the Sporting Options development, at least two other betting companies assured customers their accounts are safe.

Stephen Hill, chief executive of Betfair, said client accounts are kept separate from company funds and that "under no circumstances could third parties have a claim on Betfair clients'money...Simply put, your money is as safe (if not safer) with Betfair as with a bank and Betfair will always have 100% of its customers' money available to withdraw whenever they want it."

Another company, Betdaq, issued a statement noting that it was surprised that Sporting Options went into administration and that "we have sympathy for those who may be adversely affected."

Noting that Betdaq is in "rude good health," the statement said Betdaq "customer funds have always been fully ring-fenced from the daily operation expenses of the exchange."

The company added that it was the industry's first exchange to place a $10-million cash bond with its bank in 2001 "in recognition of the absolute priority we give to customer confidence and to the security of customer funds."

Betfair get a few more clients and, possibly more importantly, reassure their own clients. Scrip, you'll get your money back!

It is made clear that very little client money is remaining to pay back to clients. Many people suspected as much since a search at Companies House showed that the company handling client funds had been dissolved back in March.

The structure of this deal is actually very well thought out and a credit to Betfair, who are of course only looking after their own interests, but very effectively indeed.


Betfair Customer Services 16 Nov 09:52

London (16/11/04) Betfair, the leading online betting exchange, has launched a rescue package for Sporting Options customers who have lost money as a result of Sporting Options going into administration on 15th November. This means 5,000 of the 5,300 Sporting Options customers (or 95 per cent) owed money could be compensated in full in the next few days.

The package has been agreed with Sporting Options administrator and approved by Betfairs board of directors.

Our rescue package reflects Betfairs commitment to the betting exchange punter and to the nascent betting exchange industry. It is a testament to Betfairs financial strength that we are in a position to be able to do this, said Stephen Hill, Betfairs chief executive.

The demise of Sporting Options shows why we urgently need the new Gambling Bill, not only to regulate online bookmakers but also to update regulation for the wider betting industry so that all punters are properly protected, said Mr Hill.

Mr Hill noted that customers funds at Betfair are held on trust in a separate, ring-fenced account which is audited by KPMG. Protecting customers funds should be a condition of a bookmakers licence and further, the new Gambling Commission should have the power to conduct spot-check audits of online and bricks and mortar bookmakers to ensure that this is the case, said Mr Hill. The confidence that our customers have in the security of their deposits with Betfair has helped us to become the global leader in our field.

Mr Hill added: We very much welcome Sporting Options customers to Betfair and we look forward to helping as many of them as possible. We hope we have gone some way in restoring their confidence in the betting exchange industry.

Notes to Editors:

Sporting Options customers with up to 1,000 in their Sporting Options account will have the amount they are owed credited to their Betfair account, if they have one. Customers of Sporting Options who do not have a Betfair account will be required to open one and pass the standard Know Your Customer checks, which involves supplying two separate forms of ID and a bank account or card details. Customers with over 1,000 will receive a minimum of 1,000 credited to their Betfair account, or 20% of their total Sporting Options account balance, whichever is the greater. Once credited to your account the amount can be withdrawn at any time. Further, these customers will then be eligible to receive cash rebates in the form of a reduced commission rate until their account balance has been discharged, or until 30th November 2006 at the latest. Conditions of the rescue package include that each customer satisfactorily completes Betfairs Know Your Customer process. Full details of Betfairs rescue package are available on www.betfair.com

Betfair Customer Services 16 Nov 10:32

Overview

Following Sporting Options being put into administration on 15 November, Betfair has put together a rescue package to help former Sporting Options customers who were owed money by Sporting Options when it ceased trading. We have reached an agreement with the administrators under which Betfair acquired a list of all customers and the amounts owed to customers. Under the package Sporting Options customers have the opportunity to apply to receive money and commission rebates from Betfair which, if the application is successful, could lead to every former customer of Sporting Options receiving from Betfair an amount equivalent to the full amount that was owed by Sporting Options.

This rescue package reflects Betfairs commitment to the betting exchange punter and to the growing betting exchange industry. Betfairs position as the global leader is in no small part due to the confidence that our customers have in the security of their deposits with us.

All Sporting Options customers who, according to the information provided to us by the administrators, were owed money by Sporting Options when it ceased trading will receive an invitation to apply to participate in the rescue package in the next few days.

Frequently Asked Questions for former Sporting Options customers

Q How does the offer work?
A Subject to meeting our Know Your Customer requirements, Sporting Options (SO) customers with up to 1000 in their SO account will have that amount credited to their Betfair account. Customers with over 1000 will receive a minimum of 1000 credited to their Betfair account, or 20% of their total SO account balance, whichever is greater. So, if you had 2000 in your account you will receive 1000, not 400; if you had 20,000 you will receive 4000 in your Betfair account.

Q I had more than 1000 in SO. Have I lost the rest of my money?
A No. There is the opportunity, through continued activity on Betfair, to recoup a large proportion of the balance through rebates of 50% of your monthly Betfair commission. In effect we will put half of your monthly commission back into your Betfair account at the end of each month. This rebate scheme will last either until you have been rebated the rest of your SO balance, or 30 November 2006, whichever is first. In effect we will allow you trade on Betfair at half price until youve earned back what SO owed you when it stopped trading.

Q So youre really just forcing people to use Betfair if they want their money back.
A We are providing a rescue offer which SO customers are free to accept or not. Our first priority is to protect the most vulnerable punters. Larger punters dont get fully compensated initially, but they will get a minimum of 1000 immediately and then if they want to can effectively trade at half price for up to two years. Its up to the customer to decide what to do.

Q But why cant I get all my money back right away?
A If you want to make a claim against Sporting Options, you can follow the instructions at Sporting Options web site. The administrators have already indicated that any money available to former SO customers is likely to be negligible, if there is any at all, and that the process of getting anything back at all will take time. The Betfair rescue offer is something we are doing voluntarily, with the agreement of the Sporting Options administrators, because we want to protect the most vulnerable customers, and ensure SO customers dont lose confidence in betting exchanges.

Q So does this mean that Betfair has accepted responsibility to pay all SO customers their money?
A Absolutely not! Our rescue offer to former SO customers is something we are doing voluntarily. We have absolutely no connection with Sporting Options plc or any of its subsidiary companies. We are not legally responsible for repaying you any money which you deposited into your SO account but we do want to ensure that the betting exchange industry demonstrates its integrity and retains the goodwill of punters.

Q But it suggests you feel guilty about what happened to Sporting Options.
A Again, absolutely not! The situation with Sporting Options is very unfortunate, and it underlines the importance of properly ring-fencing customers funds in a way that can be audited and spot-checked by the new Gambling Commission. We are the worlds leading betting exchange, and we are delighted to be able to demonstrate our leadership by protecting the most vulnerable punters, through the agreement we have reached with the administrators and our commitment to making this rescue package available.

Q If I participate in the rescue offer, can I also claim against the administrator to get all my money back?
A The administrator has said that the amount of money available to pay SO customers is likely to be negligible, if there is any at all. You can make a claim against SO, but we will tell the administrators how much you have received under the rescue offer from time to time and the administrators will take this into account in deciding how to treat you in the administration. It is a condition of our agreement with the administrators that, to the extent that you receive payments or rebates under the rescue package you must waive any claim you have against SO, but your ability to make a claim is otherwise unaffected.

Q Does the offer work for those who already have a Betfair account?
A Yes, this offer is open to all SO customers irrespective of whether you already have a Betfair account. Those who dont have a Betfair account will need to open one to take advantage of the offer. All SO customers wanting to participate (whether existing Betfair customers or not) must go through our KYC procedures.

Q What does Know Your Customer entail?
A KYC has three components: 1) a photo ID such as your passport, drivers licence or national ID card; 2) a confirmation of address such as a utility bill or council tax bill addressed to you and showing your correct address; 3) the card and account details for the way you will deposit and withdraw funds with Betfair. This last requires a photocopy of the front only of your card and a bank statement for the relevant card or account. One of the forms of ID must be an original document, which we will return to you if you include a Stamped, Self-Addressed Envelope.

Q So how do I go about claiming?
A It is a condition of the offer that each person wishing to take advantage of it has or opens a Betfair account. If you have not got a Betfair account, you must open one. You do not actually have to fund it. Then you must logon to the Sporting Options website as you normally would, and enter your Betfair username so we can verify your identity. Then, on satisfactory completion of your application form (including KYC information) and our acceptance of it your Betfair account will be credited accordingly.

Q Is there anyone who cannot apply to participate in the rescue offer?
A We will not accept applications from anyone who we cannot identify as a valid SO account holder, or who does not meet our KYC requirements. We will not accept applications from former customers whose accounts have been closed by Betfair.

Q When will I receive my invitation to apply?
A We will send the invitation to all former SO customers as soon as we can. The information on customer names and account balances only became available to us once we had reached agreement with the administrator, and it will take some time to send letters to everyone. You should expect to receive details of the package by email within the next few days. A copy of the application form will also be downloadable on both the SO and on Betfairs website.

Q When will I receive my money?
A Once you have opened a Betfair account (if you dont have one already), logged into SO to verify your identity, submitted the application form with the relevant KYC documentation and been vetted by Betfair. (If asked, we intend that this will take about a week, but it will depend on our ability to process applications.)

Q I thought I had more money in my SO account than you have refunded.
A The rescue offer is based on the amount which SO told us was in your account when the company ceased trading. We relied on this information when we devised the rescue package. If you think you are owed more you will need to contact the administrators, whose contact details are available on Sporting Options website.

Q Could this happen at Betfair/is my money safe at Betfair?
A Your money is safe with Betfair. All our customer funds are held on trust in ring-fenced client accounts with the Royal Bank of Scotland and are completely segregated from company funds. We never trade for our own account, so your money is never at risk.

Q Why is Betfair doing this?
A This is primarily a loyalty scheme to protect the smaller, more vulnerable punters and to reassure punters that betting on a betting exchange is a safe and reliable leisure activity.

Q Who can I contact for more information?
A If you have further specific questions about the rescue offer or about KYC, please email your queries to rescue@betfair.com.

If you have general questions about Betfair, please check our website at www.betfair.com, or email info@betfair.com.

If you have questions about the administration of Sporting Options, you should contact the administrators, whose details are available on the SO website.

Scripophilist, I am currently in Australia and unable to attend your courses, do you have an idiot's guide for overseas squaddies 8-))

I am on stevew@actewagl.net.au

Thanks.

WR

I see sporting options has client liability of 3.6m and only 100k in the bank according to the administrators email I received this evening. Shocking!

Who are the directors and owners of Sporting options?

Scrip, the email talks about 100k in "the client account" against a 3.6m liability to clients. That is different to not having a client account. Early days but it would imply that the client account was raided for operating expenses and/or market making.

Oh, dear, it sounds like a variation on the Maxwell pension raid, much smalelr scale, of course.

Script, are ther plans to offer the course nearer to London?

The rumour on the street is that they were trading on their own account to increase liquidity I guess in the hope of attracting more clients.

Scrip, How efficient would you say Betfair's pricing is for the financials ?

I'm wondering if it'd be worth the effort to create my own pricing model based on volatility and time to expiry in order to spot good odds. I'd be interested to know if you've already looked into this and found it a worthwhile or worthless.

There's a lot of manipulation on the horse races today. Watch those 2,000+ stakes on one side of the book pushing it one way or the other, only to disappear and leave the price crashing back. It's almost like watching SETS :-)

Is that something that can be profited from or does it just get in the way ?

Well, you can follow along one way and then back again but you do have to be quick to spot the reversal. It's mainly that, as with SETS, having a lot of volume supporting the order book gives a sense of security, which is misplaced if it is just someone manipulating the book!

Kayak, You need to sum the whole book and its easier to avoid the fake orders. I use at least a couple of indicators to figure which way things are moving. That said it is a funny day today I started off with four out of five losers. Can't remember the last time that happened.

TPO the financials are pretty efficient. They used to be a good hunting ground for me but the horses and football is where most of my money comes from now.

There are some serious traders that have fully automated systems for the financials. That's killed some of the easier money and liquidity. Intra days are fun though. Often when the market is charging in one direction or another you can nip in for some value but you need balls of steel.

Following Kayak's post (171) I've watched the price movements on a couple of horse races this afternoon and captured some screens using SnagIt for later analysis. Is the general tactic to stick to a horse with high volume and trade in and out as if you were trading a share price with a level 2 screen ?

Seeing as there's a few seconds delay placing a bet with Betfair, do you get stung sometimes with a rapid change in price against you ?

Also I assume you pay very close attention to the clock to make sure you close out (green up) before the race starts.

TPO, there are a number of possible strategies. Yes it is a lot like share trading apart from having to "green up". Click on the horse's name and you will get a chart of the odds against time. You could pick a horse with odds that have stayed within a range and try to trade within that range. You could pick one that is "breaking out" and trade that. Often the favourite will shorten and most of the rest of the field will lengthen. A lot depends on the "chart". Be on your toes around 5 mins before the start of the race as that is when the on-course bookies come on to lay off the bets they have taken, and the odds often change direction or start moving if they hadn't been going anywhere previously. And make sure to close before the race begins or your heart will start racing along with the horses.

Thanks - I'd noticed that things went a bit nuts a few minutes before the start, I hadn't thought of on-course bookies. Sounds like I need to do a bit of paper trading to get a feel for things, but it'll certainly make a change to the FTSE :-)

Scrip: do you recommend any pre-course reading - preferably free :)

Looking forward to meeting you and fellow wannabee bookies next Friday.