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An interesting Derby meeting this year. I don’t often post up analysis after the event but I thought it was worth a few notes this year.<\/p>\n
I managed to pull a decent result out of the hat on Saturday, but I think I’d describe it as exactly that, ‘Out of the hat’. It was a bit of an erratic today, where I ended up with quite a bumpy P&L.<\/p>\n
For some reason UK racing thought that\u00a0putting on lots of other racing on Derby day and Doncaster five minutes ahead of Epsom was a good idea. I guess I will always view it with blinkers on, but it did make it difficult to focus attention on the big meeting. It’s so annoying when races clash or almost clash as full liquidity gets sucked out of the market and that makes it harder to do anything useful, whether you are betting or trading.<\/p>\n
On top of this Betfair is getting weaker at the bigger meetings it seems. I always cross compare matched bet turnover from year to year and this year the whole Derby meeting was around 20% lower than last year. Since the new CEO took office liquidity is sliding on the exchange. I guess hiding the exchange, the key part of your business, to new customers probably isn’t going to exactly help liquidity.<\/p>\n
The problem Betfair faces is that for every pound lost to somebody who provides liquidity on the exchange, you see a disproportionate drop in liquidity provision. If you are scalping you have limited upside and no guarantee of a return but you have to expose large amounts of money in the market. You can easily expose your stake to the market if return for pennies and I reckon the liquidity leverage in this case can be well in the range of 100-1000 fold. So any percentage drop in the underlying market will encourage a much wider decline at the top level. Of course the opposite can happen as well, any growth in the underlying values will boost the top line. I’ve seen it from both angles in my 13 years in the market.<\/p>\n
The day to day stuff seems to be OK, if completely unexciting,\u00a0but I think that is masked by all the ping pong that can go on during these meetings. But I’ll keep an eye on the major stuff and post up what I see. Of course we have the big one next, Royal Ascot.<\/p>\n
But, in summary, you can easily conclude that putting so much focus on the sports-book, which is still a tiny part of the business\u00a0is a very high risk strategy.<\/p>\n