Betfair Cricket and the growth of inplay betting

It seems difficult to imagine a time when it wasn’t ‘all about the inplay‘ – but before Ray and Betfair there really wasn’t much concept of betting on an event after the official start time. How things have changed!

Betfair inplay markets are now very wide and varied. The Betfair exchange was really the first to embrace the key concept of inplay betting, which you now see in appear all across sportsbooks, bookmakers and more traditional betting platforms.

Some sports really lend themselves well to inplay trading. The pre off trading market on horse racing is a market driven purely by opinion. Regardless of the pedigree and form of your horse, you may never know quite how it’s going to run on each outing at the racecourse. This is why there is a lot of activity pre-off on horse racing and while there is money traded inplay, it’s smaller than other sports. Roughy 20% of all horse racing matched bets are in-play, leaving 80% of the market traded volume pre-off.

If you look at a Tennis match most Tennis traders jump in and out of the market after it starts, not before. Football shares a decent sum of money traded before the match kicks out and then during the match itself and if you look at Cricket trading on Betfair then this is even higher.

So the first rule of thumb you will find is that different sports create different opportunities and therefore need to be treated differently. Betfair cricket markets are different from trading horse racing pre-off and each market develop their own patterns of activity.

Let us review how in-play betting has evolved over time and how that in turn has driven growth in individual betting markets.

In-play betting wasn’t the norm

Back when exchanges started, it was purely a replication of the traditional bookmaker regime. Similar sports and similar punting styles, but exchanges brought this new concept of sports betting to the market and this drove a who range of new betting styles very different from the normal punter and bookmakers.

In essence, some markets were ‘in-play’ already on Betfair from day one. I did a lot on financial markets when I first started on Betfair and the FTSE up/down market would run every hour till the hour for settlement purposes. Financial markets were ‘in-play’ between 9am and 4:30pm.

But betting on a horse race while it was running seemed madness. A horse race can last just less than a minute for a 5f race, who on earth would decide to start betting on horse racing while it was in-running? But slowly and surely, as Betfair trading took off, this became normal. People used a variety of tactics to trade either pre-off or in-play and sometimes both. But In-play betting was typically done by people looking to exit inplay or take advantage of the unique way racing unfolds.

Slowly this type of activity spread to all the other sports.

Inplay betting and keep bets on the Betfair betting exchange

An early hinderance to in-play betting and trading, has long since been forgotten. When Bet Angel was first conceived back in 2004 there was no way to keep a bet from the pre-off betting market to the in-play betting market. You couldn’t do a ‘keep bet’, it was completely missing from your exchange betting experience!

This meant there was a distinct hindrance to the development of this market. In general, there was a lack of information about ‘live betting’ and few, if any, betting strategies were geared to helping people understand the opportunity that sports betting ‘live’ could bring. In significant constrast to what we see today, betting tips continued to be widely offered before an event start, but none were offered in-play.

You can see this legacy well inside Betfair trading software and specifically Bet Angel. If you review all available options inside Bet Angel, there is still a ‘saved bets’ area buried within the software. You can still use this option to keep bets from the pre-off period into the in-play market if you wish. But of course Betfair eventually adopted this option into their betting exchange and you now know this as a ‘keep bet’. Better late than never I suppose! But you got it, features like keep bets first appeared in Bet Angel before being adopted later by the Betfair exchange. This is also true in a more general sense of features like ‘cash-out’, it was widely available on Betfair exchange apps long before Betfair and other sportsbooks and bookmakers adopted it.

The growth and growth of in-play betting

Back in 2005 things were growing rapidly from a small base. Racing grew more and more popular as people began to bet in-running and football was an obvious market for trading in and out of positions as the match progressed. Football was the first in-running market I modelled as I had successfully done that in the distant past, but I didn’t really look much beyond that initially.

Football and Racing were big markets, but Racing always seemed to be ‘stuck’ at 20% of the total turnover. With racing volumes in general accelerating, then levelling off. That 20% of turnover meant that, in relative terms, racing started to fall behind Football.

But one noticable characteristic was that in-play betting and Betfair trading in general was taking off and the amount of money matched mainly or purely on sports that were predominately in-play based sports really started to grow and drive money into betting exchanges.

The growth of Betfair cricket markets

Tennis quickly overtook Football as the sport of choice for in-play traders and it quickly accelerated upwards from there before levelling off. The development of in-play trading markets seems to be a story or one market usurping the previous one.

Horse racing was the pioneering market, football quickly overtook Horse Racing, then Tennis overtook football. In recent years the market that has overtaken Tennis has been Cricket. Cricket betting seems to be a popular activity now and inplay Cricket has gone stellar in the exchange betting world.

If we re-visit the top line of all in-play matched bets, we see that from a total of under £5bn matched in 2005 we saw pretty much straight line growth mid-2011. Premium charge payers may hint that the shallow nature of the growth since then is an indication of lost business for Betfair. However, the growth has continued, albeit a little slower. But from 2005 to 2016 we have gone from £5bn to £40bn a year matched in-play. I suspect that adding in sportsbook figures which don’t show here, would probably boost the numbers a bit. It’s difficult to tell as actual numbers were once discussed openly, but are now hidden in a mixture of other, generic, financial reporting numbers.

Regulatory issues with in-play betting

We couldn’t cover in-play gambling without covering some of the controversy that surrounds it. In Australia betting on a sport in-running online is not allowed and this has severely curtailed its growth. Though curiously you can phone up and place an order. One suspects, as it is often argued, that this is to stop betting leading to corruption on the underlying sport. Betting live on sports as they are underway can lead to all sorts of curiosities and presents many opportunities to ‘accidentally’ doing something that would yield a positive outcome in a betting market.

There have already been many corruptions scandals in Cricket, Tennis and other sports where gambling has influenced the outcome. This generally happens where the underlying event doesn’t reward the participants that well, generating a temptation to bend the rules.

For a long time there has been a running story with courtsiding on Tennis matches and this is directly related to in-play markets. When a goal is scored in a football match the market is suspended. In a Tennis or Cricket match when a critical point is reached there is no suspension and therefore it’s a prime opportunity for somebody that is a little faster than you. Courtsiding is not going away any time soon.

Legislation has been slow to catch up but the UK gambling commission has ‘looked at’ in-running markets but the words “XX limited is licensed by” probably doesn’t make much difference. There is little enforcement or adjustment to rules around inplay markets and self-regulation of this looks set to continue.

https://www.gamblingcommission.gov.uk/PDF/In-running-betting-position-paper.pdf

The future of inplay markets

Both Tennis and Football have been in relative decline since 2012. By relative, I mean they are smaller as a proportion to the total number. But a new star has emerged from the mix, Cricket.

If we look back at 2011, £4bn was matched on Cricket alone, by 2016 this had shot up to £11.6bn. Football had risen from £10.8bn to £13.6bn and all other major sports had declined. You can see from the chart however that the football number is a little deceptive as it’s more or less flatlined in recent years. Again, we can’t see positions that are accepted by Betfair but not hedged on the exchange.

I don’t trade cricket much as I’m too busy on the big three sports. But with a little more growth Cricket is growing fast and is now the biggest inplay sport there is and it looks set to rise further. Some matches reach over £100m and the markets trade particular well on a lot of occasions. Even markets that are in non-Betfair territories, where betting exchanges are restricted; tend to find good volumes. As players compete for a place in the world cup squad, with the chance to play in the cricket world cup on home soil. Things could really light up in the markets, especially during the tournament.

I’ve often looked at Cricket betting to understand why the growth has been so prolific. You don’t suspect that more people play cricket more than they used to or that cricket betting tips are driving interest, so other things must be at hand. Test cricket still has the staid reputation of yonder years and that spills over to county cricket. But limited over cricket is where it is at nowadays. Shorter games, more exciting, grandstand finishes and wild swings in fortune along the way. Great entertainment and great Betfair trading fodder.

Other sports could probably learn a trick or two as to how Cricket has transformed itself into a modern spectacle that has wider appeal. Golf inparticular is suffering from being ‘a bit boring’ and is in need of a new format.

The Betfair betting exchange versus bookmakers, sportsbooks and other exchanges

Seeing all this growth I was curious as to how in-play compared to pre-off volumes on the exchange. It’s a really interesting story, as it appears that overall in-play is getting more and more business on the exchange. Back in 2007 less than 50% of total exchange turnover was in-play but that has been increasing steadily over the years. In 2016, 68% of all exchange turnover was in-play.

This more or less makes sense. Bookmakers can target exchanges with attractive opening account offers, but accurately pricing a market with little margin in-play is a little harder. So it seems that people looking to get a decent price or hedge a position, are most likely to look to an exchange. It’s possible that Betfair picking off the low hanging mug punters with the sports book has also changed the mix a little. But the graph makes interesting viewing.

But the overall summary of the current situation is that in-play is still growing fast. This is especially so in Betfair Cricket markets on the Betfair betting exchange. This is happening elsewhere, but relative to the ability to bet in-play. Given the structural nature of the market, this looks set to continue.

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