As technology evolves and the competition for the punters pound has increased, bookmakers have been at the forefront of developing new methods of increasing their bottom line profitability and keeping one step ahead. Here we examine 10 things the industry would rather their customers did not know.
1 – IP addresses and tracking of linked accounts
Many firms employ a very expensive IT department to find out exactly who is betting with them, and to crack down immediately on multiple accounts that many professionals try to hold. They can now track where each bet is placed from, and close or restrict anyone who they suspect of having multiple identities to try and place their bets in the desired stake. Patterns are quickly tracked, while home addresses can also be checked out using Google earth to seek out the truth of them (or even see the net “worth” of a potential genuine punter). The days of getting Great Aunt Maud to bet a 600/400 on the favourite at Fontwell are long gone.
2- The monthly cull
Traders have become Betfair trackers, but to justify their salaries they now spend plenty of time discussing and factoring down any accounts that have caught their attention. Typically a monthly meeting will take place based on a printout of the top 100 winners/loser/highest turnover. Questions will be asked about anyone who comes up. Are they arbing? Is it a tipping line account? Are they beating the SP? Do they bet on a wide range of sports or specialise? All these will be considered and anyone falling into these categories is likely to be severely restricted.
The vast majority of firms now have the accountant driven mentality and try to trade punters rather than individual markets. It is very easy to take the scissors out and make someone a 10% account (so they can back things to win 1/10th of the liability of the chosen market), or even more commonly in the case of arbers 1% (basically closing the account for all intents and purposes).
3- Luring you towards high margin products
The industry now is about high margin products, marketing them and getting gullible people to bet on them in size. It is far easier to pay a software firm 200k to develop a popular brand of roulette, than it is to hire and maintain a team of racing traders to try and grind out 4% profit by sheeping mythical Betfair prices on low grade racing. Why bother taking on shrewdies who are betting to win, when you can win a guaranteed margin by flogging games and online roulette etc where the profit is guaranteed and extremely high. The entire basis of bookmaking has changed and firms try to exploit it while they can (before taxation and jurisdiction regulation erodes the bottom line).
4 – Factoring stakes in areas where you are profitable
As punters have become more sophisticated, so have the firms entertaining them. The astute racing punter may find his morning racing bets limited to a few pounds at an early price, but in the afternoon off the “shows” he can bet things to win much more (when the market has been established and Betfair has arrived at the “right” prices). Firms who are paying 22k for a trader fresh out of college are unlikely to have much confidence in the prices they come up with (by copying Betfair with a hangover at 8.30 am in the morning) when the markets are illiquid and the prices easily manipulated. Later on when the cards have been shown, they have far more confidence and stakes can be upped accordingly.
On a similar note, the long term winner at racing may find he can bet 20% stakes on the horses, but bet virtually unlimited stakes available to him on Premier League football (again where the market has strength and the prices clearly defined by pure market forces). The bigger firms have become very good at this, channelling turnover where they make the most money and using other minor sports as a shop window. Bet365 for example have pioneered this approach, offering up racing as something of a loss leader with attractive prices (available in small size to all but a few select VIP clients).
5 – Industry phone calls and intelligence exchanging via Social Media
It is no longer the small world that it once was, with firms scattered for tax purposes from Malta to Guernsey to Costa Rica to Gibraltar to Stratford, but the tight network of traders often know each other and exchange information about certain clients:
“We have a Goffy here winning 15k on non league football, has he got lucky or is he arbing?”
“Yes he is up 18k here and we have reduced him to a 0.1, handy mark to have though and we move the prices on the back of it”.
Or the warm racing account connected to certain stables:
“Yes every time he backs an Easterby horse they crash, very warm on that, possibly Veitch connections, 0.1 on racing or has to ring up to get a bet….mind you he has done 30k on live Sky football in the past year so possibly putting on for someone”.
All these conversations, ethically dubious to put them politely, form the backdrop of account management at many firms, while the use of social media such as Twitter, Facebook and Linked-In are also widely used to assess the nature of many accounts (and to check their validity).
6 – Arbing/Pricewise/Beat the SP…you are dead
When I first worked in the industry for a major spread betting firm, the cut off point for winners used to be 30k before they were chopped or restricted (or even discussed). This was considered fair, and a long enough time to judge whether they were a genuine punter on a roll or a very astute punter doing the right things and playing only on wrong prices. Those days are long long gone. Winners are simply not tolerated by almost all the firms (although Betfred do still entertain some warm early racing accounts to win a grand at early prices…as a firm marker to trade up against).
Generally the firms are not there for you anymore, they are there to win the highest possible margin in the most efficient way possible. Whether you are a winner or not is a secondary consideration, with a zealous paranoia gripping the firms about the dreaded “Arber”…who will be cut immediately regardless of P and L….or just the pricewise follower (viewed by traders with similar disgust as he pops up on the scroller with 1000 other geniuses every Saturday taking 25/1 (26.0) about something which is now 16/1 (17.0) on Betfair).
Traders are jumped on by accountants on high if anyone is allowed to get away unchecked and anyone bar the most obvious proven mug is viewed with suspicion. They are judged quickly and harshly, with leniency (and a long run view of the ebbs and flows of punting) a thing of the past.
7 – Recreational punters are the new Gold
Finding non-price sensitive punters is the aim of all the major players in the industry now. The punt on live sport guesser who just wants an interest on the televised match (and to tell his mates he had five score Aguero to score first and City to win), or the ever growing “accumulator on a Saturday” brigade that are the bread and butter for any online bookmaker. These recreational punters can be seduced by enhanced prices, free bets, or moneyback offers, and a huge amount of expense is now devoted to attracting them and keeping them loyal losers. Paddy Power and Bet365 have pulled this off better than anyone else, hence why they have left behind the floundering former giants such as Ladbrokes and Coral, with a PR budget that deliberately targets the younger punters anxious for a quick fix or a big win.
8- Prices linked directly to exchanges
One major firm now employs no “traders” in the old fashioned sense at all, merely using technology to map Betfair and constantly offer up automated prices underneath the Betfair price. This now leads to a thousand price changes on a race or event (as the bots pull the prices in and out without a sixpence changing hands with the actual bookmaker). Arbers are of course now completely avoided which is the intention, but it also makes it impossible to strike a bet at a competitive price with a layer with an actual opinion (and has no doubt alienated numerous genuine punters who have their bet declined as it has just ducked a tick under on Betfair, or their stake size severely limited).
Automation has the advantage of saving money, and for in-running fast changing sports such as tennis or football, it can be an excellent way of offering up 100s of markets that would not be humanly possible otherwise. Again Bet365 have led the way on this, generating turnover from “new” markets in running that have triggered interest from new punters attracted by seemingly big prices about “likely” events happening, i.e a player to score the next goal, or Liverpool to win 6-0 when they are winning 4-0 at halftime. It is all about attracting the leisure pound at the right price for the layer, with minimal risk and maximum margin.
9- The death of the trader
With this automation has come the death of the skilled trader. 20 years ago you needed an experienced, honed opinion and a good understanding of your chosen sport and the customer base. You needed to know what races or sports to play strongly into, and more pertinently where to tread carefully and play small for the company (who rewarded you with a decent salary and a 20k bonus once a year if targets were met). These days the firms offer failed students 20k to flat share in Gibraltar for 5 years before they limp back to the UK with their tales between their legs, they are merely exchange price followers now, updating prices directly from the machine and quickly restricting anyone who beats the Betfair price and marking him up as an “arber”. There are still some excellent head traders about, the loyal company men with 20 years experience behind them and with a deep understanding of the game, but they are increasingly marginalised and forced to toe the company line if they wish to stay in the role. Taking a view, or standing out from the crowd (or heaven forbid taking on the “Betfair price”) has been crushed out of them and they cannot compete with the guaranteed profits made by the Fixed Odds Betting Terminals (FOBTs) and games that their own results are now unfairly compared with.
10- The rise of the Super Bookie and the end of competition
All of these factors and more are leading to the creation of Super Bookmakers, as the bigger firms are forced (for taxation and expense reasons) to merge together. 2016 is likely to see Coral and Ladbrokes merge (if the proposed deal gets past Monopolies and Mergers), the Tote come up for sale from Betfred, Stan James and Bet Victor to possibly get taken over to name but a few and the pressures to create these betting giants is growing stronger and stronger. Hundreds if not thousands of shops are certain to close, with all the real action now taking place online in an increasingly cashless society and there is sure to be a tightening of margins as the competition diminishes.
In the long run this cannot be good for punters and is certainly one of the most important ten things bookmakers do not want you to know.