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April-19-2007,
Americans Need to Embrace Betting Exchanges as the Preferred Way to Bet-Part II...By David Stalcup

Author's Disclosure:

This article will focus on Matchbook.com as the best betting exchange option for American bettors. Matchbook.com is a current advertiser at MajorWager.com and the author is a customer of Matchbook.com. Neither MajorWager.com nor the author was solicited by Matchbook.com to produce this article and neither received any compensation for this article.

Part I of this article addressed the concerns American bettors might have regarding exchange betting. Part II will highlight the short and long term advantages of exchange betting, and hopefully solidify exchange betting as a necessary tool in the American bettor's arsenal.

First, some issues concerning Tradesports mentioned in the Mess Hall forum at MajorWager.com need to be addressed. Part I of this article mentioned that the total commission for accepting an offer that wins would be 1.5%; this is not the case if an offer is accepted pregame. In January, Tradesports changed their commission structure, which included charging no fees for pregame trades. So if a bettor accepts an offer pregame, he will only be charged a 1% commission if his bet wins at expiry. Also, it was brought up that American bettors currently have very little options when depositing at Tradesports. ACH is not currently online, and it seems that the only way to deposit there is to send a bank wire or paper check. Lastly, it was pointed out that Tradesports bettors can view offers in the traditional American moneyline way (-110) by trading on an alternate website: Tradebetx.

Now that American bettors (hopefully) are over the fear of using exchanges, why should bettors they be using them? What are the advantages?

There are many advantages to using exchanges:

1) Very low commissions compared to traditional bookmaking

2) Live betting options

3) No limit reductions or having an account closed for winning too much

4) Stability from a business standpoint

Bettors can plainly see that any time one can lay -102 instead of -110 he or she must take advantage of the reduced pricing. The live betting comes in very handy when having a pregame bet, and adjustments need to be made during the event (i.e. your bet is a sure loser and you need to get off of it by betting the other side!). Also, there is often good value to be found just betting an event in-running. Many times one will see bettors putting up offers that are, simply put, gifts. Not having limits reduced or an account closed due to winning too much is paramount for the professional bettor. As many shops that supposedly take "sharp" bettors very aggressively limit and boot winning, professional players more than ever, having an out that actually WANTS a bettor to bet more (because they get more commission) is a breath of fresh air. Also, from a business standpoint, exchanges aren't subject to the drastic swings that traditional bookies are. Players are betting against each other and the exchange is taking a commission. The outcome of any of the games isn't a concern for an exchange. As long as the exchange has enough volume to generate commission, the exchange is in a solid position to produce a profit.

There are also a few potential disadvantages to using exchanges:

1) Learning new software

2) Difficulty depositing and withdrawing, fees too expensive

3) Not enough volume on games of lesser interest

4) Not offering a full range of games

5) Drastically reduced live betting options and/or very low volume on those games

6) Straight bets only

Management at Matchbook.com was contacted in regards to most of the above. The current climate in the offshore gambling industry has made payouts and deposits very difficult in most cases. One way to move funds easily is to do interbook transfers. Matchbook.com currently offers free interbook transfers to and from: Pinnacle, Olympic, WSEX, Mansion, CRIS, and 5Dimes.

When asked why live betting wasn't offered on every game, Matchbook.com responded as follows:

With the exception of the biggest events of the year, live markets really need a dedicated market maker to keep them trading smoothly. As a result we only set games live if we know we'll have market maker pricing them up after every play. The alternative (setting all games live) would also make it harder to scroll through the day's card, as the rotation-number order isn't always chronological, and you'd have a lot of empty boxes in between the main markets.

While it would indeed create more "clutter" on the site and lots of empty offers (take a look at Tradesports any day of the week), it would benefit Matchbook.com to reconsider the above position. While Tradesports and Betfair obviously don't make much commission on the lesser games that have very low volume, there is indeed a market for every game. As bettors become more and more comfortable with live betting then more volume will come on even the smaller games that are offered. Matchbook.com should follow Tradesports' lead and attempt to offer markets on all the games that they offer pregame markets for and see how it goes. Even a little commission is better than none, and live bettors would like to see more markets available.

As for the volume on markets, Matchbook.com had this to say:

As we enter our third year, Matchbook liquidity is far beyond our expectations in the hours going into game time, but we still need to improve in a couple of areas. Minor NCAAB and NCAAF markets were disappointing last season, and we really need to get better liquidity overnight and in the mornings. We think there will be big improvements here over the coming months, though, in direct proportion to the number of API programs that new users have been developing. API programs allow large-scale users to skip the whole web interface when placing bets, and we've been getting requests almost daily for API documentation to facilitate the development of market making programs and arbitrage against other exchanges.

Without a doubt, Pinnacle Sports' exit from the U.S. market has facilitated a dramatic volume growth for Matchbook.com. Many posters on the forums refer to Matchbook.com as "the new Pinnacle". It's clear that Matchbook.com has a firm plan for future volume and liquidity. They are adding new market makers on a daily basis, and it's obvious they are becoming the flagship of exchanges for American bettors.

Although Matchbook.com's commission structure is low, there are plans being developed to drive commissions even lower. Concerning lowering the commission rate, Matchbook.com had this to say:

However, we do have a new structure we'd like to unveil over the summer. Basically, we will reward people for posting up offers rather than hitting offers that are already there. Even if a market is -108 by +106, we want to get people asking for +107. So far in baseball and the NFL, we've been achieving one-cent markets pretty routinely, but the goal is to use a new commission structure to bring in our NBA and college sports to one cent as well. We haven't finalized it yet, but the basic idea is to charge a discounted rate when you make an offer, and a standard rate when you accept one.

The above would accomplish two things: 1) lower commission rates and 2) increase volume and liquidity. If bettors know they can save 1% in commission, they will post offers instead of sitting back and waiting for the offers to come to them, thereby increasing volume.

There are very few downsides to exchange betting, all bettors should at least give it a try. Matchbook.com is a financially solid operation with lots of volume, and most bettors will find everything they need---with much lower juice. Matchbook.com offers quite a few deposit options; bettors should give Matchbook.com a try and see if it's a good fit for their betting styles. Now is a great time to give Matchbook.com a look, commission free! Just deposit at least $1000 and a bettor can play for two weeks commission free. Details can be found on the front page of www.matchbook.com (click on the "Big Boy Special" link).

04-19-07
David Stalcup
Editor-in-Chief, MajorWager.com
editor@majorwager.com



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