OK, we've heard from traders, bloggers, software writers and an ex-Betfair employee. Now it's time to hear from one of the betting exchanges themselves - Betdaq. We all know that they are the second largest exchange but this year has seen Betdaq become a much more serious option for sports traders. With the introduction of Betfair's 40-60% premium charge, many of the 'big players' have moved over to the purple place and liquidity has risen significantly over the past 6 months. Anyone involved in horse racing or tennis trading in particular, will have been impressed with the changes and Betdaq is definitely a viable alternative in those sports. I wanted to know a bit more about Betdaq and perhaps get some answers to a few questions that I know are often debated amongst traders. The answers come from Shane McLaughlin who is the BETDAQ Marketing Director.
What is Betdaq's company ethos?
BETDAQ is the customer facing arm of Global Betting Exchange. Our wider aim is to become the central platform for a worldwide network of betting companies with BETDAQ being the first of those. On a day to day basis our aim is to attract as many customers to BETDAQ as possible and keep growing our liquidity.
Betdaq has been running for 10 years now. What have been the major changes you've seen within the exchange industry since it began?
Everything has changed from the early days, several times over, and it’s very hard to sum up 10 years of change and evolution in a few sentences. A major change for me has been the increased sophistication of customers in terms of the betting strategies and research they rely on to select their bets. Customers do their research and seek out value and that serves BETDAQ very well with our lower commission rates.
It is generally acknowledged amongst the online trading and betting community that most people would have Betdaq as their exchange of choice if liquidity was stronger. What are you currently doing to rectify this?
Lots of people say they will come to BETDAQ when liquidity is stronger but they don’t want to be the ones putting up the offers now. We are tackling the liquidity gap in two ways. API customers, who tend to play in more markets and in greater volumes, are rewarded for making offers and generating liquidity on the exchange and penalised for doing the opposite. Retail players are offered a discounted commission rate to Betfair meaning they are arriving in greater quantities. By attacking the liquidity gap from both sides we are closing it steadily and liquidity in our core markets has grown massively in the last year especially in markets such as horse racing and tennis.
What is the company's attitude towards those who might win consistently?
We prefer to look at whether a member’s activity is positive or negative for the exchange ecosystem as a whole. Positive behaviour such as liquidity generation can be rewarded with lower commission rates and negative behaviour discouraged through higher charges. That’s how we approach our API charging and it has nothing to do with winning or losing.
What are the company's general thoughts about the Betfair Premium Charge and is it something that you would say will never happen on Betdaq?
We love the Betfair Premium Charge as it has given our business a big boost! Seriously though, we believe charging should be about contribution to the exchange as a whole and not about winning or losing.
How has the introduction of the 40-60% Premium Charge affected Betdaq? What has changed since its introduction?
The increased Premium Charge has been very positive for us. Liquidity is up, player numbers are up, and we’ve been inundated with enquiries from people looking to switch their business over. We’re doing everything we can to keep those who bring good business to BETDAQ happy through great customer service, lower commission rates, commission back specials and the recently launched BETDAQ Rewards programme. We’ve also undertaken a major upgrade to our website capacity to accommodate the new business and give us plenty of headroom for growth.
Realistically, how far do you think you are away from being a serious rival to Betfair?
It depends on what you mean by a serious rival. To our members who enjoy lower commission rates and better value, we already are a serious rival. Nearly all the major players and pros use BETDAQ for at least some of their business, and they’re not here out of charity. There are very few punters who will not benefit by being active on both exchanges today. As usual it’s the sharpest people who recognise where the value is first and the rest will follow as our business grows.
I've noticed that Betdaq's advertising campaigns never seem to mention the fact that your commission is far better than Betfair's and you have no extra charges on winners either. Why is this and why is Betdaq not more aggressive in the battle against your biggest rival?
In fairness we ran an advert about our lower commission and no premium charge almost every day in the Racing Post for 7 months. We’ve reached the point where we feel we’ve established ourselves as the lower commission alternative to Betfair with the core exchange user base and we don’t want to be talking about our main competitor in every advert. We have commission back offers, enhanced price multiples, our mobile app and lots of other good stuff to promote too.
Reading comments on websites and forums, there is a feeling amongst many traders that Betdaq haven't done enough to push Betfair down the years and take advantage of the bad customer relationship they've developed. How would you respond to that?
We don’t spend as much on marketing as people might want but that’s a conscious decision to keep commission rates as low as possible. You can’t have the lowest commission rates, the biggest marketing budget and all the added services. Betfair spend tens of millions on marketing and as a result have to charge customers up to 60% of their winnings. We don’t, so we can continue to charge everyone the lowest rate possible.
What are Betdaq's plans and goals for 2012?
We have a lot in the pipeline in 2012. We have a new website interface in development, the launch of our casino and games product, lots of B2B deals going on behind the scenes but most importantly we have a project to greatly expand the number of events and markets that we cover. We’ve never been in better shape and will continue to grow our customer base, market share and liquidity by offering great customer service, lower commission rates, better value, and not penalising winners.
Are there any plans in the pipeline to work with A Geek's Toy Pro to produce a Betdaq version?
Yes we’ve been working with the Geek over the last few months and there will be one available very soon. There are also upgraded versions of BetAngel and Gruss for BETDAQ.
Will you be introducing live video to the website at some stage?
We already have live streaming from At the Races and we constantly look at introducing new video. The issue always come back to cost. Quality content is expensive and if you want to keep commission rates low then you can’t have everything that every customer might want. It’s about finding the right balance.
The tennis markets have improved significantly over the past 5 months. Can you tell us how much roughly the average matched figures have increased by?
It’s about 40% up on last year.
What do you think the future holds for betting exchanges in general?
The next 5 years are going to be interesting as new markets open up. Betfair prefer the approach of entering new markets as Betfair whereas we prefer to look for local partners that have established businesses and locally recognised brands. In markets where there is an embedded monopoly there will be resistance to exchanges as they look to protect local interest. This is where we hope the partnership model will serve us well.
I personally have always preferred the Betdaq website to Betfair and would love to move my entire trading operation over one-day. What would you say to the many people like me who are ready to make that move but are not quite convinced 100% yet?
What are you waiting for? There are instances today where you are costing yourself money by not being on BETDAQ. Take the first step; use us when it makes sense to do so. When our proposition is compelling enough you will move your entire trading over because it makes financial sense. There’s no marketing campaign that can trump putting more money in customer’s pockets. We’re ready when you are.
Thanks very much to Shane for taking the time to answer my questions and also to Ruairi Fitzpatrick, BETDAQ'S Affiliate Manager, for facilitating the Q&A session.
As ever, I'm available on TWITTER and welcome any comments in response to this blog post.