How Betfair Beat the Bookies

From the article:
The beauty of the idea was that people could now also bet against something happening - and set their own odds. Betfair makes its money by taking a commission ranging from 2-5% from the winning customers after each event. Betfair's broad appeal was crucial to its success. Winning punters had become frustrated with traditional bookmakers, finding it ever harder to have their bets accepted. Losers - the large majority - found that Betfair, with lower margins against the punter than traditional bookmakers, made it possible for them to lose their money more slowly, or even turn a loss into a profit. Punters could turn bookmaker and set their own odds. And in-running betting was taken to a far more sophisticated level. To people discovering Betfair for the first time, it seemed that the exchange was all about the punters. The punters set the markets. The exchange's commission meant that Betfair did not care who won and who lost. It was the near-perfect betting platform.


Betfair is the fixed odds alternative to parimutuel pools with much lower margins than bookmakers. 2-5% commission versus a 14-20% takeout in parimutuel pools. We need Betfair in the U.S. We need competition in wagering markets. With the consolidation of signals (Tracknet), prices are rising (takeouts haven't explicitly been raised but rebates are down). Alternative wagering pools or products not controlled by the "industry" would put betting on horses on par with casino gambling with respect to the expected return on a dollar bet. Yes, a handful of tracks would go under but would anyone really miss Beulah Park?

Think about it. Does the NFL or NBA or NCAA control the sports betting markets? Do they get a cut of the profits?

Why should horse racing?