As reported by the Racing Post, William Hill swtiched its hedging activities from the racecourse to the betting exchanges, primarily Dermot Desmond\’s Betdaq.
David Harding, Chief Exectuive of William Hill and one of the major critic of the betting exchange\’s concept in the recent past, said traditional hedging operations which look to minimize liabilities by shortening prices through placing significant amounts of money in the racecourse ring were now virtually worthless.
“Racecourse bookmakers have been allowed to hedge directly into betting exchanges since September 2003, and many traditional bookmakers have been replaced by or have developed into operators who effectively act as mere commission agents for the exchanges.”
“They re-invest hedging money directly into the exchanges, leaving the on-course market unaffected. As a consequence the racecourse market has become increasingly unrepresentative of what is happening off course.”
“Rather than trouble on-course bookmakers with our hedging money, we will save them the bother by using the exchanges directly.”
Betfred, Britain\’s largest independent betting shop operator, is to follow William Hill by using betting exchanges rather than the racecourse market to carry out its hedging activities.
“We will definitely follow suit. The margins on course are getting thinner, and we\’re struggling to make an impact with our hedging.”
“We\’re growing at the rate of about 10 shops every three weeks, and as we get bigger, hedging becomes a major part of the business, and we have to go where the market is.”
Coral Managing Director Wilf Walsh revealed that he was considering the option and was likely to follow Hills\’ example with a trial run.
Ladbrokes Trading Director Mike O\’Kane said he would continue to send money back to the racecourse “for the time being”, but he was also looking at developments very closely.
All in all, the move caught the betting industry by surprise in a clear step towards the introduction of industry starting prices.
“I think industry starting prices have become almost inevitable, and it may not be a matter of years either,” said racecourse bookmaker Adrian Pariser.
“What surprises me is that they don’t use the exchanges and the ring for hedging. If they want to shorten something up they ought to hit both at the same time. Not doing so is negative thinking. I’m also surprised they are using Betdaq, as the money is on Betfair.”
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