In operation since 2009, Maltese licenced firm Smarkets exchange have taken on the unenviable task of trying to penetrate the betting exchange market. Dominated by Betfair and with Betdaq a clear second best, the whole business model is dependent upon building a customer base so that liquidity is good and customers can get decent stakes on their selections. In this article, we take a look at Smarkets potential for long term success, assessing their current liquidity levels, sports on offer, functionality of their website and much more.
The website has a very slick, modern and minimalist feel, with users easily able to navigate to their desired markets. A black, grey, white and green colour scheme is utilised and aesthetically, it is a nice website to look at.
The list of different markets can be found on the left hand side of the page, with a search bar in the centre of the page. The selected sport/market appears in the centre of the page and the customers bets appear on the right hand side of the page.
There is a mobile website which is automatically loaded when visiting Smarkets exchange from a mobile device. The functionality is the same as the main site and the pages load quickly.
There are odds for a total of 10 different sports in addition to politics and current affairs betting. All of the major events such as horse racing, football, tennis, basketball, cricket, handball, ice hockey, rugby union, rugby league, and volleyball are covered.
For games in the top leagues, there are several markets on top of the 1X2 offerings. These include half time/full time, draw no bet, correct score, over /under and both teams to score. There is no handicap or Asian handicap betting which has to be considered a negative, as this form of betting is getting increasingly popular.
For basketball matches, there is just the moneyline (winner of the game) and for ice hockey fixtures, customers can bet on the regular time result and the match winner. In terms of additional bet types, Smarkets pales in comparison to the other betting exchanges.
The liquidity is very important when it comes to betting exchanges. Liquidity refers to the amount of money available to back and lay for each selection. The more liquidity, the more stable the odds are and the more money punters can get on. With Smarkets exchange, the liquidity for the major football matches is surprisingly very solid. Just before kick-off for the Monaco v Arsenal UEFA Champions League match, there was £24,000 available on Arsenal to back to 29/252.16+1161.161.16-0.86 (the same price as available on Betfair). There was however only around £1300 available on the draw at the same price.
Even for the mid-week horse racing action, the liquidity for the pre-race market is fair, with average punters able to get their bets on at competitive odds. However, once the markets go in-play, market depth is non-existent. Unlike Betfair and Betdaq, it would be very difficult to assume a pre-race position and then trade out in-running, as there is just not the money in the live market.
For the smaller sports such as handball and volleyball, there isn’t quite the customer base to make the markets solid enough in terms of turnover to create robust markets. For instance, two hours before the German Bundesliga volleyball match between Netzhoppers KW vs SCC Berlin, not one penny had been matched on the game.
The competitiveness of odds is always determined by the total book percentage of a market. The total book percentage refers to the sum of all of the odds in an event, when expressed as percentages. A 100% book would indicate no inbuilt profit margin. With conventional bookmakers, the odds are set by the firms, but with betting exchanges, the odds are set by a free market supply and demand model. Generally, the more money in an event, the more likely the odds will be accurate and the margins will be lower.
For top events, Smarkets exchange has some very competitive percentages. For instance, their UEFA Champions League match between Barcelona v Manchester City saw a total book percentage of 100.6% for the back side, and 99.5% for the lay side – very impressive indeed. At the time of comparison, those figures were identical to Betfair. In terms of turnover, Smarkets had £131,860 matched, whilst Betfair had £593,221.
Again, on the smaller sports with less turnover, the total book percentages are much bigger. Even for NBA basketball matches, on the day of the game, the book percentages worked to 109% for the back side and 90.65% for the lay side.
Betting exchanges make their money by taking commission from punters, usually on winning bets. Smarkets exchange only take 2%, giving punters a great deal. Those using Betfair will start off paying 5%, which can reduce to a minimum of 2% (although the customer would have to turn over a large sum of money to achieve the lower figure).
Smarkets provide a modest sign up bonus of 50% up to £10 (or currency equivalent), which is given as a risk free bet. When a customer loses a bet, they are refunded up to a maximum of £10 on that event. In order to withdraw rebated funds, customers must bet at least the qualifying deposit on any markets within the promotion period (3 months), otherwise the rebated funds will be forfeited.
The customer services are both transparent and accessible, with a variety of methods to contact staff:
Post: 26 Finsbury Square, London, EC2A 1DS, United Kingdom
Telephone: +44 207 617 7413
There are only a handful of ways for customers to deposit into their Smarkets exchange account, albeit all of the most popular payment solutions are covered.
A relatively new betting firm such as Smarkets are always going to be in a catch 22 situation – they ideally want to offer their customers as many markets as possible, but they also want to offer events which demonstrate strong liquidity. Unfortunately, for a new player in the market, the more matches, sports and betting options, the less density of money on each betting event. Even with just ten sports, there is a real concentration of money for the top football matches, and not much money around elsewhere.
In their favour, Smarkets do offer a very attractive flat rate of 2% commission on winnings, which is pretty much unrivalled. Their website is also a slick and they are able to offer their services to customers from the UK and abroad (having obtained a UK licence to comply with new regulations). Over the coming years, Smarkets is likely to grow organically, and with that, should come improved liquidity on the smaller markets. For now, football bettors who like concentrating on the top leagues, will have access to very competitive price, fair liquidity, and market leading commission.