Sports betting and sports have always been strongly connected. Traditionally, these betting markets have been cleared by bookmakers, who accept bets on certain events. These bookmakers carry the risk of paying the amount wagered if the event occurs. Recently, a new type of betting market has appeared, so-called betting exchanges. In these markets, punters bet with each other directly, and the organization that creates the market does not carry any risk that depends on the occurrence of the event.
In this paper we provide an analysis of this new type of markets, using a SWOT-analysis. Issues like competitiveness and survival of betting exchanges are addressed. We argue that liquidity is the prime determinant of long-term success of betting exchanges.
Institut Suisse de droit comparé. (2006). Study of gambling services in the internal market of the European Union. European Commission.
11.
JonesP., HillierD., TurnerD., & ComfortD. (2004). Betting on the exchanges: Changing customer relationships in the sports betting market in the UK. Management Research News, 27(1/2), 95–103.
12.
KlarreichE. (2003, October 18). Economists explore betting markets as prediction tools. Science News, 164(16), 251–253.
13.
LaffeyD. (2005). Entrepreneurship and innovation in the UK: Betting industry: The rise of person-to-person betting. European Management Journal, 23(3), 351–359.
14.
MainelliM., & DibbS. (2004, December). Betting on the future: Online gambling goes mainstream financial. Centre for the Study of Financial Innovation, London.
15.
MusumeciJ., & PetersonM. (2004). The evolution of prices in the 21st Century American football betting market. 2004 Financial Management Association International Annual Meeting. Retrieved October 4, 2006, from http://207.36.165.114/NewOrleans/Papers/5701876.pdf
16.
New Media Age. (2003, July 17). New Betfair CEO keen to expand business areas. NMA Magazine.
17.
OECD. (2002). The economist intelligence unit and Merrill Lynch, Sportingbet Annual Report. Retrieved August 26, 2007, from http://www.sportingbetplc.com/90
18.
OzgitA. (2005). The bookie puzzle: Auction versus dealer markets in online sports betting. Department of Economics, UCLA.
19.
PhillipsT. (2003, September 29). A gambler's broker. The International Herald Tribune Online.
20.
PittL., WatsonR., & ShapiroD. (2005). www.betfair.com: World wide wagering. Communication of the Association for Information Systems, 15, 149–161.
21.
SauerR. D. (1998). The economics of wagering markets. Journal of Economic Literature, 26, 2021–2064.
22.
ShakerP. (2007). America's bad bet: How the unlawful Internet Gambling Enforcement Act of 2006 will hurt the house. Fordham Journal of Corporate & Financial Law, 12, 1183–1203.
23.
SmithM. A, PatonD., & Vaughan WilliamsL. (2006). Market efficiency in person-to-person betting. Economica, 73(292), 673–689.
