The betting ring on a racecourse was once a place buzzing with excitement. It was full of characters on both sides of the divide, with bookmakers shouting the odds to attract custom, punters scouring the boards for the best price on their fancy. The Silver Ring was often the place to go in search of a rick - someone would get his opening show from the Sporting Life, or better still the Sun.
Up went the show, in flew the sharks, over went the bookmaker's joint. Well, not quite as dramatically as that, but you get the idea. It was a battle of wits. The bookmaker would try and strike a balance between stealing a few quid while his colleagues were grabbing a cup of tea or a plate of prawns, and having a decent percentage built into his full show of prices.
Those early shows were invariably 150% and more, because many punters had no concept of value. They wanted to back the horse they had picked out and the price was often irrelevant. Sure, they knew that 8/1 was better than 7/1 but that was about it. Each way terms were standardised in those days so bookmakers would all be offering the same place terms.
You could wander through the ring and prices would sometimes vary dramatically on bookmakers' joints. It was all about opinions. Good bookmakers were rewarded for being right, poor bookmakers went home with an empty hod.
Money was passed around the ring as bookmakers sought to end up with a balanced book. If one book had taken a chunky bet from a punter or one of the off course bookmakers' reps, he would often hedge some of it with another bookmaker within the betting ring. It meant that turnover was healthy, and the money stayed in the ring.
But then things changed.......................
Betfair came along, and things would never be the same again. Initially, on course bookmakers were not allowed to hedge money into the Betfair markets although many used the prices on Betfair to help determine what prices they should offer themselves. If it was 3.8 to back on Betfair, they would go 5/2 on their board.
The logic of using Betfair prices as a guide was a sound one. The markets had been open from the previous evening, and prices had fluctuated as a result of supply and demand. Although liquidity wasn't great, being able to see unmatched orders on both the back and the lay side was often a good indication of which way the price was likely to move.
This led to far fewer pricing errors being made on course, and also meant that there was far less variation in prices on offer with bookmakers in the ring. Opening shows were much easier to form, because you could simply go slightly under the current Betfair price and not make a glaring mistake. As more and more bookmakers cottoned on, the price variations on course became fewer and fewer. Before long, prices became almost uniform. If a price moved on Betfair, it moved on the majority of boards. And in many cases a price was cut without a bet being struck.
On course punters now had to rush to strike a bet if more than one bookmaker cut a price, because they knew that the rest of the ring, almost without exception, would follow suit. It was the beginning of the end.
The next defining moment was when the decision was taken to allow on course bookmakers to use betting exchanges while trading on course. The effect of this was, at a stroke, to turn a large percentage of bookmakers into Betfair Agents. It was no longer about making a book based on your own opinion, you didn't need to have an opinion. For some it was simply about being able to take bets at under the Betfair price and lay it off on the machine. If you chose to, you could actually trade every single bet you took. And some bookmakers did, and still do.
Money which was bet into the ring by Ladbrokes, Hills and Corals which, up until then, had remained in the ring, was suddenly being hedged into the exchange markets. And so was a lot of other money from Joe Public. Turnover was damaged, margins were damaged, the on course market was damaged.
Things would never be the same again..................................
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