I’ve been aware of Smarkets for a long time but they’d never really appealed despite the low commission levels of 2% on winnings per market. They’ve been around since 2009 and it wasn’t so much the naff sound sounding name that put me off but the fact that liquidity was poor and that their site looked more like a second rate sportsboook than a betting exchange.
A few months ago however, I stumbled upon Smarkets’ website again and was somewhat excited to see a much sleeker, faster and professional looking exchange and I decided to take them for a spin. In the last few years the liquidity on Betfair’s exchange hasn’t been anywhere near what it once was and alternatives should at least be considered. Both betdaq and WBX (World Betting exchange) looked like poor imitations of betfair’s exchange with less liquidity and inferior functionality, with the latter eventually throwing in the towel. So it was pleasing to see a fresher and more individual approach that now seemed committed to being a serious sports betting exchange solution.
It was also great to see that navigating between markets and placing bets was just as quick as navigating around the rest of the site and although I found it a little difficult to read their interesting choice of font, this was only a minor gripe. That however, was probably as good as it got unfortunately.
Lacking in functionality like cashout wasn’t so bad for an experienced trader but taking longer than an hour to settle my trades on a tennis match was more frustrating. In addition, I wasn’t able to log in on my android phone and my question sent via live chat was never actually answered. Most disappointing.
Since then, the mobile version of the site has been improved and I have been able to log in at least. New ‘trade out’ (cash out) and ‘keep bet’ functionality has also been introduced but to use these on the desktop version of the site, you have to navigate to a different url which is rather strange and confusing.
Smarkets have reported some impressive figures in terms of trading on their exchange and late last year were expecting to post revenues in excess of £20 million for FY 2016. Delve a little further however and it becomes evident that they’ve set up a subsidary company called Hanson Applied Sciences Limited to provide liquidity and this will obviously account for a lot of this activity. Quite a few of the original Smarkets staff have been sent across to this operation.
Liquidity is a tricky problem to solve for betting exchanges. There are few people who are able to price up every market, in every sport possible and nobody wants to keep getting picked off by someone with superior information who specialises in one particular market. Even the bookies who have a comprehensive offering of markets will limit stakes. It’s easier for liquidity providers to copy bookies or other exchanges than it is to compile your own odds. Information is coming in that changes the markets all the time and with inplay action adding further complexity, it’s no surprise that Smarkets offer much fewer markets than betfair. Smarkets covers the most popular football markets – match result, correct score, half-time/full-time, over/under 2.5 goals but few others.
Other than effectively trading on their own exchange the majority of the other activity will be from that of matched bettors. The 2% commission makes Smarkets is an attractive choice for people who are matched betting and sites like Odds Monkey and Profit Accumulator have promoted them quite heavily.
Whether or not serious sports traders will find Smarkets a decent enough alternative to Betfair still remains to be seen. Odds in most markets seemed to be copied from betfair as per the usual tactic, but with less money on offer. This is not so much of a problem for sports like horse racing that aren’t well suited to manual trading inplay but the low liquidity levels is more of an issue on sports like tennis where manual trading is popular.
More serious of an issue though is their lqiuidity providing company and just how accepting Smarkets are to very successful traders who profit against their money. It was only at the end of last year Smarkets were forced to payout to a punter who managed to get favourable lay odds of 1.01 on a horse before the race. Claims that a users account had been hacked looked suspiciously like an excuse created to protect their in-house liquidity operation and it was more likely a Smarkets bot went wrong. This backfired in a big way as not only did the excuse not wash with IBAS but it then further raised concerns about Smarkets’ security.
Another concern is the stability of the exchange. Given how uncomplicated it is in terms of functionality compared with betfair it seems to have a lot of technical issues and downtime, particularly on Saturdays. This has even caused concern among the matched bettors and resulted in people losing money from what is often considered a risk-free activity. The terms and conditions regarding voiding bets appear to have been put in place to protect ‘Hanson Applied Sciences’.
Smarkets operate a TEAL business structure which is based on self management principles. This is very appealing for employees but whether or not it’s a sustainable approach that can provide the level of support that is needed for such a sensitive platform, remains to be seen. Betfair not only have more IT staff and developers than Smarkets but better servers too.
Only a few hours before writing this review there were familiar apologies for a brief interruption and even those that do currenlty prefer Smarkets to betfair are concerned:
@Smarkets Hi there, all markets are dead now. It is the second time today. What is up with your tech team? It’s impossible to trade smth. — Jochen Falkenberger (@DealDeserver) February 4, 2017
@Smarkets your Android app is pathetic and has just cost me £20. Shocking design/usability. @BetfairExchange it is from now on #MarketLeader — Scott Richardson (@jswrichardson) January 3, 2017
Don’t want to move back to Betfair but it’s alarming the amount of people complaining about Smarkets saying bets are matched when they aren’t
— Martin Leach (@MartL1) January 24, 2017
Smarkets’ CEO, Jason Trost is American and based in Los Angeles. It’s uncertain just how much of a role UK sports or even sports in general will play in the future of Smarkets. Trost has a huge interest in stocks and shares and given the problems with liquidity and betting legislation in many countries (which restricts growth), it wouldn’t be surprising to see Smarkets become more of a stock market trading platform. Offices in LA have recently been aqcuired and the Brexit result seems to have all but confirmed the gradual moving of operations from the UK to the US.
In summary, Smarkets’ current offering is intriguing but they still have some way to go to compete with Betfair. The Smarkets exchange could have its uses, particularly for matched betting but the instability and bet voiding is a worry. Tread with caution.