With numerous aspects of our lives gradually moving online, the internet is often given a bad name - it makes us all introverts that don’t want to communicate with others unless we’re hidden behind a monitor, or nasty trolls that spend our time hassling celebrities on social media platforms.
Yet, despite all the negativity that comes with it, the rapid growth of the online world has done humanity a whole lot of good, too. For example, it provides an easy way to communicate, both verbally and visually, with family and friends that would otherwise be unreachable.
Likewise, it also acts as the world’s largest library, providing books, music, videos, news and data at the click of a few buttons. While fires, wars and natural disasters have wiped out historical records in the past, it is extremely unlikely that the internet’s vast knowledge will ever suffer a similar fate.
However, it’s biggest perk is undoubtedly the way in which it simplifies otherwise tedious, frustrating and time consuming tasks. I wonder if this is cheaper elsewhere? Compare prices online. Should you take a jacket when you pop down to the pub tonight? Check the weather app on your smartphone. That restaurant sounds nice, but why is it so empty on a Friday evening? Check Google for reviews.
The internet makes everything that little bit easier, and as sports traders we understand that more than anyone. Long gone are the days when punters had to make their way to a betting shop to place a wager on an event - now bets can be placed with the click of a button, via the various different bookmakers that have since ditched brick and mortar stores in favour of online operation.
The betting industry is now one of the biggest areas of the online world, generating more than £12 billion each year in the UK alone. However, as well as simplifying the betting process, the internet has also provided the platform for the development of innovative ways to bet.
Betfair, for example, now ranks alongside the likes of William Hill, Ladbrokes and Coral (often referred to as the ‘big three’) in terms of popularity. However, while they all contribute to the betting industry, Betfair isn’t quite the same as its bookmaker competitors.
In fact, Betfair isn’t a bookmaker at all. It’s a betting exchange. What this means is that rather than allowing users to wager against them, they pair users up to bet against each other, using a ‘back and lay’ system. This means that the bookmaker’s ‘cut’ is removed from the equation and punters receive better prices and, as a result, better returns on their bets.
The betting exchange market has been dominated by Betfair since they opened their doors back in June 2000. In fact, the hugely successful company went as far as to buy out rival services, such as Flutter, in order to corner the market.
For a long while there were few other websites to turn to. However, the rapid growth of both the online gambling industry, which is growing at a faster rate than Mark Zuckerberg’s Facebook empire, and betting exchanges in general, have opened up new opportunities for companies looking to capture some of the market for themselves.
One such company is Smarkets.com, an ‘advanced trading platform’ which is slowly but surely growing in stature in the betting exchange sphere.
What is Smarkets?
As previously mentioned, Smarkets is a betting exchange much like Betfair, which offers an alternative method of wagering to the system used by traditional bookmakers.
Whereas betting through a bookmaker, such as Bet365, sees you betting directly against that company, betting exchanges operate by connecting you with fellow punters who believe that the outcome of an event will be different to your prediction.
What this means is that bettors aren’t limited to ‘backing’, or betting that an outcome will occur, as exchange betting also requires somebody to bet against, or ‘lay’, an outcome. For example, if you bet on Arsenal to beat Tottenham, the exchange system will pair you up with somebody that is betting on Arsenal not to beat Tottenham,which would cover both a draw and a Tottenham win.
By removing the bookmaker from the equation, punters are guaranteed better odds and better returns as a result of winning bets. This is because traditional bookmakers set their odds in order to ensure themselves a return the vast majority of the time, by shortening the odds on each outcome to guarantee that they take some of the winnings no matter what the wager.
Betting exchanges, on the other hand, do not set their own odds. Instead, the odds are calculated by the punters themselves, changing depending on demand and wagers placed. Rather than banking on you losing your money, betting exchanges rely on you winning your bets to make their money, as they take a cut of your winnings.
On Smarkets, this commission is a flat rate of 2% on your net winnings, which is significantly lower than the 5% commission charged by Betfair. It is this that prompted Smarkets founder Jason Trost to launch a service capable of rivaling the betting exchange heavyweights.
Aside from the financial benefits, Smarkets also offers a wider range of markets to bet on than those offered by Betfair. The service has open markets for a wide range of sporting events, from football to horse racing to handball, as well as a selection of other, less common markets.
The service is particularly making a name for itself for its political markets, which allow used to bet on everything from next world leaders to which political parties will win control of certain areas in elections. Likewise, there are also a range of markets which focus on current affairs and entertainment, such as the Oscars and X Factor winners.
Overall, Smarkets offers a streamlined, minimalist experience that offers a welcomed alternative to the cluttered and often complex Betfair website. However, despite its simplicity, there is still lots to play with and plenty of great value odds to punt on.
Smarkets company history
Smarkets is still a relatively new company, founded in 2008 by entrepreneur Jason Trost and his good friend and business partner Hunter Morris, who decided to ditch their careers in the United States to move to London and build a service that could rival exchange giants Betfair.
Trost was the brain behind Smarkets and anybody that knew him would tell you that he was always likely to come up with a winning idea. As a youngster, Trost aimed high, frequently expressing his desire to become a professional baseball player or the president of the United States - his political aspirations are still there, with the Smarkets co-founder often stating his desire to move into politics later on in his life, but for now he sits at the helm of one of the most promising companies in the world.
Likewise, he also displayed a particular knack for business as a youngster, going door-to-door selling wrapping paper during the holiday periods and went on to design advanced computer software, which provided patients with the ability to self-diagnose their ailments and illnesses using lab test results, during his time at university.
Trost finished his university education in 2003, graduating from Northwestern University, Chicago, with a degree in Computer Science, and soon after began trading equities for a local company.
Within a year of leaving university, Trost began to develop an interest in the betting industry. While most of us get into trading through an interest in sport, whether that be football or horse racing, Trost’s entry into the betting exchange sphere came via the 2004 United States presidential election, in which Republican candidate George W. Bush was reelected over Democratic nominee John Kerry by 50.7% of the vote, compared to Kerry’s 48.3% share.
Trost was particularly interested in the fact that betting exchanges offered a different opinion to what is being reported by the media. Say, for example, if a ‘dirty secret’ comes to light about a particular candidate, this would undoubtedly be reported as a game changer by the press. However, changes in betting markets would provide a much more realistic idea of how these revelations would affect the eventual outcome of the vote.
While betting exchanges had a new fan in Trost,, the American quickly realised that there was still plenty of room for improvement. First and foremost, the emerging entrepreneur realised that money, cost effectiveness in particular, is a huge driving factor in persuading customers to choose one service over another. With a 5% commission charge, Trost believed that by cutting his cut of the winnings, he could take some of Betfair’s traffic.
“Our margins are smaller than Betfair’s, but people get more back,” Trost explained following the launch of Smarkets. “It will take longer for us to make money, but we are counting on building the volume of users.”
So far, Smarkets seem to be well on their way to achieving their goal. However, it isn’t just the financial benefits that are driving users to their service. As a developer, Trost also recognised that Betfair’s interface was complicated, clunky and at times slow - a view that was shared by many of its customers.
While working as an analyst for asset management company UBS, Trost set about developing a streamlined system that is both fast and efficient. By 2008, backed by a group of European investors, including Deutsche Telekom (the parent company previously behind telecommunications provider T-Mobile) and former Last.fm chairman Stefan Glaenzer, Trost and Morris quit their jobs and moved to London to begin working on the start-up full-time.
By 2009, the final product, which now powers the Smarkets platform, was complete and ready for launch. Capable of handling thousands of transactions per second and processing them within milliseconds, all Smarkets needed to be a success was customers.
Following a beta test, which confirmed that the Smarkets platform was in working order, the service officially opened to the public in February 2010, with markets for UK football, Champions League and the upcoming 2010 FIFA World Cup available.
By the end of the year, Smarkets had already taken more than £1 million worth of bets and traffic was beginning to pick up. Identifying the demand for new markets, the company set about expanding their offerings, starting with horse racing a year after their launch.
By November 2011, Smarkets had seen £50 million trade hands as a result of wagers on their marketplace and surpassed the £100 million mark just five months later. Smarkets’ launch had been a huge success and it was beginning to emerge as a genuine contender for Betfair’s throne.
Trost, now viewed as an expert in the online betting field, has been justly rewarded for his hard work, having being named Innovation Entrepreneur of the Year at the 2016 Great British Entrepreneur Awards. Likewise, Smarkets was also voted as one of the UK’s most innovative, up-and-coming businesses at the Startups 100 awards in 2012.
The popular platform has since emerged as the go-to website for political betting. It still lags behind Betfair in terms of numbers and figures in the sports betting markets, but Smarkets has successfully achieved its aim of launching a service that can rival the Betfair empire, and it continues to get bigger and bigger each year.