Platform competition: Betfair and the UK market for sports betting

Abstract

We examine two episodes of strategic interaction in the UK betting industry: (a) Betfair (an entrant multisided platform, or MSP) versus Flutter (also an MSP), and (b) Betfair versus traditional bookmakers. We find that although Betfair was an underfunded second mover in the betting exchange space, it was able to attract punters at a much faster rate than the better-funded first mover, Flutter. Moreover, while Betfair and traditional bookmakers competed aggressively for market share, they also developed a highly complementary relationship that favored all parties. We discuss implications for research in the economics and management of MSPs. Specifically, we argue that the literature would benefit from work that endogenizes platform design and that considers the possible competitive and cooperative interactions between the business models of traditional incumbents and those of potential innovative MSP entrants.

Governance and Design of Digital Platforms: A Review and Future Research Directions on a Meta-Organization

“…By creating specific access control features, digital platform owners seek to ensure that complementors will act in accordance with the platform's interests after entry into the platform. First, recent studies report that platform owners can design screening mechanisms that involve application and selection processes to determine who will be allowed on the platform (Casadesus-Masanell & Campbell, 2019;Kwon, Oh, & Kim, 2017;Song, Xue, Rai, & Zhang, 2018;Tiwana, 2015b), and complementors who are not up to the standard will be denied entry. Doing so helps control the quality of participants and enhance the performance of the platform (Kapoor & Agarwal, 2017).…”

“…Research shows that platform owners can design screening mechanisms that involve application and selection processes to determine who will be allowed on the platform (Casadesus-Masanell & Campbell, 2019;Kwon, Oh, & Kim, 2017;Song, Xue, Rai, & Zhang, 2018;Tiwana, 2015b), and complementors who are not up to the standard will be denied entry. For instance, Uber hires a third-party company to perform background checks on prospective drivers (Garud, Kumaraswamy, Roberts, & Xu, 2020;Karanovic ́, Berends, & Engel, 2021), and individuals who have criminal or particular driving violation histories may be disqualified from driving for Uber.…”

‘Information Doesn’t Want to Be Free’: Informational Shocks With Anonymous Online Platforms

“…He also discusses the link between platforms and innovation. The most recent contributions extensively study competition across platforms 7 and multihoming (Armstrong, 2006;Anderson et al, 2019;Bryan and Gans, 2019;Casadesus-Masanell and Campbell, 2019;Halaburda and Yehezkel, 2019;Karle et al, 2020), as well as showrooming and the most-favoured-nation clause (Edelman and Wright, 2015;Foros et al, 2017;Johnson, 2017;Calzada et al, 2019;Johansen and Vergé, 2020;Ronayne and Taylor, 2020;Wang and Wright, 2020). While most of the platform literature is static, Cabral (2019); Kanoria and Saban (2020) are notable exceptions.…”

Gambling Behavior of Private Investors in Financial Markets : A Comprehensive Empirical Analysis

“…Regarding online sports betting, Elaad et al (2020) point out that, through increased competition, commission rates and profit margins have been reduced among online bookmakers. Casadesus-Masanell and Campbell (2019) point to an example where the competition among online betting platforms as well as the competition between a newly established online betting platform with traditional bookmakers has led to overall positive outcomes for all competitors. 146 Mikesell and Zorn (1986) argue that, similar to the voluntary purchase of heavily taxed goods like alcohol and cigarettes, the lottery presents an excise tax on the participation in a state-provided entertainment service.…”