According to What Investment the online betting powerhouse, Betfair, through its spread betting exchange Tradefair, is moving into Contracts for Difference in 2010. This is a sign of convergence that may see other gambling companies moving into this area. Funnily enough we think it will take a bit of time before this has an impact on prices.
Here’s why. The average Tradefair punter may not be the average CFD investor. They are usually people who have been upsold from Betfair’s sport betting site. While they are certainly more savvy and intelligent on average than the typical sports better, after all they’ve migrated on to the internet to get the most keenly priced deals and they are comfortable with a betting exchange rather than a high street bookmaker, they do not have the profile of a typical CFD trader, which is either a sophisticated retail investor who wants to get more speculative gains or a financial worker who prefers to gamble with his or her talents rather than on sports results.
The CFD investors that come through Tradefair will be upsold through the betting exchanges. They will be sports betters who are looking for other ways to gamble. The bets are likely to be far more weighed on big domestic share indices and to have far less demand for foreign investments, individual shares or other types of investments such as commodities and currencies. However they are just, if not more, likely to be looking for ways to leverage returns and go short. It will be sports betting on the stock market.
There is unlikely to be much price pressure at least outside betting on the FTSE, and even less likely to be an expansion of services that will be offered. This is why it is important to use our CFD price comparison table, as this is the real customer’s revenge.