The exchange factor: Matchbook on closing the gap to Betfair

Despite Betfair Exchange dominating the peer-to-peer betting landscape for the ensuing two decades since its debut in 2000, Matchbook has been closing the gap on the Flutter Entertainment-owned brand, first in horseracing and greyhounds but now in golf, cricket and football. 

After 2018, the firm switched its initial focus from US sports to become more UK-facing, with Ronan McDonagh joining the operator shortly after, in March 2019. With a background in exchanges spanning 20 years, including an eight-year spell at rival Betdaq, McDonagh, who is now head of exchange at Matchbook, has seen many changes over the past two decades. 

He recalls how sportsbooks began to “fight back” about 15 years ago with best odds guaranteed, extra places and moneyback offers to attract, for example, smaller punters staking under £50. At that time, some of the exchanges pivoted from attempts to appeal to everyone to reverting to their origins of concentrating on catering to pros and sophisticated bettors. 

One of Matchbook’s strengths lies in its pure exchange-only proposition, which McDonagh feels gives it the edge over its rivals. However, the company has since dipped its toes into other areas such as bet builders and brokerage, plus the launch of its zero margin and zero commission product, Matchbook Zero, a year ago. 

Alongside a Trustpilot score of 4.3 out of five – impressive for the online gambling sector – McDonagh attributes this success to its personal and direct communication withcustomers. Here, Matchbook’s head of exchange delves into how the firm is competing with Betfair Exchange in terms of liquidity, the detrimental impact of affordability checks thresholds and building up a solid roster of market makers.

EGR: How is Matchbook standing out and enticing customers over from other exchanges? 

Ronan McDonagh (RM): The big thing with Matchbook is [unlike Betfair] there’s no sportsbook attached to it. Right now, we’re just exchange only. But we do have other products such as Matchbook Zero and we introduced bet builders in the past couple of months. So, we’re catering for that audience, too. But, because we don’t have a sportsbook, we’re very much focused on the exchange part and we haven’t deviated from building that up. 

We’re not compromised by having a sportsbook product where you prefer your customers to bet at higher margins. So, that’s really been a positive. We’ve started to pick up a lot of the on-course bookmakers. We’ve had more than 100 of them in the past 18 months and that’s made a massive liquidity difference to the horseracing markets. We also do hedging for large operators. 

Our app is built for the exchange; it’s not built for the sportsbook. We have plenty of cross-sell items but, again, just focusing on the exchange has really been the big game-changer for us.

EGR: Where does Matchbook rank in terms of the hierarchy of exchanges? 

RM: Obviously, Betfair are the dominant force here compared to everybody else in the market. For Betfair, specifically, volume is dropping off year on year, especially around Cheltenham. In comparison, we’ve grown 35% just for Cheltenham 2024, year on year and volume wise. 

The one thing that we can do that Betfair specifically can’t do is talk to our customers from a small base and that helps with compliance and feedback. Exchanges are quite complicated, and a lot of customers are doing a lot of volume. For some it’s their job or their income, so they want to be able to give direct feedback and be listened to. That’s what’s really helped us get ahead. 

EGR: With liquidity visibly drying up on Betfair, are customers coming over to Matchbook?

RM: The conversations I’m having now are very different. Two years ago, I was going out to people trying to sell it and the first few guys took a leap of faith coming over. But as time went on, they have said: ‘I’m getting a better deal. I’m getting the same prices and better liquidity in a lot of scenarios [with Matchbook],’ and that’s snowballed for us in a really good way.

Now people are contacting me and dropping into my DMs, which never happened before. A lot of them are customers who might have looked at us three, four or five years ago but we didn’t have what they wanted back then. 

EGR: In which betting markets are you competing with and overtaking Betfair?

RM: It’s hard to get specific figures, but we’ve made big inroads last year in horseracing and greyhounds. We’ve got to a place now where we’re really happy with them. During the past six months, we’ve really made big progress in golf, and we have markets that aren’t on Betfair. 

Football has been really good for three or four years. Again, a lot of people think all exchanges are the same, but we will have markets on golf and football that don’t even exist on Betfair. Sometimes people think everything is dominated by Betfair, but that’s actually no longer the case. 

Our process over the past couple of years has been to build it up sport by sport. Betfair are absolute monsters at cricket and we have a long way to go there. If you want to bet on cricket, our markets are sustainable for big volume, in-play trading. But it took us a while to get there. Tennis is probably the next on our list. 

EGR: Can you tell us more about your commission structure?

RM: We do it slightly different. Everybody pretty much comes in at 0%. But generally, we have a 2% net win flat rate for all customers. So, we don’t have the premium charge [on big winning customers] like Betfair where when you win X, your charges are Y.

We do it on a very bespoke basis. So, we’ll do regular reviews of customers and when required we may look at increased rates, informing customers of any changes. With most customers who are playing all the time and doing lots of volume, they can win and survive on 2% for a very long time. 

The ecosystem has to work for everybody, and we have to generate revenue. We have matched bettors in there on 0% driving liquidity, which is brilliant. But at the same time, if you’re winning and at a high rate, you have to pay your fair share.

We’ll have guys in the greyhound market who will pay 5% net win. They’ll win over a year, but they pay us enough commission that the whole ecosystem generates enough revenue for us, and everybody’s happy. It’s very much bespoke. 

EGR: It has been suggested that affordability checks are why liquidity is drying up on Betfair. Has Matchbook had customers refusing to provide documents?

RM: Yes and no, but it’s definitely a factor. People can be laying on the exchange and winning elsewhere so it can be very hard. We’ve always been aware of that. So, we try and build our compliance around that.

Two years ago, it was hard to get documents. Now it’s a lot easier because if you go and move somewhere else, you’re going to run into the same problem. If you run into a problem with us, someone will be able to talk to you instead of bombarding you with emails like you’re applying for a mortgage.

It’s a big resource, but it pays off because exchange customers hang around. 

EGR: The Gambling Commission has announced that financial risk checks will begin at £500 net deposits from August, before reducing to a £150 net deposit from 28 February 2025, both in a rolling 30-day period. What are your thoughts? 

RM: For those who think it’s going to be frictionless and only a small number of customers get caught up in it – that’s just not true. And those saying that are neither living in reality nor listening to anyone. It’s catching all sorts of people.

One thing an exchange allows you to do is actually make an income from betting. With problem gambling, it’s so important we don’t let that run away with itself. The industry did for a long time and that’s why we’re paying the price now. 

However, at the same time, gambling should be aspirational. There are plenty of clever people in gambling, and most of the clever people are using the exchanges. I’ve chatted to a couple of guys recently who are 22 or 23-years-old. They are maths geniuses and want to make a career in gambling. But because they’re under 25, the stipulations don’t allow them to get going.

So, they have to do one of two things: move to a different world like crypto or banking, or they have to start looking at something nefarious like black markets or use third parties. That’s not helping anybody. Tony Bloom [the Brighton & Hove Albion FC owner and one of the world’s largest bettors] and Matt Benham [owner of Matchbook and Brentford FC] would never have got going if that happened to them in their early 20s. That’s a big problem. 

What really bothers me is that it hasn’t been thought out – what works for a sportsbook doesn’t work for an exchange necessarily. The big sportsbooks have millions of customers and they’re happy getting £150 off everybody. But we don’t want that. I don’t mind if a customer turns £150 into £1,000 this month. He can do it next month or the month after, but you can’t do that with a sportsbook.

Again, deposit limits are fine. I’m not against deposit limits, but these flat numbers just don’t work. 

EGR: How do you go about finding and onboarding market makers?

RM: We’ve had some big market makers, especially going back to US sports and then football. The big guys will come knocking on your door and we’ve added them. But a lot of new market makers have come in even during the past year to 18 months. So, we started to go out and chase them. 

If you asked me this three or four years ago, I’d be making a call for market makers to give us a try. But the interesting thing I’ve spotted over the past three to four years is there are young people from the finance world or high-frequency trading who have come in to give market making a try. Market makers in the original days developed from professional bettors, whereas nowadays people are starting out as market makers. 

EGR: What is driving your competitive pricing and liquidity?

RM: The market makers are key because they are your starting point. And obviously, there are big arbitrage players. But then again, it’s the quality of customer. All those customers we’ve brought across from Betfair – and especially the on- and off-course bookmakers – all that hedging business flows into the ecosystem. So, rather than five to 10 years ago where everyone was following Betfair, that’s less the case now. 

It’s about getting good market makers, good arbitrage players, matched bettors, retail [smaller punters] and then a mix of pros and hedging from corporates, operators and off-course bookmakers. The beauty of an exchange is it’s all organic. But having all those clever people drive the volume into us just means the price and liquidity takes care of itself after that.

EGR: Do you have plans to enter into any new markets?

RM: We’ve been concentrating on making big inroads in the UK and Ireland in the last few years and that’s gone really well. Absolutely, at the back of our mind we’ve looked at other jurisdictions.

There’s lots of barriers to entry out there but there’s also huge positives. A lot of our competitors are doing that, so it would be foolish not to do it. If the right opportunity comes along, we will absolutely look at it.

EGR: What’s next for Matchbook in terms of product innovation and growth?

RM: Our brokerage service has been growing substantially in the past few years. It’s an off the exchange market, more for high value customers, corporate clients, hedging and other operators.

We have a lot of counterparties, which could be other syndicates, bookmakers and finance houses that are quite happy to quote prices at size. A lot of the industry’s big names have realised we’re the place to go to for hedging, managing risk and managing promo risk. 

We have bet builders, which launched in the past couple of months. It gets people in the door. For example, the punter who wants to do a bet builder on top of his 90-minute market doesn’t have to move anywhere else. We’ve had Matchbook Zero for about a year and we keep hoping people turn to that because it’s a no brainer if you like to bet £20 on a horse or a football match. 

The UI has been the same across all four exchanges for 20 years. We have a couple of ideas about how that might change. Our core focus is to drive everything via the exchange. So, how we can change up the UI or have another entry point to get people across. That’s something we’re going to look at later on this year.