Betfair runs bots too

If you trade on Betfair's horse racing markets then you might see an odd price grouping somewhat below the current lay price for all the runners. For the favourite the offering will be £400 and there will be three such lays grouped with a two tick gap, sometimes three ticks or maybe more. The image on the left shows two £400s and one that has merged with another lay of £149 to give £549 at a price of 1.74.

I noticed this awhile ago and I wanted to try and understand what was going on. Obviously it's a bot but whose and why? I noticed that there are never back bets of a similar type so I assumed it was part of a 'lay only' operation. That means that it has to be a bookmaker's bot. I call the bot the '400 Bot' due to the volume offered for the favourite at each price. For other horses in the market the volume offered will be lower.

Occasionally, the group of three offerings will drop as the price on a runner drops dramatically. Sometimes some of the topmost lay will be eaten into before the group moves further down the ladder. In anticipation of a further price drop? 

I suspected that Betfair is running the bot. After all, Betfair now has a traditional bookmaking (sports book) operation in tandem with the exchange. Today, I watched the price on Betfair's sports book for the favourite in a race and just as the price on the book was lowered then so too the three lots of 400 dropped.

What the purpose of this is, I do not know. It can only be an exercise in getting to the front of the order book at those three particular prices. Nearer the off it is hard to get to the front of the order book so it is better to do it earlier in the day. The groups of three are a little lower than the book price and naturally enough the book price is considerably lower than the exchange price. It's probably some sort of risk management device.

Whether this knowledge can be used to my advantage remains to be seen (and thought of) but I doubt it. Betfair moves these three lay bets in reaction to market activity and is unlikely to be anything predictive.

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