Big news today.
As per this announcement FI have decided to remove In Play Dividends from the platform – which has huge implications for us as traders.
Here is my hot take on the announcement and thoughts on strategy and what that means for different types of player.
To get this out quickly I am going to publish each section as I go.
The Changes
15:51
As I have mentioned very recently – In Play Dividends were far too strong and were a major contributor to the problems we have seen in this market in recent months.
I recall I put it like this: It’s too good to be bad. The incentive to refresh constantly and short trade around IPD was undermining the stated aim of the platform which is as a long term alternative to traditional betting.
They were too strong partly because FI doubled them along with all dividends in 2020. But that was in line with others. What made them particularly over mighty was the fixture schedule – more games inside that 30 day window. Something FI should have seen coming.
Combine that with falling prices and suddenly IPDs were just completely out of control and it was a big part of the reason the market was thrown into chaos.
I suggested IPD’s should be halved as a result. This would have calmed things down without, I think, completely destroying the value of many players people will own already on the basis of IPD.
So my first impression is – I am very pleased something has been done on IPD – it was essential to do this to see a more stable market in 2021.
However – I am surprised they have removed it entirely because this is going to leave a lot of people stranded with players with little to no value – and really, through no fault of their own in many cases.
I suspect FI may regret dropping IPD all at once. I think a gradual approach would have done the job without causing a ruckus.
The stated reason of it being a major blocker to expansion into Germany may well be the clincher for them. If IPD was the difference that prevented this from happening immediately I’d understand the trade off. I still think they would have been smarter to make this reduction in IPD gradually (I very much doubt Germany is ready to go as soon as IPD is cleared away!).
And then we are promised “new” incentives to trade in the coming weeks which presumably would have to support their restated aim of preventing short termism and returning to the USP of the product – a slow burn, more thoughtful alternative to traditional betting.
I am really pleased they have restated that aim – it was getting lost.
I have to say though I really think it is a mistake to sweep it away and a gradual reduction would have been my choice. But I’m not the CEO so there is little point complaining – let’s turn to what it will mean on the market and what we can actually do about it.
What does this mean for the market?
16:06
There are clear winners and losers here.
“IPD Player” is something we are used to hearing. It’s a lazy but useful shorthand. It basically means: “Player who is average or worse for FI match day scoring, but can return nice IPD usually in good form/fixture spells”.
That gave value to a TON more players outside of the 200-300 who are credible dividend challengers at any one time.
They no longer have that value. They may no longer have any value.
If we have players that can never realistically win performance or Team of the Month – they are now worth very little if anything. Assuming of course, the mentioned new win mechanic doesn’t give “penny stock” types of player value in some way – but I would suspect anything new reinforces Team of the Month or similar. Hard to say at this stage.
So if you have these “IPD players” – what is there to do but dump them for any price if you possibly can? If stuck with them, you may be stuck with them for a long time. At least for a long time until they get that random win, or some turn of fortune or the lunancy of others steps in to give you a bid.
IPD is still around for the next 30 days so there is a chance of some more wins – but that’s going to be cold comfort and very unlikely to cover enough of the purchase price.
That’s the rough bit.
The good news is that for those 200-300 credible performance players, often the “Core” that I go on about so often – they just got much more desirable. (For none members I have a detailed definition of what a “Core” player is but for simplicity – think of them as “well known, high quality, and popular”.)
So if a trader has a Core player focused strategy, with at least 50% in the Core which has been my minimum recommendation, I’d suspect that trader would come out of this quite well in the end. Even with some hits on the IPD trades.
The reason is quite simple. Once you make a whole swathe of IPD players irrelevant almost all of the liquidity in the market concentrates into an elite group of perhaps 500 players at the absolute tops. And this will heavily favour the very popular and well known players at least at first, of which there are probably no more than 50-100.
Obviously – which players are in this group of “credible winners” and “popular players” changes all the time depending on tactics, form and the dozens of different issues we deal with as traders week in and week out.
This solves a lot of problems that FI has right now – particularly on the liquidity front. And probably on the “prices are too low” front as well. With fewer relevant players to spread money between – liquidity in the Core players will increase and logically so will their prices.
If therefore, you are one of these people who has made a big short term change and is mainly loaded with IPD/short term selections to take advantage of recent market conditions… you might be in real trouble here.
The person holding 100% Core picks at the time the music stopped is the Big Winner. As I mentioned this week, I have been aiming for about 75% Core in current market conditions. There is something to reflect on here about sticking reasonably close to the USP of the product if you want to be “lucky” come announcement time.
Unless of course FI decided to change that entire USP. Fortunately, it looks like they haven’t and have recommitted to it. When the dust has settled – that might be the most important thing from today.
So – the obvious thing to do to be very clear would be to drop any such “IPD players” if at all possible and redistribute that into the best quality Core picks – these would be exactly the type of players I discussed on Tuesday under “Key Takeaway 1” in the State of the Market article.
Final Thought for Today
16:36
Overall – this is a good change for those who want to see a more liquid market this year that is less volatile and sees prices returning to something like previous highs at least.
It makes the Matching Engine much more workable by concentrating liquidity across a smaller group of players. It’s hard to over state just how big a change that is. It’s going to put a lot of upward pressure on the price of the more well known players.
That’s good because you know what, all the misery of 2020 aside, the Matching Engine is fun to use when it works well. It opens up a lot of opportunities for good trading to get rewarded (as well as for bad trading to be punished). There is a reason why traders wanted it in the first place.
This is a big underlying change that will really help all that come together. And FI, having now made a promise for further win mechanics must follow through on that in a logical way. If IPD was as I put it a few weeks ago “causing the market to eat itself”, then how will the new win mechanic encourage healthy growth?
This positive change is not without a cost, however. There will be traders who are hurting today particularly if they have gone all in on an IPD/short termist strategy. And most of us will have at least some of these players that are now going to be worth less as a result.
So there will be upset, and you can understand why.
Overall though, an unhealthy market that looks like it did in 2020 is good for precisely nobody. Even for those who thought the short termism was good and enjoyed it – there was never a future for FI down that road – the platform would have destroyed itself.
The biggest takeaway for me is that recommitment to the long term USP of the product which is so important and great to see from a new CEO.
And whilst like anyone I’ll be taking a few hits as the goalposts move, I’m convinced that removing the over mighty influence of IPD is a very positive move that can set up long term success.