Betfair

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Betfair
Type Public
Traded as LSE: BET
Industry Online gambling
Genre Bookmaker
Founded 2000
Founder(s) Andrew Black and Edward Wray
Headquarters London, United Kingdom
Key people Gerald Corbett, (Chairman)
Breon Corcoran, (CEO)
Revenue £389.7 million (2012)[1]
Operating income £33.9 million (2012)[1]
Net income £33.9 million (2012)[1]
Website www.betfair.com

Betfair Group plc is the world's largest Internet betting exchange. The company is based in Hammersmith in West London, England. In 2011 Betfair went offshore and became registered and licensed in Gibraltar;[2] since 9 March 2011 its betting exchange operated under an offshore licence.[3]

History

The company was founded in 2000 by Andrew Black and Edward Wray who subsequently won the Ernst and Young Emerging Entrepreneur of the Year award. In 2003, the company was one of about 50 recipients of the Queen's Awards for Enterprise in the Innovation category.[4]

In October 2005 chief executive Stephen Hill announced his resignation when the board decided not to proceed with plans for a stock market flotation, the investors holding out for a higher valuation.[5]

In November 2005 the Tasmanian government announced a deal to licence Betfair in the state. It was the second licence awarded to Betfair outside the UK - the first being in Malta with subsequent licences following in Austria and Germany - and Tasmania now receives substantial tax revenues. However it infuriated the established monopolistic totalisators and bookmakers (due to loss of revenue) and governments (due to loss of taxes) in the other Australian states. A ban on the use of betting exchanges took effect in Western Australia on 29 January 2007, with Betfair successfully claiming this new law violated the Constitution of Australia.[6]

In a unanimous verdict by the High Court of Australia on 27 March 2008, the two provisions of the legislation, purporting to ban Western Australians from using a betting exchange and prohibiting an unauthorised business from using Western Australian race lists, were declared invalid as they applied to Betfair. The provisions were characterised as imposing a burden on interstate trade that was protectionist in nature, and therefore contravened section 92 of the constitution. The Court decision suggests, but leaves open, that a more narrowly drafted ban may have been allowed (e.g., banning people in Western Australia from laying "lose bets" on events held in Western Australia).[7]

Softbank purchased 23% of Betfair in early April 2006 valuing the company at £1.5 billion. In December 2006, Betfair completed the purchase of the horseracing publishing company Timeform (which traded under the name Portway Press Ltd).[8]

In March 2007, Betfair launched its own Betfair Radio service, available via its website, on the telephone and elsewhere. This has now become Timeform Radio, broadcasting horse racing commentary and results.[9]

Betfair won its second Queen's Award for Enterprise, this time for International Trade, in April 2008. It joined an elite group of multiple Queen's Award winners and was recognition of the fact that over half of all new customers now come from outside the UK and they account for 44% of all revenue.[10]

In January 2008, Betfair acquired Macrovision's Television Games Network interactive TV and broadcast service for $50 million in cash.[11]

On 27 January 2009, Betfair announced the purchase of the TVG Network in the United States from Macrovision $50 million USD as part of Macrovision's dissolving of TV Guide's assets.[12]

In November 2009, Betfair announced a deal with the New York Racing Association that allows Betfair's customers to start wagering immediately on Aqueduct's thoroughbreeding races.[13]

Betfair floated on the London Stock Exchange with a stock symbol of BET on 22 October 2010 at £13, valuing the company at £1.4bn ($2.2bn).[14]

In March 2011 the company moved some of its operations to Gibraltar to reduce the amount they paid in tax.[3]

Operations

Since Betfair was launched in June 2000 it has become the largest online betting company in the UK and the largest betting exchange in the world. Betfair claims to have over 4 million customers and a turnover in excess of £50 million a week.[3] As of April 2013, the company employed 1,800 people worldwide, down from 2,300 people.[15]

Betfair claims on average 20 percent better odds than those offered by a traditional bookmaker.[16] Betfair charges a commission on all winning bets, which is set at 5 percent of the net winnings for most markets, although according to how much a client wagers on the site, it is possible to reduce the amount of commission paid to as low as 2 percent.[17]

In late autumn of 2005, Betfair finalised a deal that began in early summer, to purchase the online poker site PokerChamps.com, which the company will integrate into its network, replacing a poker arm that previously used gaming technology software from CryptoLogic Inc. On 30 October 2006, Betfair Poker left the Cryptologic network to move to its new platform. In a press release the company's then poker head, Ben Fried, stated: "Having our own poker software puts us in command of our own destiny. It means we can react quickly to customer feedback and continue to develop an innovative, community-focused product. We are confident that we are laying the foundations of a market leading poker room."[18]

Cash 4 Clubs is a sports funding scheme set up and funded by Betfair. The scheme provides sports grants to local community sports clubs.[19]

In-play betting

Betfair offer in play betting on a variety of horseracing events. There has been some controversy[20] surrounding bets placed on events televised by the satellite channel At The Races. This is because the "live" transmissions can be subject to delays of up to five seconds. Betfair's Live Video service, offered on its website, typically offers lower latencies.

Premium Charge

In September 2008, Betfair introduced a "Premium Charge" for wagerers whose winnings were deemed to be disproportionately high when compared to the amount of commission they pay. Specifically, members whose commission charges amount to less than 20% of their gross profits (across at least 250 markets) are required to pay the additional charge to make up the difference.[21]

Even though Betfair insisted that the charge would only affect a very small portion of its members (less than 0.5%), it attracted a great deal of criticism on its member forum and from the broader exchange betting community.[22][23] According to The Guardian, the charge has significantly changed the relationship between Betfair and its customers, as Betfair can no longer claim to be a neutral bet exchange provider "where winners are welcome" (its mantra for many years).[24]

In June 2011 Betfair raised its Premium Charge to 60% for some customers, a move which was met by outrage.[25]

Suspicious betting patterns

The fact that sports wagerers can use exchanges to lay outcomes has caused tremendous criticism from traditional bookmakers with much of the anger coming from the UK's "Big Three" - Gala Coral Group, Ladbrokes and William Hill. Betfair has led their defence by countering that while corruption is possible on any gambling platform, the bookies' arguments are motivated not by concern for the integrity of sport but by commercial interests. Betfair also asserts that unlike the high street brokers, who all accept anonymous cash bets, Betfair is aware of who their customers are. Customers are required to create personal accounts, and Betfair keeps records of each customer's betting history. Betfair in particular has noted that they have signed numerous information-sharing agreements with governing bodies around the world with whom they co-operate fully on matters if the latter suspects corruption to have taken place. The company shares information through agreements with some 30 sports bodies, such as the Lawn Tennis Association and the British Horseracing Association, and has been instrumental in several high-profile investigations into suspicious betting.[26]

In August 2007, Betfair took the unprecedented step to void all bets following a tennis match between Martin Arguello and Nikolay Davydenko because of suspicious betting patterns.[27]

In September 2009, the Advertising Standards Authority (ASA) banned Betfair from running two billboard adverts which claimed that their Starting Price (SP) offered 40% better returns, on average, than the industry SP. The ASA found that only 10% of the bets used by Betfair in their calculations yielded at least 40% better returns than the industry SP.[28]

In December 2011, Betfair voided all in-running bets on a race at Leopardstown when an automated customer laid the winning horse Voler La Vedette at odds of 28-1, even as the mare crossed the finish line. Betfair claimed that the bet, which resulted in a maximum liability of close to £600M, was caused by a "technical glitch" and there was only £1,000 in the customer's account. The controversy was described as "devastating" by Betfair's CEO Stephen Morana and it affected at least 200 customers (backers) who were refused more than £23M in winnings. Some of these customers are believed to be pursuing their case with the independent adjudication body IBAS as Betfair no longer falls under the jurisdiction of the Gambling Commission since its move to Gibraltar in 2011.[29][30][31]

References

  1. ↑ 1.0 1.1 1.2 Preliminary Results 2012
  2. ↑ McGrath, J A. "Punters fear the worst in Betfair dispute". The Daily Telegraph. 1 January 2012. Retrieved 5 May 2011.
  3. ↑ 3.0 3.1 3.2 O'Hare, Sean. "Betfair moves operations to Gibraltar". The Daily Telegraph. 9 March 2011. Retrieved 5 May 2011.
  4. ↑ "The Queen's Awards for Enterprise: Innovation 2003". queensawards.org.uk. Retrieved 30 October 2007. 
  5. ↑ Bowers, Simon (15 October 2005). "Chief of Betfair steps down as float is cancelled". London: guardian.co.uk. Retrieved 8 April 2009. 
  6. ↑ "Betfair Issues High Court Challenge". virtualformguide.com. Retrieved 8 April 2009. 
  7. ↑ "High Court of Australia - Betfair Pty Limited v Western Australia 2008". austlii.edu.au. Retrieved 8 April 2009. 
  8. ↑ McGrath, J A (25 November 2006). "Betfair set to buy Timeform for £15m". The Telegraph. Retrieved 8 April 2012. 
  9. ↑ "Timeform Radio launches". 1 October 2008. Retrieved 8 April 2012. 
  10. ↑ "Betfair Wins Second Queen’s Award". 1 May 2008accessdate=8 April 2012. 
  11. ↑ "Macrovision Sells TV Games Network to Betfair for $50 Million". dmwmedia.com. Retrieved 3 November 2009. 
  12. ↑ "Industry Awaits Betfair Plans for TVG". bloodhorse.com. Retrieved 8 April 2009. 
  13. ↑ "Betfair, NYRA reach wagering agreement". thoroughbredtimes.com. Retrieved 3 November 2009. 
  14. ↑ "Betfair flotation values firm at £1.4bn". BBC News (bbc.co.uk). 22 October 2010. Retrieved 7 May 2011. 
  15. ↑ "FY13 Trading & Strategy Update", slide 5 Betfair. Retrieved 9 May 2013.
  16. ↑ "What are the benefits of a Betfair account?". Betfair. Retrieved 1 July 2011.
  17. ↑ "How is my commission calculated?". Betfair. Retrieved 1 July 2011.
  18. ↑ "Betfair PR: Independence Day for Betfair Poker". prweb.com. Retrieved 8 April 2009. 
  19. ↑ "A grand in the hand as Betfair up the odds". The Belfast Telegraph. 8 July 2009. Retrieved 1 July 2011.
  20. ↑ "Racing: ATR dismisses the time delay with SIS as a 'non-issue'. - Free Online Library". Thefreelibrary.com. 6 March 2006. Retrieved 28 December 2011. 
  21. ↑ "Betfair Charges". betfair.com. Retrieved 8 April 2009. 
  22. ↑ Cobb, John (10 September 2008). "Betfair faces criticism for massive rise in charges". London: independent.co.uk. Retrieved 8 April 2009. 
  23. ↑ "Betfair bosses deny being too "greedy"". racingpost.co.uk. Retrieved 8 April 2009. 
  24. ↑ Wood, Greg (9 September 2008). "Betfair: where winners have just become losers". London: guardian.co.uk. Retrieved 8 April 2009. 
  25. ↑ Hayler, Will. "Betfair's premium charge increase welcomes winners with open palms". The Guardian. 29 June 2011. Retrieved 1 July 2011.
  26. ↑ "Playing their cards right, Director magazine". Retrieved 1 June 2008. 
  27. ↑ "Betfair suspends betting on tennis clash". metro.co.uk. Retrieved 8 April 2009. 
  28. ↑ "Misleading Betfair ads banned in UK". egrmagazine.com. Retrieved 28 September 2009. 
  29. ↑ "Betfair blame technical glitch". skysports.com. Retrieved 3 January 2012. 
  30. ↑ "Betfair needs to win back confidence of punters". independent.ie. 1 January 2012. Retrieved 3 January 2012. 
  31. ↑ McGrath, J A (1 January 2012). "Punters fear the worse in Betfair dispute". London: telegraph.co.uk. Retrieved 3 January 2012. 

Further reading

External links

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