You Bet: The Betfair Story and How Two Men Changed the World of Gambling. Colin Cameron
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Bookmakers’ initial complacency towards Betfair was, Black suggests, perhaps as a result of having survived – ultimately with ease – the emergence of fresh competition in the previous decade. Then, as you would anticipate from a group such as bookmakers with four decades of market domination, once it was understood that the new force had been underestimated and market share was under threat, steps soon began to be taken to preserve what was considered almost a birthright of profit. This would be the period of confrontation, then? Looking back, Black, eagerly anticipating capitulation, chuckles: ‘We knew exactly what to expect. I am sure spread betting shaped their thinking. With spread betting, they thought, “Oh my goodness, they are challenging us with this completely new way of thinking.” After that, they panicked for a while, tried to copy it, then failed, before ultimately everyone said, “don’t worry, it is just a niche”, in other words nothing to worry about after all. Then we came along. With their relatively recent experiences, they thought, “just another niche”. Except that we were more than that.’
Since selling up his stake in Sporting Index in 2003 as part of a £55 million deal, Compton Hellyer has taken an interest in a host of projects and companies. Mainly these have involved pastimes and pursuits synonymous with the interests of rake-like males of a certain wealth and age (and also, like the 62-year-old Hellyer, those senior to them still young at heart). There is the chairmanship of a golf tours company, as well as an involvement with a web endeavour that seeks to analyse football data to generate predictive statistics. (Hellyer supports Hull City who gained a place in the Premier League, which needed some explaining). Never easy is distinguishing between what is work for Hellyer, small in stature but not in his appetite for fun, and what is play.
If there has been a perfect blend for him in his business career, which began in the altogether more sombre world of the City, it was probably Sporting Index. Sport is an ongoing passion. A gamble also remains central to his life, as you would expect from someone who took a social punt and used the size of a woman’s chest to illustrate the nature of spread betting to the lady who subsequently became his second wife; the spread might, he suggested, be 32-34, or maybe 34-36, with Hellyer, ever the optimist, a buyer. Incidentally, the other example in Hellyer’s repertoire to illustrate to the uninitiated the scope for spread betting on anything, including sport, was the number of lovers a gentleman or lady might have taken over a period of time. During dinner parties, he went round the table making markets for individual guests – ten to twelve for the prettiest or most handsome, five to six for the more seemingly conservative-minded – by and large to general amusement with the occasional controversial reaction, hopefully, to keep things lively.
Hellyer admits that in starting a business specialising in spread betting on sport, he was just adapting something that was long established with a pedigree of more than two decades. In fact, another company, City Index, founded in 1983 to trade on financial markets, had just beaten him to the sports spread betting market, albeit without Hellyer’s all singing and dancing style which affords him the place in history as the de facto founder of the application beyond financial markets. Indeed, this and Sporting Index’s more inclusive name helped the company quickly assume the dominant market position in its sphere. ‘The best business decision I made was to use the word “sporting” in the name,’ Hellyer reflects. ‘It differentiated Sporting Index. We were something new.’
Exactly what Hellyer adapted for sport was spread betting on financial futures. The origins of that date back at least to the 1970s. In 1974, Stuart Wheeler, a new breed of speculator for the Square Mile who came to wider prominence when donating £5 million in 2001 to a Conservative Party led by William Hague, set up IG Index. This allowed for speculation on the price of gold. If you believed that the price of gold would rise above a given price over a set period of time you would ‘buy’ gold. If you had faith the opposite would happen, you ‘sold’. Again, no gold actually changed hands. All that did ultimately was money. For example, a £1 bet for every cent that the American price of gold changed meant that if gold went up 50c, and you had bought, you took home £50. And, of course, vice versa if the market went against you. Along the way, not a single bar of gold bullion changed hands. Within two years of setting up, Wheeler extended betting to cover all commodities traded in London. In 1979, IG expanded further to take bets on movements in US markets with betting on the FTSE and Dow Jones indices following two years later.
Hellyer fully acknowledges that he was only formally presenting as new and innovative what was already thriving, informally. Long before the creation of City Index – even IG, which, incidentally, went into sport in 1993 – spread betting had an established and illustrious history, albeit underground. ‘Sports spread betting was taking place on the floor of the Stock Exchange before us all,’ admits Hellyer. ‘Traders on the life floor would make a market on say, the number of points in a rugby match at the weekend. Then, depending on the results, they would settle up on Monday.’
Hellyer maintains that it was the people in the City of London financial market who understood market fluctuations, currency market, and the price of gold. ‘There was already a natural base for us. It had been tested. They traded for a living. And also with spread betting you have to be prepared to lose a sizeable sum of money. You won’t get away with just losing a tenner.’ This meant spread betting lent itself to people who received bonuses – in other words, those who work in the City of London again – which could act as a spread betting bank for those bad days. The logic was, according to Hellyer, ‘salary goes on the mortgage and to my wife and children but the bonus is mine.’
A loyal and local following was enough for Sporting Index to thrive. ‘The Nineties was a wonderful time for the City but, equally, the size of bonus being paid was not nationwide,’ recalls Hellyer. ‘We belatedly concluded, after efforts to take spread betting north of Birmingham, the best way to get a new client was to have an existing client recommend someone.’
Publicity for Sporting Index was key to the business thriving. In this there was good fortune from launch. This was in the spring of 1992. A summer of sport was ahead and exploiting this was, understandably, the plan. But before then there was a general election. Indeed, campaigning was in full swing at the time of Sporting Index’s birth. Very soon, the merit of making markets on this, as much as sport became clear. ‘We didn’t realise it,’ Hellyer admits now. ‘But, leaving aside sport at the time, interest in betting on the outcome of the election was great, generally, for spread betting. In this election, betting on the winner with the bookmakers at fixed odds was pretty dead. The outcome was not sufficiently compelling – two potential winners, with Neil Kinnock favoured at the start of the campaign to beat John Major – to engage the general public to have a bet. But spread betting on the overall majority? What the final make up of parliament would be was far from clear. That lent itself to what we were doing. We received huge press coverage on the election, which was a fluke. We originally wanted our launch to be around a football match. But, thanks to the election, we got a flyer.’
Once up and running, and after a month of publicity in a volume that shouldn’t even be imagined for a start-up company, press coverage continued. Hellyer, along with his public relations sidekick, Wally Pyrah (his impact was comparable to that which Eric Cantona had on Manchester United, according to Hellyer), reached platforms for self-promotion previously beyond the reach of mere bookmakers. Critically, broadcasters showed a huge appetite for spread betting related stories. This included outlets such as Test Match Special. Appearances at the luncheon interval on BBC Radio 4’s TMS broadcasts became commonplace. ‘We got out and about,’ Hellyer shrugs; a rare understatement on what was an orchestrated campaign of hype. ‘There I was next to Henry Blofeld on air, part of TMS, and he is asking me what we were betting on runs England might make in their innings.’ Such a conversation fell easily into the narrative of a broadcast at moments such as lunch or even between overs.
The advent of Sky’s extended coverage of all sports, live, was also key. ‘It was obvious very quickly that when an event was live, we would get many more bets,’ Hellyer recalls. ‘At first we would spend time making markets for the biggest events. Then we realised that, if an event was on television, it was effectively a big event. Manchester United v Arsenal, or Chelsea, or Liverpool was less of a deal to us than Sheffield United v Watford on television if the Watford game was the only one screened. People