You Bet: The Betfair Story and How Two Men Changed the World of Gambling. Colin Cameron
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it became an issue in relation to the sport’s integrity. This presented a dilemma for the authorities. You could manipulate margins of victory against the spirit of the sport without the result – namely who finished first, second and third – being affected. In other words exploit a betting market without jeopardising, in the case of a jockey or trainer, professional livelihoods. Wheeler recalls a particular trainer who took an occasional interest in this sort of wager and was believed to be working an advantage without drawing much attention from the authorities who were satisfied that his horses were, as the rules dictated, seeking to gain ‘the best possible placing’ as required. ‘It is funny how analytical evidence differs from anecdotal evidence,’ Wheeler laughs. ‘Our guys on the sports desk were at one time alarmed at this. But when they looked at the market for winning distances they found it to be one of our most profitable.’
As far as Betfair, which would encounter its own problems in relation to the corruption of sport, is concerned, Wheeler is one of many to have been invited to become a founding investor. He is not alone is turning them down. Maybe the arrival of Betfair and the betting exchange’s trade on sport limited spread betting further, he muses. ‘They came to see me. Maybe I didn’t understand the concept [which is hard to imagine]. Decent people,’ he notes. ‘I just didn’t think they would succeed. I realised relatively soon after they started to trade that they would’.
Wheeler remembers that Sporting Index also wanted a partnership, which he turned down, too. ‘Wrong again,’ he jokes.
The architect of that venture, Hellyer, laughs at the times back then. He admits he also missed a trick at Betfair’s beginning and took betting exchanges perhaps too lightly. Maybe it was the name? With Sporting Index, that had truly been a masterful choice, not least in raising money to establish the company. ‘I’ve raised money before and since for other enterprises with much more difficulty,’ Hellyer reflects. ‘My usual line when seeking to persuade people to invest in my latest idea is to say have you got a few thousand you can afford to lose – which is by and large always met with the response, possibly, why, what’s the latest idea? In this case, when I said, it was something to do with sport and gambling, the majority would say, almost straightaway, I’m in.’
After launching, returns soon flowed. ‘We were in profit very quickly, wonderful, bloody good years, six or seven of them in a row,’ Hellyer recalls. In the year ending May 2002, Sporting Index recorded a return of £5.1 million. Bad debts were, according to Hellyer, less than 1 per cent, as spread betting trade had been deemed as involving Contracts For Difference (CDF), with, as a result, debts recoverable through the Courts. Happy was the ‘merry band of forty friends’ who supplied the seven figures Sporting Index needed to launch, joined subsequently by the respected venture capitalists, Electra Investment Trust, to underwrite the plan for world domination. ‘So small you won’t even notice’, was how Hellyer remembers selling the idea of a £2 million investment to the then Electra chairman, Michael Stoddart.
Profits, without much risk of cannibalisation ultimately proved too much of a draw for Ladbrokes and William Hill. Markets otherwise dead for bookmakers could come alive. For example, rugby league, never a high-roller game for bookmakers, was live every Friday evening during the season. Hellyer rubs his hand at the memory of many a sporting weekend getting off to a flyer. He could reminisce all day.
Raising money, promotions and publicity, reminiscing; Hellyer undoubtedly has gifts. Yet, he cannot quite pinpoint why he was relatively cool about Betfair. ‘If you are going to attempt a betting coup one piece of information you need is how much you might lose. On Betfair, you know that. You don’t on spread betting so that is at least one reason why people prefer the former. I used to think that we were the most exciting thing that ever happened to betting. Not because of the success of Sporting Index, which was relatively tiny and unimportant in the grand scheme of things but because of the impact it had on the general betting market. Certainly we made traditional bookmakers more outward looking.’
He tails off. Bookmakers may have been compelled to innovate a little. Sporting Index certainly gave the lion’s tail a good tug. Then came Betfair. ‘We were stopped in our tracks by Betfair,’ Hellyer shrugs. ‘If Betfair hadn’t come up who knows where Sporting Index would be now? You ring Betfair and the operators are so nice. “Good luck”, they say. Not like other bookmakers. Betfair take a percentage, they are not part of the wager. Why would bookmakers wish you well?’ he laughs.
ILLUSIONS OF CONTROL
Why do we bet? To a gambler, this is not so much a question as an invitation. Ask, and in no time odds against well-worn theories would be chalked up somewhere, including the basis for gambling is a desire to lose everything in order to test the unconditional love of a father. It would be odds-on that a good few of them would also feature something about maternal relations, too.
Sigmund Freud on betting would not be anywhere near favourite these days. To summarise his theory, gambling is a form of masturbation would be an extremely simplified précis. Even in full, academics dwell little on these notions today. In a book published in 1995 and titled Adolescent Gambling, by Mark Griffiths, professor of gambling at Trent University, he outlined a host of more contemporary explanations behind the subconscious desire to bet. These largely focus on the part of the population – between 0.2 per cent and 1 per cent, according to experts – that are reckoned to be pathological gamblers.
Griffiths, himself, has a taste for casinos. This is leisure time, he reasons, which, along with other distractions, he ‘buys’ by exposing himself potentially to financial losses. In other words, time and money spent at the tables incurring inevitable losses is no different to that spent watching Nottingham Forest, his other passion, having splashed out comparable amounts of cash on a match ticket. Professionally speaking, Griffiths is not short of subject matter in the shape of the world’s many gamblers to analyse in addition to the pathologically challenged who are the focus of much specialist work. National surveys of betting habits almost universally conclude that in the Western world there are more gamblers than nongamblers. Estimates of the proportion of Britain that bets in some form or other vary from 80 per cent to 94 per cent of the adult population, with up to 68 per cent of Americans and as many as 92 per cent of Australians sharing in the habit. In the UK, recent estimates suggest that, on average, citizens each bet £800 a year with a quarter of all turnover staked on the Internet. All this before even considering Asia.
That a majority in most countries bet, fits in with a conclusion to some of the research undertaken by Emmanuel Moran, published in 1970, one of a number of scholars referred to by Griffiths in his compelling book. He found that gambling flourishes because of the pressures on those to bet, who find themselves among other risk takers. In other words, peer pressure is a big factor in gambling. Other factors unearthed in what compels us, overall, to have a bet include the desire to release stress and tension. This may puzzle those who find a bet achieves the exact opposite. Each to his own.
According to Griffiths, Owen Wolkowitz, Alec Roy, and Allen Doran published work in 1985 that supported the theory that most gambling habits have their roots in adolescence. These desires are then kick-started by an adult shock such as a death or birth. A year earlier, Henry Lesieur and Robert Custer identified phases in escalation of gambling habits; the winning phase, the losing phase, and the desperation phase for those who develop a fullblown addiction. Various views exist on what each of these phases involve. Suffice to say that one school of thought claims to have unearthed a fourth relevant period; the hopeless phase. Reputedly, this is gambling for gambling’s sake. The research behind this touched on ‘laboratory animals with electrodes planted in their pleasure centres, they gamble to the point of exhaustion’. A word of warning, there, if ever there was one.
Back to Freud: we should note that his theorising on gambling was based primarily on one patient’s experiences, whom the good doctor is reputed never actually to have met. (Edmund Bergler, whose idea that gambling is simply guilt relief in losing is rated more credible today, did at least have 200 cases to consider in his research in the 1950s.) So Freud’s analogies