You Bet: The Betfair Story and How Two Men Changed the World of Gambling. Colin Cameron
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much more acceptable, both socially and to governments. The latter are happy to sanction freely consenting adults betting with each other. Eliminated from proceedings is an element that to many represented not only a middleman, but – with apologies to all respectful bookmakers – a pretty unreliable, unsavoury type, with doubtful ethics and a reputation for dishonesty, topped by a pork pie hat. Using Betfair.com, I bet with you, you bet with me. Or I make the odds – again, lay the bet – for you to take, or you make the odds and I bet. An altogether more civilised means of staking – and of course, potentially losing your shirt. Or as Betfair’s marketing campaign of 2008 maintained, betting as it should be.
For all the concept’s simplicity – Betfair takes up to 5 per cent of winnings as commission, shades of ‘neither a lender or borrower be, be a broker and take your fee’ – this is betting but not as we had known it before the millennium. Clean and fresh, person-to-person. You start with, say £50, and you can churn this amount through a day of gambling, taking bets, making bets, engaging with your fellow speculators. Meanwhile, a man – statistically that is overwhelmingly likely – walks into a betting shop with the same £50, or enters a parimutuel (mutual betting) café in France, or a TAB-licensed bar in Australia. He has a bet. And waits. He either wins or loses. Eventually, if he wins and once he has been paid out, he might have another bet. Or he might have to go to the bank cashpoint first. Win or lose, the process is pedestrian by comparison. And with the British betting shop in mind, even allowing for home improvements, all in an environment which is rightly deemed inappropriate for minors.
But if you don’t bet (apart from the Grand National, of course, or the Melbourne Cup if based in Australia, also in the grip of Betfair, as we will see) so what? Let us leave aside for a moment the scale of trade for which Betfair is responsible. On their own, annual revenues of £239 million for a company only eight years old should command interest from even those prejudiced against the nature of the business. To many, Betfair’s true significance over and above offering an alternative way to gamble is how the operation has proved to be able to affect both its own industry and beyond. As well as being part of what has been a huge upheaval in betting since 2000, what Black and Wray created has been more than simply a reflection of the Internet age superseding an otherwise largely Luddite world. Betfair has driven market changes since 2000, as well as met growth in demand as a result of the global spread of affluence, credit crunch and recession notwithstanding. Much of what has been reformed or altered by the power of the market has been as a result of Betfair, a catalyst for broader changes affecting gambler and non-gambler alike. A company capable of this demands attention.
Of course, Betfair is most relevant to those who do bet. Customers of betting industries from Britain to Australia have been directly affected by Betfair. In Britain, for example, where betting giants such as Ladbrokes have enjoyed nearly fifty years of relatively unchallenged domination, Betfair, with a model that takes retail overheads out of the market, cuts into profits. Existing giants of the betting world were motivated to introduce betting-in-running and improve web access to counter this, and to consider revamping licensed premises on high streets, nationwide. As far as Britain is concerned, with about 8,000 betting shops, some of them beyond restoration, you may not have noticed a change yet. But a revolution began in 2000. The latest generation of gamblers are as likely to enter an Internet café as a betting shop.
However, you don’t bet. You may even live in a remote location, and have no high street to speak of that is changing, nor enjoy spending time on a computer. You may, though, follow sport. That has changed as a result of Betfair, from the sponsorship of shirts. Betfair’s deal with Fulham for the 2002-03 Premier League season opened up the possibility of betting organisations taking space across players’ chests previously denied them because of fears of corruption. There have been Memorandums of Understanding, (MOUs). These were originally agreements that Betfair made with sporting bodies to facilitate exchange of information in suspected cases of corruption. Ultimately the government in Britain legislated to make the custom of cooperation universal, meaning that sports bodies are now intimate with betting, in the past more a shadow than enlightening. Indeed, in Britain, the government, which had previously taken the view that betting was a potential social evil that needed to be strictly supervised, changed its attitude. It began, thanks to Betfair, to see person-to-person betting as an acceptable pursuit offering opportunity for gainful employment and legitimate revenue stream. Betfair was the first-ever betting operation to win a Queen’s Award for Enterprise.
However closed you are to betting, you are still touched by Betfair. Only if you don’t bet, vote, ignore sport and take no interest in the worlds of business and commerce can you rationally feign disinterest. Indeed this is true globally. As the company has grown in Britain, so it begins the same journey of expansion in Australia, starting from Tasmania. Likewise in Malta (a corporate outpost), Italy, Germany, and Austria, where Betfair is formally licensed. Meanwhile, in the world beyond the giant kingdoms of betting and sport, Betfair has been inspiration, even as a template, for new innovations.
An extreme example is the market for gold. Bullion-Vault.com was set up in 2005 to allow traders to bypass the traditional market for gold and speculate directly, leaving brokers redundant. The creator of BullionVault was also an investor in Betfair, which yielded both handsome dividends on an initial stake that bankrolled the set up, and the idea to adapt to other markets. What’s more Betfair has inspired others. The business model is increasingly being successfully adapted. You may indeed not bet, but Betfair has touched the lives of many beyond its core endeavour.
This book is the story of Black and Wray from 1998 to the present day, the story of the path Black and Wray took to unimagined wealth by tapping into the changing landscape of global betting, and how exactly they were the catalyst for many changes the world over – both related directly to betting or otherwise.
The basis for Betfair’s success is that in Britain the company offers a huge improvement on what was the traditional smoky interior of the high street betting shop (and, it being an Internet outfit, better value free from expensive overheads). You are in charge. Elsewhere in the world, the service for consumers is preferable to state-run monopoly pool betting which, because of high tax and duty levels, offers an even poorer return on winning bets and successes.
What’s more, with Betfair, the pace of gambling is faster and more furious, more commensurate with the modern age. Betfair clients hammer away on their keyboards making bet after bet after bet at a speed which makes the process of filling in a betting slip and taking it to the betting shop counter, or even placing a bet on the phone, seem pedestrian. During the 2003 Rugby World Cup, a French-based gambler, trading in stakes that meant liabilities were never greater than £400 a time, was personally responsible for turnover of over £116,000 in less than two hours. Since then, the pace has only quickened.
Betfair grabs those for whom old-style gambling was simply too sedate. For example, the speed of trade that Betfair facilitates has meant that betting-in-running has a growing following by any of those who may previously have opted not to bet on an event but now seek to enhance their experience of live sport by taking out a financial interest. This trade can then be graphed to show how the market fluctuated from starting stalls to winning line, from kick off to final whistle. Football, rugby, cricket, American sports like baseball, and F1 all lend themselves to this type of betting; namely sustained and, during high drama, frantic. Equally, a five-furlong horse race, over in less than a minute, can now sustain any number of bets during the sixty seconds the race takes to run, and not just before the start.
This cyber pursuit’s popularity means that growing numbers of serious, full-time gamblers – like shoppers who skip visits to the supermarket by ordering provisions online – no longer bother actually to attend race meetings, the greyhounds, and major sports events other than for company. Likewise, spectators previously enthralled only by the game itself, also stay away. For them betting with Betfair while watching the game at home greatly enhances their enjoyment. Satellite coverage of sport means that you can glean pretty much everything via telecommunications then trade through the web. If you have been able, lately, to get a ticket for the big games, it may be because, along with satellite television, Betfair’s appeal has freed up a seat.
From start to chequered flag, first ball to stumps, round one bell to knock out, Betfair handles literally millions of bets, with