You Bet: The Betfair Story and How Two Men Changed the World of Gambling. Colin Cameron
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market for gamblers. Actually, many players derive as much pleasure from simple vindication as they do from outright financial gain. In today’s affluent society, being right is as much valued as being even more rich. Betfair offers a chance to test your theories and expectations against the beliefs of others, betting with them directly on anything from the Grand National to the Eurovision Song Contest. With no middleman, betting is hand-to-hand. Protagonists gather in the Betfair Forum chat room both to boast of successes and to unite against injustices outside their own empowered world. For those who think there is something nerdy about Internet betting, time in the Betfair Forum should dissuade you of the notion. This is not a cyberspace for retiring types. Nor the faint-hearted.
The idea that enabled this range, scale, and rate of trade was Andrew Black’s, originally. The thought occurred to him while he endured another boring evening after a day’s work at GCHQ, in Cheltenham. Away from his friends and family for another working week, Black had time to think and after a few hours had what seemed, not uncommon for him, a reasonable enough notion. The difference with this thought was that, the following morning, the idea still seemed a good one. At the same time, Ed Wray was rooted in J.P. Morgan’s prestigious and rewarding debts and capital markets division. Wray was committed to the Square Mile. The City was equally committed to him, and paid accordingly. Black’s plan was good enough for him to break completely the ties with all that he had known professionally and draw him away to another world (he even abandoned a cookery course). Then with Wray’s help, Black’s idea became a reality.
Today, the pair are partners and co-founders of one of the greatest modern success stories of the current business age. Betfair is the multibillion dollar gambling world’s own version of Google based on a solid business foundation that will endure long after other web gaming operations have imploded. If Google is the number one ranked Internet enterprise, Betfair claims top-ten status by the yardsticks of growth rate, revenue, and profit. By value, some reckon that of the globe’s digital start-up success stories there are only two others worth more of which you have probably heard: Wikipedia and Facebook. All this in less than a decade.
Black and Wray originally teamed up because both have a taste for making money. Wray has always been particularly thirsty for a profit. He saw the potential of Betfair and, after venture capitalists snubbed him – most just couldn’t understand the idea that Betfair allowed gamblers to bet with each other, directly and legally – simply invited favoured colleagues to bankroll start-up costs.
A sign that those who invested would be rewarded by being part of a successful business was in the reaction to Betfair of traditional bookmakers. While continuing to attack Betfair on the grounds that allowing punters to take as well as have a bet is a deregulation too far, a steep improvement in shop comforts was not entirely a coincidence. Above that, bookmakers then looked more to the web to shore up a business encumbered by having a portion of retail outlets in poorly-sited inner-city locations. Indeed, for new bookmakers, the Internet is now a point of departure. The web has advantages. For starters, once up and running the overheads are lower. Plus the anonymity allows women, previously put off gambling by the old-style, testosterone culture of the traditional casino and betting shop, to become major players and, in some cases, when finally happy to go public, millionaires and poker world champions. In addition, the Internet allows players to gamble at their convenience. The web is always wide open with broadband. Blackberrys and WAP phones enabling gamblers to bet on the move. Companies like Betfair never close, which in turn is great for business.
According to figures published by the International Federation of Horseracing Authorities, betting on the sport alone reached €89 billion in 2008, up 3 per cent on the previous twelve months. Gambling has experienced extraordinary growth in recent years, and Betfair has been both a contributor to this and well placed to profit. Since the millennium and Betfair’s arrival, gambling has tapped into an era of unprecedented disposable income – although this has been tempered by the recession from 2008. Betfair was brilliant marketed, so what is, after all, a simple concept, took a significant and growing slice of the cake; moreover it can claim credit for increasing the size of the cake, itself. Betfair also utterly prevailed over betting exchange market rivals. The most established, Flutter – which just predated Betfair but was a blunt instrument by comparison – fought to the end until the inevitable occurred and Betfair bought them out, absorbing them into the Betfair fold. In a market where there should have been room for any number of companies, one stands alone, at the top, without a serious threat to market supremacy in sight.
In Britain, the collaboration of Black and Wray has been widely acclaimed. In 2008, a second Queen’s Award for Enterprise followed the first in 2003. Further afield, between the two gongs, Betfair secured a foothold in Australia with a view to cornering a slice of the market for gambling in Asia where the passion for betting exceeds that in Europe many times over. Considering the Australian nation’s rich reputation for ‘have a go’ culture that has spawned some of the world’s most powerful entrepreneurs this proved more of a struggle than you might expect. Resistance to Betfair setting up in Australia proved even more vitriolic than back at the mother country where established bookmakers like William Hill, Ladbrokes, and Coral challenged Betfair’s legality and integrity. In the end Betfair prevailed in Australia thanks to the strength of the company’s business model and the same arguments that persuaded British officials, reshaped and refined for use there. In Britain the company has successfully lobbied sometimes unenlightened government departments that Betfair’s new way of gambling is a win-win situation of more taxes and jobs, as well as personal profit, and that government should at the very least not hinder progress and development. With the argument for deregulation articulated by well-versed, socially-aware entrepreneurs, official eyes were opened to the wider merit of general liberalisation of domestic betting and gaming restrictions. Most important, the Treasury was convinced of the merit in blessing Betfair.
To the west America remains untapped, offering scope for yet further exponential growth. Gambling on the Internet hit a pothole in the Fall of 2006 when George W. Bush signed legislation banning betting with foreign bodies like Betfair through the web. That said, taming the Internet by government statutes is easier said and signed than done. Blocking access to a website is little more than an inconvenience to the determined gambler with resource to the necessary reroute software. The side door remains ajar. That said, while other Internet operators have ended up facing criminal charges for alleged breaches of the Wire Act, 1961, Black and Wray have approached American interests with offers of investment, collaboration and partnership – along with a warning that if gambling goes underground, governments kiss goodbye to billions of dollars in duty. This is a lesson for likeminded entrepreneurs facing similar statutory obstacles. America may not be able to resist Betfair. When the time comes for America to liberalise online betting coast-to-coast and open up borders, Betfair hopes to have remained an eligible suitor.
The story of Betfair, of Black and Wray, is a story of our cyberspace age. Even after being wedded together for over ten years now, they remain a most unlikely pair. In the same way that the web can unite contrasting strangers many thousands of miles apart, their differences merge behind Betfair’s slick, uniform corporate image. The inviting open-plan offices at Hammersmith spread over two floors with riverside views for open-minded thoughts convey a sense of togetherness. Their respective strengths do come together in a way that means the whole greatly exceeds the sum of the parts.
Black is a warm, avuncular family man – four children and counting – albeit with an eccentric side that can leave someone meeting him for the first time feeling unexpectedly detached at any point in a conversation as his thought process departs on an unexpected tangent. As good a companion, especially against a backcloth of live sport, Wray is rather more direct. There is a greater urgency in him to reach the point of a conversation. He has just the two children but might leave them with his in-laws while he travels. (He did on a trip to South Africa in 2007 to attend a wedding and ended up, to his amusement, with Chris Bell, chief executive of Ladbrokes, for company, instead). There is little ceremony with Wray. When they met at that garden party in 1998 it was perhaps only the strength of Black’s idea that held them together for long enough that the pair agreed to talk again. Otherwise, there would be no partnership, no corporate identity. Black and Wray would have disappeared back into their own worlds, as if they had simply brushed shoulders amid the bustle of bookmakers on Britain’s