Gambling Guide

Betfair Logo

Betfair is the world's leading Internet betting exchange. It is based in the borough of Hammersmith and Fulham in London, England.

Contents 1 History 2 Controversy 3 Betfair outside the United Kingdom 4 PokerChamps.com 5 External links

History

Betfair was launched in June 2000 and has become the largest online betting company in the UK and the largest bet exchange in the world. Betfair currently has over 100,000 clients and a turnover in excess of £50m/week.

A bet exchange allows punters (gamblers) to back and lay at odds set and requested by other punters rather than by a bookmaker. Betfair uses decimal odds, which are easier to work with when trading than fractional odds. Its bookmaking model - bringing together two counterparties with opposing views - removes the need for a bookmaker's markup or overround, which results in odds that are on average 20% better than bookmakers, according to the site's operators. Betfair punters are able to offer odds based on their own opinion rather than on a set bookmakers' margin. Betfair charges a commission on all winning bets, which is set at 5% of the net winnings for most markets--though it is possible to earn discounts.

The company has attracted much comment in the British and Australian press. Its co-founders, Andrew Black and Ed Wray, won the Ernst and Young Emerging Entrepreneur of the Year award. More recently the company was recognised by the Department of Trade & Industry when it was given a Queen's Award, the most prestigious business award in the UK.

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 [1].

In November 2005 the Tasmanian government announced a deal to licence Betfair in the state. The deal will see Tasmania receive AU$5 million up front and is projected to pay Tasmania about $40 million per year. Now that it has been approved by the Tasmanian Parliament, it will be the second licence Betfair has received outside the UK - the first being in Malta. The deal has infuriated the established monopolistic totalisers and bookmakers (due to loss of revenue) and governments (due to loss of taxes) in the other Australian states. Bans on bet exchanges exist or are proposed throughout Australia.

On February 28th 2006 Betfair launched a new interface, including current live scores of in-play soccer matches, jockey silks and horse form, and an express view in which only the currently available back odds are viewable. Within two days the 'Xpress' idea was copied by Betdaq, due to a suspected leak from within Betfair. The changes were criticised on the Betfair forums by many members who disliked the smaller fonts and the right-aligned columns, which displayed a large amount of whitespace. On March 1 these display issues were addressed, although many users still felt the site had been dumbed down in order to attract new punters to the exchanges. The gambit worked, however, with a significant increase in membership and deposits during the Cheltenham Festival.

Softbank purchased 23% of Betfair in early April 2006 valuing the company at £1.5 billion.

Controversy

The fact that gamblers can now lay outcomes on the exchanges has caused tremendous criticism from traditional bookmakers with much of the anger coming from the UK's "Big Three" - Coral, Ladbrokes and William Hill. These firms argue that granting who they consider to be anonymous punters the ability to bet that an outcome will not happen is causing corruption in sports such as horse racing (since it is much easier to ensure a horse will lose a race, the bookmakers reason).

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 well 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 agreements with governing bodies of sport including the Jockey Club, with whom they insist they will co-operate fully if the latter suspects corruption to have taken place.

In the summer of 2004, Betfair provided data to investigators, including the City of London Police which on September 1 led to 16 arrests on charges related to race fixing. Among those arrested was champion jockey Kieren Fallon, whose case remains before the courts as of this writing.

Betfair outside the United Kingdom

Although the bulk of its customer base is in the UK, Betfair offers its services in a number of countries. Betfair currently does not accept customers and/or credit card numbers from the United States, where online gambling is legally proscribed. Being the leading bet exchange, Betfair has been reluctant to entangle itself in legal trouble and has thus turned away business from countries where its services are prohibited.

Betfair admits customers from Australia but it has not been marketing its services there. Betfair is well known in Australia because of negative publicity from the racing industry and the bookmakers. With the exception of Tasmania the Australian state governments have not welcomed bet exchanges with open arms. The state racing boards fear that betting on horses to lose will cause corruption whilst reducing revenue especially for the TAB services. The mainland states have warned that Tasmania (which accounts for a fraction of horse racing in Australia) could become a pariah if its deal with Betfair proceeds. Some Australian states (such as Queensland) have banned their citizens from placing bets on exchanges, although gathering evidence to enforce such laws is difficult if not impossible. These states are now considering introducing tougher prohibitions and finding ways to make these bans easier to enforce. As of 2005, the federal government has declined to intervene, stating that gambling policy is a matter for states to deal with under the Constitution of Australia. Betfair launched in Tasmania in 2006.

Betfair also offers its services in Canada, where its legal status is somewhat uncertain. The Criminal Code of Canada effectively prohibits private individuals from operating an online gambling website in Canada. The Canadian provinces are permitted to offer sports betting and all provinces do through the Sport Select program, but offering single sports betting (Betfair's forte) is prohibited even to the provinces. On the other hand, an individual placing a bet (even a single sports bet) from within Canada to a foreign website is not violating the Criminal Code. As a result, Betfair's services are considered to be grey market in Canada - no laws are broken when a Canadian bets with Betfair, but the Canadian courts could not likely be used to resolve disputes either. In addition, not all Canadian credit cards can be used to deposit money with Betfair. This is because the credit card departments of some Canadian financial institutions are intertwined with American firms, meaning Betfair cannot be certain of the nationality of the card number.

PokerChamps.com

In late 2005, Betfair purchased the online poker site PokerChamps.com, which the company will integrate into its network, replacing a poker arm that previously used Cryptologic software.

External links

• Official site
• Betfair Lite (handhelds, etc.)
• Poker Champs
• Interview with company founder
• Betfair Guide