Betfair is a renowned British gambling company that was founded in 2000. It operates the world's largest online betting exchange, and its product offering includes sports betting, online casino, online poker, and online bingo. The company's operations are divided into two divisions, UK and International. While the UK operations are conducted from its headquarters in London, the International business operates from satellite offices in Ceuta and Malta. In February 2016, Betfair merged with Paddy Power to create Flutter Entertainment.
Betfair's History and Growth
The company was founded in June 2000 by Andrew Black and Edward Wray. In April 2006, Softbank purchased a 23% stake in Betfair, valuing the company at £1.5 billion. In December that same year, Betfair completed the acquisition of the horseracing publishing company Timeform (which traded under the name Portway Press Ltd).
Betfair was the first betting company to sponsor an English football team, featuring on the kit of Fulham F.C. in the 2002-03 season before the Gambling Act 2005 permitted the industry to advertise on television and radio.
In March 2007, Betfair launched its Betfair Radio service, available via its website, on the telephone, and elsewhere. This has now become Timeform Radio, broadcasting horse racing commentary and results. In January 2009, Betfair announced the purchase of the TVG Network in the United States from Macrovision for US$50 million as part of Macrovision's dissolving of TV Guide's assets.
In November 2009, Betfair announced a deal with the New York Racing Association that allowed Betfair's customers to start wagering immediately on Aqueduct's thoroughbreeding races. Betfair floated on the London Stock Exchange with a stock symbol of BET on 22 October 2010 at £13, valuing the company at £1.4bn ($2.2bn).
In March 2011, the company moved some of its operations to Gibraltar to reduce the amount they paid in tax. In May 2012, Betfair launched a Sportsbook (fixed-odds betting) service to compete with traditional bookmakers.
In August 2014, Net Entertainment NE AB entered into a partnership with Betfair to expand its reach into the UK market. It was announced in September 2015 that Paddy Power and Betfair had agreed on terms for a merger. The transaction was structured as an acquisition of Betfair by Paddy Power, and the enlarged entity, named Paddy Power Betfair, is based in Dublin. The merger was completed on 2 February 2016.
Betfair's Operations and Services
As of 2013, Betfair had over 4 million customers (1.1 million active customers) and a turnover in excess of £50 million a week. The company employed 1,800 people worldwide. Betfair claims on average 20 percent better odds than those offered by a traditional bookmaker. Betfair charges a commission on all winning bets, with the market base rate set at between 5 and 7 percent of the net winnings for most markets, depending on the country of residence. However, it is possible to reduce the base rate by as much as 60% depending on the client's wagering activity on the site.
Betfair introduced a Premium Charge in September 2008 for wagerers whose winnings are particularly high compared to the amount of commission they pay. Members whose commission charges amount to less than 20% of their gross profits, and have placed bets in at least 250 markets, are required to pay the additional charge to make up the difference.
In late autumn of 2005, Betfair finalized a deal that began in early summer to purchase the online poker site PokerChamps.com, which the company integrated into its network, replacing a poker arm that previously used gaming technology software from CryptoLogic Inc. Cash 4 Clubs is a sports funding scheme set up and funded by Betfair, providing sports grants to local community sports clubs.
Betfair's Overseas Business
Betfair owns subsidiaries in the United States, including the TVG Network, dedicated to horse racing, broadcasting live races as well as race analysis, interviews, handicapping tips, and features. The company acquired TVG Network in 2009 for $50 million. Betfair also has a subsidiary called BetfairCasino.com, which is a New Jersey-licensed provider of online gaming products.
In February 2014, Betfair was granted two online gambling licenses by the State Gambling Commission of Bulgaria. In April 2014, Betfair launched its betting exchange in Italy, and in May 2016, it launched a betting exchange in New Jersey, United States.
In March 2018, Betfair successfully trialed an auto-cash out feature with its live betting customers in the UK and Ireland, allowing players to lock in their chosen profit. In December 2021, Betfair announced the launch of their online casino overseas, making it available to consumers residing in the UK, New Jersey, Argentina, Mexico, New Zealand, Australia, Iceland, Ireland, and select states in the US.
Betfair in Australia
In November 2005, the Tasmanian government announced a deal to license Betfair Australia in the state, making it the second license awarded to Betfair outside the United Kingdom, the first being in Malta, with subsequent licenses following in Austria and Germany. Tasmania now receives substantial tax revenues; however, the deal infuriated the established monopolistic totalisators, bookmakers, and governments in other Australian states due to the loss of revenue and taxes.
A ban on the use of betting exchanges took effect in Western Australia on 29 January 2007. Betfair successfully claimed that this new law violated the Constitution of Australia. In a unanimous verdict by the High Court of Australia on 27 March 2008, two provisions of the legislation, purporting to ban Western Australians from using a betting exchange and prohibiting an unauthorized business from using Western Australian race lists, were declared invalid as they applied to Betfair.
In August 2014, Betfair completed the sale of its 50% stake in Betfair Australia to venture partner Crown Resorts, one of Australia's largest gaming and entertainment groups.
Betfair's Chief Executive Officers
In October 2005, CEO 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. In January 2006, Chief Technology Officer David Yu was appointed CEO of Betfair. In December 2011, after overseeing the company's 2010 Initial public offering, Yu resigned his position. Breon Corcoran, who was formerly employed by Paddy Power, was appointed in August 2012.
Betfair has sponsored numerous sporting events, teams, and organizations, including Barcelona F.C. and Conmebol - South American football's governing body. It is currently the main shirt sponsor of Cruzeiro Esporte Clube.
Betfair's Controversies
Illegal Dividends
In its 2014 annual report, Betfair admitted that its final dividend in 2011 and the interim and final dividends for 2012 and 2013 were paid erroneously because the "company did not have sufficient distributable reserves to make those distributions and so they should not have been paid by the company to its shareholders". Betfair also admitted that the purchase of 6.5 million shares in April 2012 was executed when the "company did not have sufficient distributable reserves".
Data Theft
In September 2011, Betfair admitted that it had concealed the theft of confidential customer data from the company's 2010 share prospectus. The theft included the payment card details of most of its customers, "3.15 million account usernames with encrypted security questions", "2.9 million usernames with one or more addresses", and "89,744 account usernames with bank account details". The company further stated that it had informed the Serious Organised Crime Agency of the incident, which happened on 14 March 2010 but was not discovered by Betfair data security until 20 May that year.
In-Play Betting Concerns
Betfair offers in-play betting across a variety of horseracing events. There has been some controversy over alleged broadcast delays of up to five seconds. Among the bettors on Betfair's exchange are companies that place high-speed automated bets using predictive models. Some of these companies use courtsiding data transmitted directly from agents located at the event, giving them an edge over recreational punters who do not receive the latest scores as quickly. The practice drew widespread scrutiny after one such agent, working for a company established by former Betfair employees, was arrested at the 2014 Australian Open; charges were later dropped.
Advertising Controversies
In September 2009, the Advertising Standards Authority (ASA) banned Betfair from running two billboard adverts that claimed their Starting Price (SP) offered 40% better returns, on average, than the industry SP. The ASA found that only 10% of the bets used by Betfair in their calculations yielded at least 40% better returns than the industry SP.
In February 2011, the ASA banned another Betfair advert, stating, "On Betfair, you cut out the middle man, which means you could win bigger". The regulator said that the description "cutting out the middleman" was ambiguous and misleading because the site takes a commission fee on winnings, which could be perceived as a middleman role.
Premium Charge Controversy
Though Betfair stated that the Premium Charge would only affect less than 0.5% of its members, it attracted criticism on its member forum and from the broader exchange betting community. According to The Guardian, the charge significantly changed the relationship between Betfair and its customers, as Betfair can no longer claim to be a neutral betting exchange "where winners are welcome" (its mantra for many years). In June 2011, Betfair raised its Premium Charge to 60% for some customers, a move which was met by outrage.
Sports Integrity Issues
Betfair has noted that they have signed numerous information-sharing agreements with governing bodies around the world, with whom they cooperate on matters if the latter suspects corruption to have taken place. Betfair has agreements with some thirty sports bodies, such as the Lawn Tennis Association and the British Horseracing Association, and has been instrumental in several high-profile investigations into suspicious betting.
In June 2010, high-profile racehorse owner and professional gambler Harry Findlay was banned by the British Horseracing Authority for using Betfair to bet against his own horse, Gullible Gordon. At the disciplinary hearing into Findlay's betting against Gullible Gordon, it was revealed that Findlay had been in financial difficulty and that Betfair had allowed him to use the account of a friend, racehorse owner Eammon Wilmott. In a further twist, the bets were actually made by Findlay "associate" Glenn Gill. Betfair themselves condemned the punishing of Findlay, saying the punishment was not "proportionate or consistent with similar offenses in the past".
Winning Bets Voided
In August 2007, Betfair took the unprecedented step of voiding all bets following a tennis match between Martin Arguello and Nikolay Davydenko because of suspicious betting patterns. In December 2011, Betfair voided all in-running bets on a race at Leopardstown after an automated customer reportedly laid the winning horse Voler La Vedette at odds of 28-1, even as the mare crossed the finish line. The controversy was described as "devastating" by Betfair CEO Stephen Morana, and it affected at least 200 customers who were refused more than £23M in winnings. Some of these customers are believed to be pursuing their case with the independent adjudication body IBAS, as Betfair no longer falls under the jurisdiction of the Gambling Commission since its move to Gibraltar in 2011.
In September 2011, Betfair refused to honor winning bets made by their customers on The Tote Jackpot bet at Newmarket Racecourse. Although funds were removed from customer accounts before the bets had won, the company claimed that due to "technical issues in transmitting bets into the Tote pools in the last 10 minutes before the pool closed", they would not pay any winnings. Reportedly some small gamblers were deprived of wins of up to £16,000 apiece.
Conclusion
Betfair remains a prominent force in the online betting industry, offering a wide range of services and products to its customers. The company has faced its share of controversies and challenges over the years, but it continues to adapt and grow in the ever-changing landscape of online gambling. As Betfair continues to expand its international presence and improve its services, it remains a popular choice for sports bettors and gamblers worldwide.