However, the betting landscape was transformed with the creation of a trio of betting exchanges who battled to become top dog. All this happened in the late 1990s, and the first time most gamblers new about betting exchange platforms came with Betfair and Flutter.com.
Andrew Black, an ex-professional gambler had the brainwave of a betting exchange after working in the stock market and impressed by the US shorts markets how investors could detail a price they wanted. Black worked on the software side of the business while Edward Wray was impressed by the concept to invest money and work on the business plan.
Around the same time Flutter.com were working on a betting exchange. It was created by two Americans, Stamford graduates who achieved $30M investment, which compared very favourable to Betfair who struggled to find venture capitalist investment having to ask for help from friend and family to the tune of £1M.
Flutter.com displayed their odds in a fractional format, and initially, didn't have in-running betting. Whereas Betfair used decimals. Also, the former charged less commission at 2.5% while Betfair was 4 - 5%.
In those early days, the Flutter platform was noted as having a much better interface and more robust. It was fast and far from clunky or suffered from server problems which seemed to bog down their rival.
It was very much a race to the front with both companies vying for publicity and custom. Andrew Black detailed they had an informer called 'Tin Man' who would email them about developments about Flutter. It seemed as though the $30M investment into Flutter was running dry at a crucial time. In a make or break gamble, Betfair pushed hard with their advantage within the market and merged with Flutter. However, it wasn't really a merger, it was a buyout and the Flutter was closed down seeing the end of the service.
From that point, Betfair had beaten the competition.
Around 2010, Betfair was floated on the London Stock Exchange and soon would be a £1B company. In 2016, it merged with Paddy Power to form Flutter Entertainment.
Most punters may have forgotten or ever realised of the existence of a third betting exchange at this time. It was a creation of bookmakers who were fearful of the impact of 'the machine' as it was called by many. In fact, it was founded by rails bookmaker Stephen Little, who wasn't afraid to take a bet. He used his computer coding skills to create Betmart. After some interest, the platform struggled to find investment from the bookmaking industry. As we many betting exchanges which either come and went or disappeared because the markets lacked liquidity, Betfair proved strong.
In fact, although it impacted markedly on bookmaker profits, especially those on-course, it was used by bookmaker far and wide. In 2006, Barry Dennis, who often featured on TV, talking the talk with John McCriririck, said he used Betfair within his business model to hedge or lay bets. This was to the sum of £15M in a single year. Far from insignificant sums of money it was a beast of a platform and in those early days liquidity was healthy.
The downside for many on-course bookmakers was that big names such as William Hill simply used Betfair rather than trade with independent bookmakers. It made no sense not too.
There is little doubt Betfair commissions went to exorbitant levels the Premium Charge was surely to knock a lot of these accounts on the head. Unfortunately, with competition from other exchanges such as Betdaq, Matchbook and others saw liquidity suffer across the board. It is a cause of concern for all platforms.
There have been many fears about betting exchanges with some saying they are illegal and encourage dishonesty. However, betting exchanges have added so much to betting and they won't be doing anywhere.
You will never stop progress and thankfully Betfair wasn't one of the hundreds of companies which were lost in the dotcom bubble.
No comments:
Post a Comment
Thanks for taking the time to comment. All spam will be deleted.