Bet Exchange News - Aug 2004

BetOnBet correction

In last month's issue of Bet Exchange News we reproduced Playp2p's review of Bet Exchange News. In Playp2p's article, they referred to my review of BetOnBet and wrongly said that fees are charged on a bet by bet basis rather than an event by event basis. I added an editorial correction at this point explaining that they were incorrect with this statement and that BetOnBet only apply commission on a bet by bet basis on their multi bet feature, on normal win,lose, draw type markets commission is calculated on event profits. Unfortunately this comment was left out when the July issue was first distributed therefore, anyone who accessed this article within the first few days of release may have been mislead. I apologise for any confusion and am pleased to say that this has been corrected in the article which can now be viewed in the archive.

Betfair link with Kerry Packer as exchanges get the go ahead in Australia

Following a lengthy review the Federal Government of Australia has left its gambling laws unchanged paving the way for the betting exchanges to apply for licenses to market, sponsor and operate from within the country. Throughout the review process TAB, who effectively have a monopoly on off course betting conducted an aggressive and increasingly desperate campaign against Betfair. The government in reaching its decision appears to be accepting Betfair's stance that TAB's arguments had no real merit and were motivated by self serving commercial interests. The next step is for Betfair to apply for licenses in each of the eight Australian States. Mark Davies commented:

"States can go one of two ways - they can prohibit us, which would seem strange, since we would continue to operate out of London and pay taxes to Gordon Brown, or they can license us, which would benefit their economies."

Following on two weeks after this announcement, Betfair made their own announcement of a major international partnership with Australian media giant Kerry Packer's PBL. The deal which involves the Australian and New Zealand Betfair business will see Betfair partnering its technology with PBL's impressive sports coverage and its unparalleled reach to the Australian public. This deal which is subject to Betfair being granted a license to operate in Australia is a huge step forward for Betfair and a ringing endorsement of their growing status in the worldwide betting business.

Racing's purge continues

"There is a degree of pain that racing has to endure when it receives this kind of publicity. It's vital the regulatory body is able to demonstrate its ability to investigate matters thoroughly and effectively. We are able to access [betting] information now through the memorandum of understanding and production orders, and can therefore identify patterns through the monitoring of betting activities."

The above quote comes from John Maxse the Jockey Club's director of public relations talking to the Racing Post. This month has seen an increasing number of cases of sleaze in the racing world which are discussed below. Is the increase in this type of case due to an increase in the problem caused by the opportunities created by betting exchanges, or is it due to improved detection rates which has been made possible by the exchanges' audit trails? Your view on this matter will depend whether you are pro or anti betting exchanges. I believe the truth lies somewhere between the two, however as increasing numbers of racing insiders are brought to book, future indiscretions in my opinion seem to become increasingly less likely.

Jockey Pat McCabe has been called to appear in front of the Jockey Club Disciplinary Panel in regard to his ride on Red Lancer at Wolverhampton last November. This race was one of those highlighted in the Scam documentary on ITV where the investigator had information in advance that the horse would not win. Sure enough, the horse got left behind from the start having had a "snooze on the rails" as the commentator put it. In response to the news of the forthcoming disciplinary, McCabe's solicitor commented that there is not a shred of evidence to convict him.

Well known jockey Gary Carter was sensationally charged with deliberately losing eight races throughout August and September 2003. In common with the McCabe case there is an alleged link to London based tailor Christopher Coleman who was warned off from racing after the Jockey Club found that he had accessed privileged information from former jump jockey Barrie Wright.

Owner Darren Mercer has been warned off for laying his horse Joss Taylor in the Welsh Grand National, when he was aware that the horse would not be running. Mercer, who claimed that the sum in question was only £410, and it was to offset an earlier, much bigger bet, was seemingly furious, but decided not appeal. He claimed that he was unaware of the rule which was introduced last September and prevents owners, trainers and stable staff from laying their own horse to lose on betting exchanges.

Miles Rodgers former boss of Platinum Racing who featured in the recent Money Programme special on betting exchanges has launched his own tipping service in which he boasts of his racing contacts and insider information. Rodgers who was warned off for two years after being found guilty of laying Uhoomagoo and Million Percent on Betfair did the racing industry no favours by saying that it is impossible to make betting on horse racing pay without genuine inside information. The Jockey Club are unable to take action against him despite his claims, though they were keen to stress that anyone within racing who is providing Rodgers with this information is contravening racing's rules.

This months betting highlights

Todd Hamilton wins the British Open, becoming the second winner in a row to be backed at maximum odds of 1,000 on Betfair.

Greece win the Euro2004 having been backed at up to 500 on Betfair.

France score two late goals to snatch victory from the jaws of defeat against England, bringing a bumper payday for punters who backed France in running at up to 500.

Conspiracy theorists back the 2-2 draw in the Sweden v Norway match at massively shortened odds with £12,000 being matched at 6.0 or less on Betfair and with Betdaq reporting massive volume on the score at odds as short as 6.4 compared with the 20-25 which would be the norm in such a game. On this occasion backers got remarkably lucky as an open competitive match amazingly finished in the 2-2 draw which safely saw both teams through to the quarter finals.

Frustrated tennis punters turned their attention to betting on whether there would be any play on Centre Court on one of the particularly wet days. Punters who backed a total washout at odds as long as 7.0 collected as in excess of £350,000 was wagered on this innovative market.

Horse Racing Levy exceeds £100m

Figures published this month by the Horse Racing Levy Board show that the amount collected has for the first time topped £100m. This is in marked contrast to the disappointing figure collected last year which was used by many in the industry as ammunition against the betting exchanges claiming that they would be ultimately responsible for the demise of the UK horse racing industry. These claims were strongly refuted in Betfair's detailed report "The Funding Question" a summary of which can be read in the March 2004 issue of Bet Exchange News. The conclusions of Betfair's report appear to have been vindicated by this record figure which includes a contribution of £4m by the betting exchanges, a figure which has increased by 75% since the previous year. Howard Wright in the Racing Post made the following comments in an article entitled "Is memory selective on exchanges?"

"CONFUSED of Hammersmith writes to ask if anyone else can remember back to a year ago, when a huge slice of the blame for the below-forecast levy yield from bookmakers was levelled at lower horseracing margins, which in turn were laid squarely at the door of the betting exchanges?

One year on, no-one from the betting industry seems to be trumpeting that margins have climbed out of the trough. Indeed, Betfair say the percentages are still declining year-on-year, while their business continues to grow, with profits said to be up eight times since 2002.

Yet the Levy Board stopped counting when the yield from the bookmakers for 2003-4 reached the remarkably round figure of pounds 100 million, an increase of 34.2 per cent over the previous year.

Could it be that the damaging effect of betting exchanges is not so pronounced as the traditional bookmakers would have us believe?

Maybe other factors should be given greater credit for the volatility, notably the impact of results, which generally favoured punters at a crucial time in 2003, whereas they went the way of the bookmakers earlier this year."

Betfair step up anti money laundering and fraud measures

Over the coming months all Betfair customers will be required to provide proof of identity. They will be required to provide three items, namely 'personal identification' such as passport, driving license etc., 'address verification' such as a utility bill and 'payment verification' such as a recent statement of a Betfair registered credit card. Betfair already have strong rules against collusion, and accounts are monitored for abuses such as passing funds from one account which could be indicative of money laundering.

Betfair wins Technology award

Betfair have won the regional award for the National Business Awards for the best use of Technology, and now go through to the National final in November. Commenting on the award David Yu, Betfair's CTO said

"Our technology is constantly being challenged by the phenomenal growth of the company and the event-driven demands of our customers. We have retained 90% of the betting exchange market and it is paramount that we remain as the leader in the technology battle."