Before the debate, the betting market on Betfair regarding who if anybody would secure an overall majority was as follows; Conservative Majority 1.75; No Overall Majority 2.68; Labour Majority 17.0.

After the debate, the market was betting as follows: Conservative Majority 1.83; No Overall Majority 2.54; Labour Majority 17.5.

Consensus opinion held that the Liberal Democrat leader Nick Clegg had performed best, and, there is little doubt that this debate represented a significant turning points as regards the publics perception of him.   If he performs as well in the next two debates, this will have serious implications as regards the probability of a hung parliament.  Accordingly, one would anticipate that the odds on No Overall Majority are likely to shorten further ahead of the actual election.

I am trying to determine whether the loss of £11.9m relates to Betfair’s acquisition of Pokerchamps.

Betfair Australasia Pty Ltd had, according to Reuters, recorded a net loss of around A$11.8 million for the year to the end of April 2009.  Betfair’s marketing costs had allegedly increased to A$7.7 million for the year, up from A$1.3 million, “following the lifting of bans on interstate advertising”.

In a recent interview with Betview magazine Ralph Topping, Hills’ current head had this to say of Betfair;

“‘I call Betfair the choirboys of the betting industry – “look at us we’re so innocent” – actually the exchanges are the biggest Masonic lodge there is.   They’re a massive secret society where illegal gambling is taking place. What would throw a spanner in the works is if William Hill came up with an exchange model which could be offered in our betting shops or through our telephone business.”

A fascinating portrayal of one of the most transparent betting companies in the world.

EDITOR’S NOTE: BetFair’s Mark Davies has his own take on the Topping statement.

To those of us that engage in backing and laying, the result of the race is irrelevant; we are trading on price movements and price movements alone.  It was my belief (mistaken) that the contract that I had entered into with Betfair, would ensure that at all times Betfair would provide me with the means to back and lay, and that where it was unable to do so, the company would rule that as a proper market had not been formed on the race, my bet would be declared void, and my stake monies would be returned.

Alas, this was not so, as the following reply from Betfair makes clear;

“As the site was not available to any customers between 2 – 4pm, no bets were placed during this time and as this was due to matters beyond our control, our terms and conditions (11.3) state that:

We are not liable for the failure of any equipment or software howsoever caused, wherever located or administered, or whether under our direct control or not, that may prevent the operation of our betting services, impede the placing of orders for bets or the matching of bets, or prevent you from being able to contact us. In particular you should be aware that if you place a bet with the intention of subsequently placing a separate bet to reduce the liability incurred by the initial bet, there can never be a guarantee that the Exchange will be available at the point you wish to place the subsequent bet.”

As it happens, the race concerned was the 2.45 at Fontwell, which somewhat contradicts Betfair’s statement that; “As the site was not available to any customers between 2 – 4pm, no bets were placed during this time.”

That aside it would seem that I have been snared by Betfair’s all encompassing exclusion clause, to the effect that;

“In particular you should be aware that if you place a bet with the intention of subsequently placing a separate bet to reduce the liability incurred by the initial bet, there can never be a guarantee that the Exchange will be available at the point you wish to place the subsequent bet.”

I do not accept that this exclusion clause is fair or equitable, and accordingly I shall seek legal advice as to its efficacy.  In the meantime, I will no longer use my Betfair account.

Betfair are rumoured to be lining up for a 1.5bn flotation; it is a disgrace that they do not have back up servers to prevent their site from crashing.  When such an occurrence does take place, it is in Betfair’s interest to return all bets.  Betfair, the revolutionary betting company, have much to learn about the concept of goodwill.

Those that felt that Gold was not a “dangerous” trade are looking a little shifty this evening. Gold is currently trading at $1149 an ounce, down nearly $59 on the day and way below the mystical $1200 mark, much beloved of the recent bulls/bandwagon merchants.

Meanwhile, the U.S. Dollar has surged against all major currencies. Pre-report estimates were for the unemployment rate to remain unchanged at 10.2 percent. In addition, the total jobs lost came in at 11,000, well above the consensus estimate of 125,000. The October job loss was also revised lower.

Traders rushed to buy the Dollar on the back of the surprise news, as it raises the possibility that the Federal Reserve might be forced to raise interest rates much sooner than most had expected.

One City of London Prop trader, who wished to remain unnamed, said that he had been skinned after betting that the unemployment numbers would come in at worse than consensus;

“When the 10000 number came in, there was an audible gasp, followed by silence… then everybody rushed to close out their positions. Once again the market has taught us all a hard lesson… I don’t know of a single person who was short Gold, long the dollar at this time.”

A.  Not many people know what is going on within them.

The Guardian’s Nils Pratley was compelled to write at the time;

“Has Joe Lewis, the British billionaire, built a stake of 7% in Ladbrokes? The company apparently doesn’t know, but the story smells true.  Ladbrokes would appeal to a value hunter. A sizeable chunk of the revenues comes from electronic roulette machines. These properly belong in casinos but the government has agreed they can be operated by high street bookies. For Ladbrokes, it’s risk-free cash.  Lewis may also have noticed that his multi-millionaire friends are gamblers by instinct. Ladbrokes is doing nicely with its volatile, but often lucrative, income from “high rollers”.  Yes, deregulation has produced more high street competition, but the market leader is unlikely to be blown away. Given the weakness in the shares, Lewis would be making a reasonable bet.”

I wrote to Pratley at the time, suggesting that that his comments were careless in the extreme, and based upon no real knowledge of the gambling industry’s structure, its regulatory framework and its future outlook.  Pratley  did not reply.

In the interim period, Joe Lewis and his partners allegedly chalked up a loss of over $1 billion dollars in the collapse of the American investment bank Bear Stearns.

Ladbrokes, meanwhile, recently announced results for the 3 months ended 30 September 2009.  Group net revenue was down 15 per cent.  Gross win margin was significantly lower due to poor horseracing margins and an exceptionally low football margin.   Group operating profit fell 58 per cent to £22.4m.   The company also launched a £275m (€300m) steeply discounted rights issue, that comprised of a one-for-two issue of 300m new shares, priced at 95p, or a 48 per cent discount to its then closing price of 181p

At the time of Lewis’ acquisition of shares in Ladbrokes,  the company was valued at around 1.9bn; this morning, it is valued at 848mn.  This would suggest that Lewis may be sitting on a loss in the company somewhere in the region of 60m.

The Irish investors JP McManus and John Magnier, have also allegedly built up stakes in Ladbrokes in the past, and they too may now be sitting on significant paper losses.

In the wake of the recent release of the company’s results, Ladbrokes’ CEO Chris Bell spoke of the Ladbrokes franchise  as being “a profitable and cash-generative business with strong positions in markets that remain attractive.”

There is no reason, however, why the company’s recent profit warning, alongside the unexpected arrival of a heavily discounted, highly dilutive rights issue, should not trigger a change of management at Ladbrokes.

For those shareholders that have seen the value of their investment in the company decrease significantly  in recent times, the charge sheet against Bell could run as follows;

that he was guilty of swallowing the myth that gambling companies were resilient in the face of an economic downturn;  that he wrongly believed that fixed odds betting terminals would not cannibalise the company’s traditional core business;  that he did nothing to stem the tide as punters deserted the horse racing product; that he failed to appreciate the threat that Betfair poses to his company’s traditional business model; that he failed to exploit the opportunities presented in the newly liberalised betting markets of Italy and Spain; that he has failed to innovate; that he has failed to exploit the value of the Ladbrokes brand, not least in the online sphere, etc, etc …

Moreover, shareholders should demand that the £957,000 bonus that was paid to Bell this year be returned.  They should also question why it was that he was granted a 11.4% salary increase last summer (attributed to “reflect competitive pay levels and the continuing high levels of leadership Mr Bell gives to the business.”).

Meanwhile, in the wake of the recent rights issue, the short sellers have arrived on Ladbrokes’ lawn, with CATAPULT CAPITAL,MILLENNIUM PARTNERS, L.P and Highbridge Capital Management all recently disclosing short positions in the company.

Cross-posted from BettingMarket

In August 2009 it was reported that Betfair would be allowed to apply for a betting licence in France, ahead of the partial liberalisation of the French betting market in 2010. It was said that Betfair’s application had been approved by the French authorities, after heavy lobbying by Arnault.

Fast forward to October 2009 and it looks like Betfair will be excluded from the newly liberalised French betting market. A surprising defeat for Arnault and a major shock for Betfair.