Will Air France Flight 447′s black box be recovered?

Sport
The most anticipated sporting event this week is still the ongoing NBA playoffs. Last week the Lakers had only a even chance of wining compared to the Orlando Magic, this week though Hubdubbers make it a surefire bet it’s the Lakers for the win.

NBA Finals, LA Lakers – Orlando Magic, series outcome?

Politics

For anyone who thought British politics was boring and mundane, the recent expenses scandal in the UK is certainly creating a right fuss… Will it bring down Gordon Brown though? Well the expenses scandal and Brown’s staggering loss in recent elections in the UK, has his chances of being forced out in 2009 as high as 62% as of now.

Will Gordon Brown resign or be forced from office by the end of 2009?

Entertainment
David Carradine’s tragic death last week under ‘mysterious’ circumstances was shocking. His odd demise whether it was suicide or accidental, perhaps was caused by drugs? Hubdubber’s seem to think drugs a quite likely cause. There’s a 72% chance a autopsy shows drugs were in Carradine’s system.

Will autopsy show drugs be found in David Carradine system?

This weekend three main movies are vying for contention at the box office, Up, The Hangover and The Taking of Pelham 1 2 3. Up has already received critical acclaim, but the comedy The Hangover is gaining ground this week. As of now Up though still seems to the be the likely winner at the box office.

Which will be the No. 2 film at the U.S. box office the weekend of June 12-14, 2009?

Trading percentages given are at time of posting and may not match up with markets after the fact due to Hubdub users forecasting on said markets. Posted from newspundits blog.

International Leaders in Sport conference, Auckland, New Zealand. April 3-4th 2008.
Keynote speech, April 4th. Mark Davies, Betfair.

“New Understandings in Sports Betting”

Minister, ladies and gentlemen… Thank you very much for your kind invitation to speak to you today. I have once before been asked by sport to address it, as a member of the bookmaking industry, and it was apparent when I got there that they expected me to tell them that sport was their business, and making money out of it was ours. I can tell you that those who spoke to me afterwards said that they left the conference surprised to hear that a bookmaking operation could hold views so different from what they expected. I hope to be able to break down a few perceptions today.

A number of perceptions have grown in recent years in relation to betting and sport which I believe are completely false and misleading, the first of which is that sport suddenly has a new problem as a result of sports betting on the internet.

Betfair is at the forefront of this debate for one very good reason. When we launched the business back in 2000, we did so under the bold slogan “revolutionizing betting”. By that, we meant not just that we planned to revolutionise the experience for the customer, by allowing him better choice, better value, and – for the first time – control over what he did; but, crucially, that we were going to transform the way that betting worked with regulators, both in the sport and government sphere.

The basis of our model was the business that the founding team had come from, in the main, which was the business of finance. I used to trade bonds at JPMorgan, and I can tell you that what our customers do is exactly the same as what I used to do in my previous life, with the single exception that where I had to pore over balance sheets and income statements, they pore over form and team-sheets. It could be argued – indeed, it has been – that they will therefore know a great deal more about the underlying mechanics of their markets than I ever knew of mine; but the principles are exactly the same. You express a view of value about a given outcome or a given currently-traded market price about an outcome. The extent to which this is true was really brought home to me when I was asked to speak at the Swiss Futures and Options Association’s annual gathering at Birkenstock – you can see I get all the good gigs – which was attended by all the leading exchanges of the world: The Chicago Board of Trade; the Swedish stock exchange, whose platform powers another eleven stock exchanges worldwide, the London Clearing House and representatives of the LSE, Nasdaq, and many more. My presence there was an irritation to many: what place had a sports betting exchange at such an event, people wanted to know. But by the end, they were so ready to accept that what happens in the sports betting world and what happens in their world is actually identical that they wanted to know why we weren’t taxed on the same basis.

So we came to the sports betting market saying this: why is it so opaque? And by that, we didn’t mean just, “why is it not clear what the customer is charged?” but “why doesn’t anyone know who is betting? The City had gone through the Big Bang in 1987: the sports betting market was continuing to exist as it had done for most of its legal history: with the power in the hands of a few, and everyone else ignorant of what was going on.

We sought to change that, and at first, people welcomed it. But the more successful we became as a company, the more people – led to a large extent by our commercial competitors – started to change their tune, for a very simple reason: that with transparency came issues which people had never been able to see clearly, and so had always wanted to believe didn’t really exist.

Before I go on, I want to give you a couple of analogies.

The first is perhaps a little high-brow. In his philosophical work Being and Nothingness, the French author Jean-Paul Sartre debates whether anything actually happens if we aren’t there to see it. The example he gives is of a tree falling in a forest. How can we know, he says, that the tree actually fell, unless we saw it happen? Just by virtue of seeing it lying down rather than standing up, he says, we assume it has fallen over. It is an absurdist argument which exists to enable philosophical theorising; but everyone would accept that in reality, you don’t need to witness something to be able to acknowledge that it has happened.

The second analogy is rather closer to home. As I understand it, the speed limit in this country is 100km/h. I would imagine that it was long-suspected that people broke this limit, particularly on the main highway. People observing cars drive past would have had a perception of this, but no evidence for it. Then, one day, someone came up with the idea of a speed camera, and a number were installed. The following week, a number of cars would have been recorded as speeding. Would anyone seriously suggest that what caused the cars to speed was the camera? It is self-evident that the camera did nothing but produce the proof of an existing fact.

The reason for these analogies is this: in recent years, there has been a growing clamour from the media and from sport that there is more corruption today than there ever was, and the cause of it is betting. In same cases, they even claim that the cause of it is Betfair, on the grounds that you will find very few corruption stories in the last seven years that do not mention Betfair, which has led some to argue that if the words ‘Betfair’ and ‘corruption’ appear in the same paragraph, that must somehow be evidence of the fact that Betfair is the cause, and corruption the effect.

Betfair takes a very different view. Our view is that we are the speed camera, showing you something that you never knew was there. We are shining a light into the darkness, and people give us a hard time for having a torch.

Why do we think that? Because the level of transparency which Betfair has brought to the sports industry is unprecedented. Every single bet placed on Betfair is recorded, to the second. Every click of your mouse; every movement of funds in and out of your account – we know where it has come from, and we know where it is going. As I mentioned, we brought financial markets best practice to the sports betting market. We came into a world that was entirely opaque, and made it entirely transparent. If there was anything hiding in the murk, it can now be seen.

An interesting example of this came in August last year, when a match at the Poland Open in Sopot between Nikolai Davydenko and Martin Arguello-Vasallo raised eyebrows, when Arguello won by default after Davydenko withdrew while leading. You cannot fail to have read about this: not an article about tennis and the ATP now appears without mentioning it. It was all over the press not just for days, but for weeks; and it continues to be brought up, as the ATP’s investigation into what happens continues.

Now, there are a number of things to note about this incident. The first is how it came to light. As I mentioned, we are fully aware of all the betting details on Betfair; but what I didn’t mention is that everyone looking at the site can see bets betting placed, and can see the prices moving in a free market. The 40 or 50,000 pairs of our customers’ eyes that we have on our markets at any one time can all see exactly what is happening to the odds. And our forum allows sports punters to discuss what they can see.

Davydenko’s lawyer criticised Betfair for having sought publicity from the incident but the reality is that we were called by the media, not the other way around; and the reason for that was that what was happening was in the public domain. Everyone on our site could see that the World Number 4 had started at $1.20 and moved out by the end of the first set to $2.28, even though he won it with no apparent difficulty, and was paying $3.75 after losing the opening game of the second set on his serve. And well before he actually pulled out through injury, hundreds of people on our forum were speculating that he must be about to pull out.

I cast no aspersions here: it is entirely possible that the player was carrying an injury and some group of people were aware of the fact. There is no consistent rule across sports, as things stand, against insider trading- the rights and wrongs of which can be debated later perhaps, but it might be worth me mentioning as an aside that we don’t make the rules; we just help to enforce them once they have been made. So I am not suggesting that the match was corrupt. We, as a company, made a decision to void the bets on it, because we felt that the betting itself was not fair. It was clear to us that the betting was leading events, and not the other way around. But I would also mention here that another fallacy of this position was that it served us to do so. A number of people commented at the time that it is all very easy for a bookie to void bets when a result is going against him. But this misunderstands the whole business proposition we have: we are set up like a stock exchange, matching up supply and demand, and taking a cut in the middle. This means that we have no exposure to the result, or, to put it another way, we don’t care who wins. We make money if the event happens, regardless of the outcome, and we make no money if the event is voided. It is also worth mentioning, as an aside, that while many were crying foul about the movement in prices, we also, of course, had full access to the information as to who was betting. The complete audit trail created by our systems and our Know Your Customer checks mean that we know exactly who was behind the bets.

So, we voided the market, at a cost to us. But what happened next is perhaps the most striking of all. One after another, big players around the world came out and said that they had been approached to throw matches. One after the other, they said that they knew of players who had, or had themselves, been offered money by people who wanted them to rig the result. In several instances, these offers were made before the advent of internet-based sports betting.

Now, for me, the big question is, Why did it take a company that stands for transparency to make a stand before anyone mentioned that there was a problem? If we had not voided the bets on the match, would tennis be better or worse off? Is it helpful to know if you have a problem, or would you rather remain ignorant of it until it kills you?

The answer, with some in sport, would appear to be the latter. One sporting body, unconnected with this case, which we approached with a view to signing an information-sharing agreement, actually told us directly that they didn’t want information because they were frightened about the level of corruption it would reveal. Time and again, since the Poland Open, we have been told (although not by the ATP, I should add, who were among the first to embrace the information-sharing agreements we have pioneered) that we are causing sport a problem that didn’t previously exist. And yet, the evidence is there for all to see: we made our stand after people had been approached. Once we made our stand, people started to come out and talk about things. And yet a sizeable number of people want to return to where we were before we blew the whistle.

The reality of this point of view is that it is childish. Corruption is something that no-one here wants to see, and every one of us wishes didn’t exist. But it does exist. And, we cannot, like children confronted by a monster, hope that if we close our eyes, the monster will disappear. Even less can we credibly say that all the time we were sitting with our eyes shut, the monster that stood before us wasn’t there, and that it was only the person that told us to open our eyes that put it there.

The nature of sport is that it produces clear-cut results, and where there are clear-cut results, there is money to be made speculating on the outcome. This, again, is a basic truth. You may not like the fact that for some people, this is the sport; and I accept that for many, in a perfect world we would simply have no betting at all. Some sports bodies still struggle to accept just how great the demand for betting is. For example, I went to talk to the IOC about betting about eighteen months ago, and they, in line with many others I have met (to be fair to them) were totally incredulous that anyone would want to bet on who would win the 100metres in Beijing. Again, I accept that this is not the Olympic ideal, but it is a fact that they do, and rather than close our eyes to the fact, we should work with it. Because the reality, strange as it may seem, is that for many people, having a bet on the 100metres final retains their interest. If that hundred metres final comprises six Americans, a Jamaican and a Cuban, there will be plenty of people won’t give a monkey’s who wins it, unless they have had a bet to make them feel involved.

Again, I accept that this is not what sports bodies might want in a perfect world. But we don’t live in a perfect world. And if you want to live in the real world, you have to accept that there are plenty of people with strong opinions who want to express them through a bet. Plenty of people don’t accept this. Just this week, the coach of the Brisbane Lions AFL team, Leigh Matthews, showed that he is among those who don’t. Described as “certainly neither a wowser nor a saint, and having no intention of ever becoming either”, Matthews is a four-time premiership coach and was named Player of the 20th Century. He told a press conference just a few days ago that the Australian Football League should sever all ties with the bookmaking industry. Let me quote him: “The one thing that really annoys me is any thought that whatever we do as a game has something to do with people betting on it. I hate that,” he said. “I would prefer that nobody bet on the AFL. Then all innuendo would not exist. It’s one of the unfortunate progressions in the evolution of the world that betting agencies now bet on everything. I think that’s really unhealthy, really unsavoury and really unfortunate.”

As I say, I can understand this view in the ideal: he would rather no-one bet on the sport. But what I do not accept is that betting companies offering bets on the sport is what makes people bet on it. If the legal betting companies offer bets on the sport, it is because there is demand for bets on the sport – and if that demand were not offered in a regulated environment, it would be filled in an unregulated one. So while I do not argue with Matthews’ picture of the ideal, I struggle with the argument that he follows it up with. Again, let me quote him directly: “I think [the AFL] should say to the betting companies `you want to bet on the footy, fine, but don’t include us. Don’t ask us to have rules and regulations that pander to people who might want to bet on a game.”

For me, this view is absurd. It is essential that there are rules in place, and essential that there is a mechanism for those rules to be upheld. The AFL’s own experience of having named information of who is betting on its sport has been that it has been able to help players with addictions, and drive out a problem which could, unchecked, lead to corruption. Having no rules or no means of enforcing them is precisely what leads to problems – not just here but in any walk of life. And yet Matthews’ criticism was taken up by the press. They argue that when people were caught breaking the AFL’s rules preventing players betting as a direct result of the agreement the AFL signed, the sport was shown in a poor light. It wasn’t the fact that rules were being broken that was troubling, but the fact that it had become apparent. It should, wrote one commentator, be all about perception, rather than reality. In other words, it would be better to sweep things under the carpet.

I think, in contrast, that we should accept that the demand of people to be able to bet on a clear-cut result is a fundamental reality, and in itself is not a problem. The trouble is that where there is money to be made, there are also people who would seek to corrupt. Sadly, this, too, is a basic reality of the world we live in. So we must protect against corruption, which means having rules and regulations in place, and a proper means of policing them.

The idea that corruption must be rooted out is uncontentious. The question is simply how we do it. In my view, agreement on this is hindered because many people think that betting causes corruption. But betting in itself is not corrupt. Corrupt betting is corrupt, but corrupt betting is not really betting at all, by definition: it is merely getting guaranteed financial reward through securing a fixed outcome, which isn’t the same as backing your analysis of a given contest and speculating on the chances of a particular outcome at all. In other words, the key part of the phrase ‘corrupt betting’ is not the betting part, but the adjective that precedes it: or to put it another way, corruption is corruption, through whatever channel it happens to manifest itself.

This is an important point, because the first thing that must be done if the battle against corruption is to be won is to work out who is on whose side here, and what tools we have to fight with. At the moment, the perception exists in sport that betting is the cause, rather than on occasions (and by no means on all occasions) a facilitator, and the inevitable next step in sport’s logic is to blame the betting companies for their problems. And this means that we have a fundamental issue, because the betting companies – by which I mean the legal, regulated, and co-operative betting companies – are actually a tool in the fight.

You can accept that betting for betting’s sake is not in itself the problem, and that 99% of people who make money out of the sporting result, through betting on it, would never consider affecting that result to suit. But that still leaves us with an issue: using the money being generated by that 99% of people to make money out of a corruptly fixed result clearly is a problem. But here we must consider what added ingredient is needed to allow someone to do that – to turn betting from a pastime into a facilitator for corruption. Put simply, “How do you corrupt?”

If you or I decide we want to rig the outcome of a horserace, or a rugby match, or any other sporting event, it isn’t immediately apparent how we would do it sitting here. We can very easily have a bet right here, and right now, on almost any sporting event taking place in the world at the moment; but what we can’t do, sitting here, by ourselves, is affect the outcome. For that, we need the collaboration of the people involved.

Now, there’s a story about Winston Churchill which goes something like this. Winston Churchill, apparently a few the worse for wear – as was his wont – allegedly once approached a lady and asked her if she would be prepared to sleep with him for £1million. She thought about it for a moment, and said she would. He then asked her if she would be prepared to sleep with him for a tenner, and she was horrified. “What do you think I am?” she exclaimed. “Madam,” he replied, “we have established what you are. We are now just negotiating the price.”

As was true of Winston and his target, so is true of sportsmen and corruptors. When I talk to people about corruption in sport, and protest at the idea that internet betting in particular has increased corruption just because the sums of money involved are that much greater, I think of that story about Winston Churchill. Because as far as I am concerned, either you can be corrupted, or you can’t. If you can’t bribe a sportsman or a group of sportsmen to rig a result, then you can’t get a result fixed. And what that means is that the heart of the problem in the issue of corruption in sport is not betting, but is sportsmen willing to be bought.

I realise that pointing the finger at sport, from what appears to be the betting side of the fence, might seem somewhat inflammatory. But the most important point I want to make is that when we consider whose side of the fence is whose, we are currently getting it absolutely wrong. The betting industry doesn’t want bad apples as customers any more than the sports industry wants bad apples participating; and just as more than 99% of your participants are clean, so are more than 99% of ours. Our less than 1% can do the buying; your less than 1% can deliver the goods. The challenge for us both is to rid ourselves of the 1%, and the best way to do that is to work together.

Put another way, the simple fact of the matter is this: if we are to draw a line – not to say dig a bloody great big trench – between sport and corruption, as obviously we must, then the first and most important thing is to understand that the legal betting industry is on the same side of that line as the sports industry. And I say this not just because it serves our purpose for sport to be clean, although it does: if people don’t have confidence in the fairness of the result, they will not bet. I say it because we were set up as a business philosophically because we are lovers of sport. And, having set up something which was designed, in part, to bring complete transparency to the market; and then having set out our stall to share information with sports to help them deal with problems that exist, it has been extremely frustrating to find ourselves attacked as if we are the cause of the problems. If ever there was a case of shooting the messenger, this is it.

In fact, the finger pointing from sport to betting, and to Betfair in particular, has been so great that there are calls around the world for betting to pay sport, because sport now has to deal with integrity issues which betting has caused. Let me say straight up that Betfair has never been against paying sport on the basis of a commercial agreement which recognises that sport is putting on a show and Betfair is benefitting from that. This is not the same as saying that sport ‘owns’ the product, but it simply recognises that there ought to be a symbiotic relationship between the two industries. And we are not suddenly coming to this party under pressure: I spoke at the Sport Accord conference in Madrid in 2003 and told the 80 or so delegates there from sports bodies all round the world that the two things they should expect from a bookmaker in the 21st century were information about what betting was taking place on their matches, to allow them to police their sport better; and a financial contribution to acknowledge that they were putting on the show. But I do have a fundamental problem with betting being asked to pay to ‘clean up’ something that exists whether they are there are not. The integrity of sport is the domain of sport, whether Betfair, or Ladbrokes, or any other betting company in the world exists or not.

In fact, I would go further than that. Imagine a world where bookmaking is illegal. Take Betfair, and Ladbrokes, and William Hill, and everyone else you care to mention, and close them all down. What happens to sport’s problem then? Does it go away, stay the same, or get bigger? Clearly, it gets bigger – and if you doubt that, let me give you two reasons why.

The first is best exemplified by Hansie Cronje. No-one in New Zealand will be unaware of the scandals that affected the world of cricket in the late 1990s – an era, incidentally, which preceded internet betting, and in which cricket was not alone in experiencing problems: floodlights went off in top-flight UK football matches for reasons which at first were not apparent. Talk to the ICC about those times in cricket and they will readily acknowledge that their problems came from the Indian sub-continent, where – no surprises – bookmaking is illegal. And the source of floodlight failures, too, was eventually traced to Far Eastern illegal betting syndicates, but only because someone was eventually caught red-handed with his hands more or less on the switch.

The second reason is this: tell me why betting was legalised and regulated in the first place, if it wasn’t that it existed illegally and unregulated, and if, being illegal and unregulated, it was not seen to be causing problems which could not be dealt with? The whole basis of regulation is that regulating makes it more difficult to corrupt.

Betfair took the level of regulation a significant step further. I have already talked about our audit trail, but what I didn’t mention was that any sports regulatory body in the world can have the information gathered by that audit trail from us, free of charge. In fact, we can deliver it, via our Bet Monitor technology, in real time – as Stewards not so very far away in Victoria will tell you. In other words, we are providing, without any obligation, information which would otherwise be unknown about betting that is taking place all over the world – information which makes it easier to know what is happening, not harder. And it seems to me that asking the legal, regulated betting market to pay to clean up problems of integrity in sport is like approaching a High Street pharmacy and asking it to pay for the fight against cocaine-smuggling on the grounds that their business is in drugs. The difference between the legal, regulated market and the illegal market is the difference between chalk and cheese. And asking Betfair, or any other well-regulated, well-run global brand, to pay for problems which are seen to originate in the murky world of unregulated, illegal, bookmaking seems to me to be entirely missing the point.

To illustrate my point a little further, here’s the page from Wikipedia on match-fixing. You will see if you look at it more closely that it claims that cheating on sport started with the Ancient Olympics, and with battles between gladiators. When I once mentioned this on a radio interview, I was taken to task over it by a journalist from a British national newspaper, the Guardian, who accused me of being disingenuous. The amount of match-fixing today, he said, was of a completely different proportion, and the sums of money involved were much greater.

Even aside from my story about Winston Churchill, I would take issue with that. First of all, on what empirical grounds can anyone justifiably claim that there is more match-fixing today than there was before? Isn’t the perception that there is simply born of the fact that we can see it better today than we could a decade ago? Are there more diseases these days, or do we just diagnose them better?

To go back to my earlier analogy, are there more speeding cars, or are we now in a position to clock them? Did people start taking drugs to improve their sporting performances the week after drugs testing came in, or were they taking them before we had tests, and just doing so undetected? Was Jacques Rogge, the President of the IOC, justified when he commented during the Athens Olympic that, “Each positive test is a blessing for us because it’s eliminating the cheats and protecting the clean athletes. The more we find, the better.” I would say absolutely he was.

In truth, the basic fact is that it is simply not possible to make any judgment whatsoever on what the level of corruption in sport was before we had a means of tracking it, just as it is impossible to know how many athletes in the past used performance-enhancers to bring them medals. We might think that in a bye-gone era, the world was a nobler place; and on the whole, we might be right. But if the Chicago White Sox were throwing the World Series in 1919, and Liverpool and Manchester United were colluding over a result in 1915 – on that occasion, not for a betting return, incidentally, but to ensure survival in the top division at the expense of Chelsea, who consequently went down – and if these are scandals we happen to know about because someone happened to sing about them, then how can we possibly make a judgment about the bigger picture?

The challenge now is to take the attitude that Jacques Rogge has to drugs testing and apply it to betting, not being fearful of instances we find to occur, but to be confident that transparency is rooting out the corruption and tipping the risk/reward ratio dramatically in favour of the regulator and away from the corruptor. For that, we first need to draw on another of Mr. Rogge’s pronouncements in Greece. “You have 10,500 athletes in the Olympic village,” he told the world’s press. “You do not have 10,500 saints. You will always have cheats.” We have to acknowledge that the only people who can corrupt sport are the players, and we have to educate those players about how they will be caught and how they will lose their livelihoods and their reputations when they are. And to do that, we first need to educate sport about how they can do the catching: the only way to know whether players are corrupted is to have the names of the people behind the bets, and then use forensic analysis to make the often easy links between the bettors and the participants. Any attempts to look at the betting quantum and make judgments on it are absolutely doomed to failure, and the only people who will gain anything from doing so are the media. So sport needs to put itself in a position where it has access to named information, wherever it can get it. If it is not doing that, it is not using the tools available. I find it amazing that any sporting body would turn down named information from a betting operator willing to provide it with no strings attached, and yet, from the top down, there are plenty who do.

Don’t get me wrong. I am not trying to suggest that sport is riddled with corruption. I am an optimist, and I hope and expect, like everyone here, that 99.9% of sport is played for the Corinthian ideal of winning. But it is clear that sports – perhaps because they are being told so by the media – now feel that they have a problem which they feel they didn’t have before. The immediate reaction is to point the finger, rather than take steps to do something to tighten regulation in a manner which perhaps should have happened years ago, and it is not difficult to see why this has happened. It is easy enough to make what appears at first a logical jump: betting has increased; corruption has become apparent; therefore betting is causing corruption. It’s like saying, “it’s raining, and I don’t have an umbrella, therefore I will inevitably get wet”.

But what if it’s pointed out that there is no reason for you to go outside? Suddenly, the argument falls apart. And what if you understand that the increase in betting has moved in parallel with the increase in transparency? Suddenly, the logic doesn’t hold there either. But that growth in transparency of betting has led people to believe that there has been a growth of corruption, and the result is that sport is setting itself against the very people it should be working with. Again, I can understand how this is happening. Many in sports regulation genuinely don’t see that this problem is not new, like a patient diagnosed with cancer who insists that he felt fine yesterday and still feels fine today. But understanding why we are where we are doesn’t mean we should continue to plough the same furrow. We have to get out of it before we dig it so deep that we’ll never be able to do so. As a first step, that means understanding that transparency is not to be feared, and the people who bring it should not be resisted and looked at suspiciously. And second – away from words and onto concrete actions – it means sport starting to use the tools provided for them by betting operators who want to work in partnership, which would make it easier to combat the problems facing them than any other measure. Use the audit trail, link betting to names, and root corruption out of sport.

Understanding this, and acting on it, would allow sport to make the most of the commercial advantages that the betting market brings. I am not talking specifically about betting companies paying them directly for commercial agreements, although that is precisely what Betfair is doing voluntarily in Australia with the AFL, NRL, and cricket among others; we have done it with British greyhounds, and Irish horseracing; and we have committed to doing it elsewhere. I am also not talking about sponsorships coming from the betting companies, although it is interesting to note that just last week, Reinhard Rauball, the President of the Bundesliga in Germany, affirmed that the ban on foreign gambling advertisements would cost German football between €100 million and €300 million every year in lost revenues. I understand that even if we got to the point where regulators and betting operators were working in partnership to stop corruption, many sports would prefer to keep at arms length from betting companies in other areas, and I fully respect that. Rather, I am referring to the notion that betting plays a significant role in helping sports to internationalise their marketplaces, and ultimately, we now all compete in the global village.

In other words, although sports today recognize that they need to embrace a modern, global audience, they spend a lot of time working against the very sorts of organizations which might help it to achieve one.

Let me give you an example. There is a racing newsletter published in Australia called BetAngel. It is dedicated to a whole new audience who, since the arrival of Betfair, trade the sports markets as if they were the financial markets. Their March edition began with the words, “Wind back nearly eight years ago, when Betfair started and I joined them, I had no idea what Cheltenham was all about” – before going on, for eleven pages, to lay out the best strategies for punting on Britain’s premier Jumps Racing festival. In a similar vein, Betfair this year had e-mails from all over the world eulogising about the up-to-the-minute coverage and ideas being distributed far and wide by Betfair Radio on that same Cheltenham Festival – from Cyprus, Belgium, India, Singapore and – yes – New Zealand. The extent to which we are broadening the appeal of British horseracing is incontestable if you look at our international audience and the 85 or so countries from which we list customers. By virtue of the mechanism by which we pay to British racing a percentage of the profits which we achieve on British racing, it is fair to say that today money is coming in from the four corners of the earth which just a few years ago was staying firmly put.

Betfair is committed to paying sports bodies a percentage of the profits achieved on betting on events run under their jurisdiction. But if the betting markets continue to be seen as a problem, then they cannot at the same time be seen as an opportunity, and sports worldwide cannot make the most of that commitment. In contrast, if we could get sports administrators to realise that we do not threaten their integrity in a regulated and open environment; if we could get them to work with us, on commercial terms, and not against us; if we could get them to understand that the utopian world of no betting on sport is exactly that – utopian – and that the sensible thing is to work with the regulated market to ensure maximum transparency and minimum outlets for those would corrupt; if we could do all these things, then it wouldn’t be a question of sport putting on the show and the betting industry benefitting. It would be a question of sport broadening and maintaining its audience; of sharing in the first derivative market which stems from it – the betting market; and of the two industries working together to ensure that every tool is used to keep both the underlying commodity and the derivative market clean.

So I am here today to try to give you a new understanding of sports betting. I want you to understand that as far as we at Betfair are concerned, the regulated betting industry today is not some backwater of corruption in smoke-filled rooms, but a modern leisure industry which engages its customers and allows them to get involved on a participatory level that enhances their enjoyment; that it is an industry which harnesses those customers, and wants to do so in partnership with sport rather than at the expense of sport; that what sport today should expect from a modern bookmaking operator, as I told Sport Accord back in 2003, is a financial return which recognises that sport is putting on the show and seeks to demonstrate the good faith that leads to partnerships that leads to everyone growing the cake; and – entirely unconnected with any commercial agreement – they should expect information on what betting is taking place on their product, and – and I cannot over-emphasize this enough – by whom, in order to allow it to fulfil its role of policing the sport.

There are plenty of issues facing sport today, as there always will be. But feeling it has to fight betting should simply not be one of them. Sport has to fight corruption, using every tool it can; and the betting companies, who also, like the sports bodies, have brand names to defend; and, in a way that sports do not, more often than not have market values and share prices to protect, have to fight it too. So in conclusion, let me say it one more time: the legal and regulated betting companies around the world want to work with sport, not against it. But they need sports to recognise that it isn’t betting that causes problems, but corruption. I hope we can fight it together.

Thank you.

Mark Davies of BetFair

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Mark Davies (Managing Director of Corporate Affairs of BetFair)

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The best text that I have ever read about sports betting.

It’s that kind of speech that the US Congress should hear.

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The Winston Churchill joke was lame.

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Took me like one hour to read it in full, but every sentence was worth my effort.

All the issues he raised were known to me, but it was fine to see them all gathered in one place.

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I’m still persuaded that the Winston Churchill joke was lame.

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“Nowadays, some casinos even have two zeroes on the roulette wheel. Anyone playing them should be certified. But gambling on a Champions League match, a Premier League match, you can win.” This, he explains, is because modern betting exchanges take a far lower proportion of their punters’ stakes in profit. “There is no margin, it’s about 2 per cent.”

“If I were leaving school now, the chances of ending up behind bars are the same as me skiing for Britain in the London Olympics. It only happened because of all the lies and kidology that used to go on with betting. Nobody can get [bets] on with bookmakers, because when you win you get closed down. Now it’s all up front. We’re now living in the real world. Press that button on Betfair and let’s see how good you are. Simple. There’s no myths or lies any more, it’s all fact.”

He also believes that direct, accountable trading via the internet betting exchanges is taking the carpet up on the cheats, and he colourfully repaints some of the turf’s most honoured names as arrant frauds. “At the end of the day, it don’t matter how big your house is,” he says. “Nurses and teachers working for nothing, they’re the real legends. If you cheat, what kind of buzz is there, conning all that lot?”

Does the existence of betting exchanges corrupt sport?

NO

In the world of finance, it has always been far easier for employees to have a negative impact on a company’s share price than a positive one. Even a chief executive would be hard pushed to cause a price rise on any given day, but anyone with physical access to the company can very easily cause a fall. No one would suggest people should only be able to buy shares, and not sell them. Instead, regulators ensure that sanctions against corruption tip the balance heavily against trying it. Make the penalty draconian, and you deal with corruption at its heart.

Betting on sport is no different. The only people who can corrupt sport are those taking part – a fact unchanged by the existence of betting exchanges. If you prevent people from succumbing to the temptation, would-be corrupters have no one to help them . You and I cannot rig a race just because we can bet against its outcome: we need someone who can affect the result. If that person might lose a livelihood, would they risk it for a fast buck?

Attack corruption at source, and it does not matter where the bet was placed. Nevertheless, some still long for the days when more traditional bookmakers held every card (an interesting notion considering what has historically been their dubious reputation); others prefer a Tote monopoly; and some believe that banning bets against outcomes would constrain corrupters.

This series of arguments is based on the naïve belief that a black market does not exist. This is absurd. Asian syndicates behind apparently rigged football matches (like those who turned floodlights out at grounds in the late 1990s) are no more dependent on Britain’s legitimate market than Colombian drugs barons are on sales of aspirin at Boots. The difference between legal, regulated, transparent betting – nowhere more so than on the leading betting exchange [= BetFair], where every transaction is open to scrutiny from 29 different sporting regulators – and the murky, illegal market, is the difference between chalk and cheese.

Black markets thrive where legal ones offer poor value. Now that the exchanges offer the best value, those previously tempted by odds on the black market are returning to the legal fold. Corruption-free sport comes from total transparency. The exchanges are the only part of the market that offer it. People get hung up on “betting to lose”.

Leave aside the obvious: bets to win (most clearly demonstrated in two outcome sports like tennis or snooker) are direct bets on the opposite outcome to lose. “Betting to lose” is just betting at value: if the price unfairly reflects the realistic chance of something happening, why should you not bet against it?

Value bets, placed for or against, are perfectly legitimate; acting to impact a given outcome adversely is corrupt. But banning the former through fear of the latter is like banning cutlery because some people use knives to harm. It is not the knives doing the damage, but the criminals using them. Legal betting does not corrupt sport; people do – and they are more likely to do it when they think they w ill not get caught. Measures to protect sport are not best aimed at open, transparent, and audited betting markets but through its participants, where the corruption can occur.

Excellent.

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… is a piece of ****.

#1. The brand name of this sub-site is crappy.

#2. The organization of the content is crappy.

#3. The content is crappy.

#4. Everything in it is totally crappy.

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My meta thoughts:

1. The non-media, commercial companies cannot produce interesting journalistic content —unless they partner or buy out a media.
2. Most people don’t have what it takes to be a good journalist. The blogging revolution has opened the door to many wannabe journalists, which is good… but still… only a small percentage of all the bloggers are good journalists. A good journalist is fundamentally a bastard. He/she would kill his/her mother to get the scoop, to find the right headline, to grab attention, and to advance his/her ideological hidden agenda. [*] That’s a very different mindset than executives and managers have. Journalists are a special species.
3. As of today, it is inconceivable to publish on the Web and not to abide by the conventions and standards established by the other publishers. In other words, if you publish a group blog, it should resemble in its layout to the other group blogs —because that’s what your readers are accustomed to. Most of your readers spend most of their time elsewhere on the Web, are shaped by that experience, and then impose the conventions and standards to your website.

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[*] For instance, Mike Smithson‘s hidden agenda is dual: number one, political betting has a social utility (forecasting), and, number two, the Liberal Democrats (that’s the third party in the U.K.) are good for Britain.

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Note: I was admonished by Niall O’Connor, yesterday, for using a ‘special’ image that conveyed perfectly what I thought about this BetFair sub-site. I suppressed the shocking image, to make up with the Irish betting man. He was right that it attracted attention; that blog post was the most downloaded, yesterday. Rock around the bunker… Rock around, rock around… Rock around the bunker… Rock around, rock around… Rock around the bunker… Rock around, rock around…

1 September 2007

With effect from 00.01 on Saturday 1 September 2007, all gambling in Great Britain (except spread betting and the National Lottery) becomes subject to the provisions of the Gambling Act 2005.

Gambling Commission

The Gambling Commission regulates gambling in the public interest. It does so by keeping crime out of gambling, by ensuring that gambling is conducted fairly and openly, and by protecting children and vulnerable people from being harmed or exploited by gambling. The Commission also provides independent advice to government on gambling in Britain.

Betting

The Gambling Act 2005 defines betting as: ‘making or accepting a bet on the outcome of a race, competition or other event or process; the likelihood of anything occurring or not occurring; or whether anything is or is not true’.

General betting licensees are able to offer facilities for betting as premises-based bookmakers (off-course) and on tracks (on-course), as well as by remote means (for example by telephone or over the internet). They must have rules that cover issues such as voiding late bets, maximum payouts, treatment of errors, and the treatment of withdrawals and non-runners. On-course licensees’ joints must also display specified information.

Pool betting incorporates racecourse pool operators and football and other sports pool operators and ‘fantasy football’ type competitions. It can be conducted in person, for example the Tote which accepts pool bets on tracks and in high street betting shops, or remotely, for example an internet betting site run by one of the football pools operators.

Betting intermediaries provide a service designed to facilitate the making or acceptance of bets between others. Remote betting intermediaries, often called betting exchanges [e.g., BetFair, Betdaq], generally operate through the internet. An example of a non-remote betting intermediary is a tic-tac, who normally works within a betting ring on a horse or greyhound racing track.

Spread betting is not covered by the Gambling Act 2005, or regulated by the Gambling Commission. Regulation of spread betting [e.g., SpreadFair] is undertaken by the Financial Services Authority.

Guardian:

Professional sports players have been warned that they face two-year jail sentences if they break new laws that come into force under the Gambling Act today.

The Professional Players Federation (PPF), an umbrella group for players’ unions, has issued a code on gambling to its members and has called on the government to do more to educate athletes about the risks they face under the new regulations. [...]

Sun:

The Gambling Act 2005 is a wide-ranging piece of legislation which covers most forms of gambling.

- The Gambling Commission was created as the new regulator for the industry, replacing the old Gaming Board.
- It is responsible for casinos, bingo, gaming machines, arcades, lotteries, remote gambling and betting.
- The Act allows remote gaming operators – such as gambling websites – to be based in and regulated by Great Britain for the first time, making them subject to the rules set out in the legislation.
- Existing casinos will have a number of restrictions lifted, such as the requirement for people to be members of casinos in order to go inside.
- The Act also sets out provision for three new types of casino – the one regional “supercasino”, plus eight large and eight small casinos. The supercasino element is currently under review.
- Licensed betting operators in shops and online have new conditions imposed on them, such as having to display gambling helpline information and training staff to identify problem gamblers.
- Betting shops will be able to open from 7am to 10pm all year round instead of just in summer, subject to local authority consent.
- The Act reforms the advertising rules for gambling operators, allowing casinos and some others to advertise on TV for the first time.
- Gambling adverts will be subject to a code of practice policed by the Advertising Standards Authority.
- Operators have also signed up to a voluntary set of rules which set a 9pm watershed for TV commercials for gambling services, except around televised sporting events.
- The law sets out new limits on stakes and prizes for poker games held in pubs.
- As with casinos, bingo halls will no longer have to make people members in order to let them inside.
- Changes to the rules for bingo prizes means bingo halls will no longer have to return all stakes as prize money. Instead, they can keep some money behind to offer as rollover prizes.

The French presidential election
France’s chance
Apr 12th 2007
From The Economist print edition

After a quarter-century of drift Nicolas Sarkozy offers the best hope of reform

No French presidential election in 50 years has looked as unpredictable [*] [?? - SEE THE MARKET-GENERATED PROBABILITIES, JUST BELOW] as this year’s, the first round of which takes place on April 22nd. This is so even though the leader in every opinion poll so far has been Nicolas Sarkozy, the candidate of the ruling centre-right UMP party. His support may be overestimated, just as that of the far-right Jean-Marie Le Pen may be underestimated. The rise of the centrist François Bayrou, who at one point almost overtook the Socialist Ségolène Royal, has muddied the electoral arithmetic. And with only ten days to go, more than two in five voters are undecided.

This election matters. France is the euro zone’s second-biggest member and home to ten of Europe’s 50 biggest companies. But it is deeply troubled. It has the slowest-growing large economy in Europe, a state that soaks up half of GDP, the fastest-rising public debt in western Europe over the past ten years and, above all, entrenched high unemployment. Over the past 25 years French GDP per person has declined from seventh-highest in the world to 17th. The smouldering mood of the suburbs (banlieues), home to many jobless youths from ethnic minorities, blazed into riots in 2005 and lay behind new trouble that flared recently at a Paris railway station. The disenchantment of voters is reflected not only in opinion polls but also in their rejection of the European Union constitution in 2005. Tellingly, they have not re-elected an incumbent government for a quarter-century.

The most urgent cure for all these ills is to get the economy growing faster. That requires radical liberalisation of labour and product markets, more competition and less protection, lower taxes and cuts in public spending, plus a shake-up of the coddled public services. None of these things was seriously tackled in the past 26 years, under the presidencies of François Mitterrand, from the left, and Jacques Chirac, from the right. This was a time when other European countries, such as Britain, Spain, the Netherlands, Ireland and the Nordics, transformed themselves for the better, and still largely retained their cherished social models and welfare systems. Here lies the biggest challenge for the next French president.

Worst, worse, bad
How do the candidates measure up? Only three of the 12 are serious runners (see article). A fourth who may shape the outcome is Mr Le Pen, the veteran leader of the racist National Front, who shamed France by edging past the Socialist candidate into the run-off against Mr Chirac in 2002. Mr Le Pen’s poll numbers are better now than they were at the equivalent stage then. It is vital for France and its image that Mr Le Pen be kept out of the second round this time.

Ms Royal would be an asset in the second round, turning it into a satisfyingly direct left-right contest. She has other attractions: the first woman to be a serious contender, the boldness to push past the elephants in her party to win the nomination, a willingness to break with Socialist taboos by praising Britain’s Tony Blair and criticising the French state’s imposition of a maximum 35-hour working week. Unfortunately her policies are woolly even by modern standards. And in economics, she stands squarely behind all the old left-wing shibboleths: state intervention, rigid labour protection and high taxes.

On the face of it, the centrist Mr Bayrou is more promising. His pledge to curb the public debt is more credible than Ms Royal’s and even Mr Sarkozy’s. But he has failed to promote a free-market agenda—he is distressingly fond of farm subsidies and state intervention. Nor is it clear how he would form a government: his centrist party is tiny, and his vague musings of drawing in like-minded leaders from left and right smack of the lowest common denominator.

Faute de mieux
Which leaves Mr Sarkozy as the best of the bunch. Unlike the others, and despite his long service as a minister under Mr Chirac, he makes no bones of admitting that France needs radical change. He is an outsider, born to an aristocratic Hungarian émigré father; he openly admires America; he is enthusiastic about the economic renaissance of Britain. He plans an early legislative blitz to take on hitherto untouchable issues such as labour-market liberalisation, cutting corporate and income taxes and trimming public-sector pensions.

But there are two doubts about Mr Sarkozy. As he showed in his brief stint as finance minister, he has most of the traditional French politician’s meddlesome economic instincts, favouring a strong industrial policy, protected national champions and even interfering in supermarket prices. Recently he has taken to heaping blame on the European Central Bank for France’s self-inflicted failings.

Such economic populism may merely be a ploy to win over an electorate that has long been averse to the market. But in Mr Sarkozy it is yoked to a second unattractive streak: a form of nativism, reflected in his harsh comments about immigrants and national identity. His supporters say he must tack right to lure voters from Mr Le Pen. But he is now so unpopular in the banlieues that—unlike Mr Le Pen—he has barely set foot in them during the campaign. As interior minister, he took great interest in how to improve the lives of French Muslims, but he has dropped all such talk as a candidate.

This may also explain the biggest defect in Mr Sarkozy’s foreign policy: his fierce hostility to letting Turkey join the EU. Ms Royal has bravely supported the principle of Turkish membership. But this is unlikely to be put to the test for at least a decade, and on other EU issues, such as the future of the constitution, Mr Sarkozy has a more sensible, pragmatic approach than either of his main rivals. He is also the most likely candidate to repair France’s tattered relations with America.

On the evidence of his career and his campaign, Mr Sarkozy is less a principled liberal than a brutal pragmatist. Yet he is the only candidate brave enough to advocate the “rupture” with its past that France needs after so many gloomy years. It has been said that France advances by revolution from time to time but seldom, if ever, manages to reform. Mr Sarkozy offers at least a chance of proving this aphorism wrong.

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BetFair – French President prediction markets

Nicolas Sarkozy: 66%

© NewsFutures

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[*] The Economist has a screw loose. This French presidential election looks predictable. The day before his re-election in November 2004, the George W. Bush event derivative was at 55%.

WARNING: If ever the Centrist Francois Bayrou gets more votes than the Socialist Segolene Royal, he passes the first round and will win over Republican Nicolas Sarkozy in the second round. The prediction markets do not think it is likely (13%), but that could happen.

Previous: The Economist should set up The Open Institute of Prediction Markets.

UPDATE: MIDAS ORACLE PROCLAIMS REPUBLICAN NICOLAS SARKOZY AS THE FRENCH PRESIDENT-ELECT.

#1. Peter Hitchens on Channel 4 covered the “Tory conference” (British Republican convention) at Blackpool in October 2005.

#2. Political blogger and ex-BBC News Mike Smithson strongly disagrees with the Channel 4 story (“a number of myths have developed which don’t fit with the facts”). And to make his point, Mike Smithson uses an odds chart. (Not sure whether it’s BetFair or the British bookmakers, or an aggregation of all that.)

ETHNO-POLITICAL NOTE: It happened that I watched a little bit of BBC News and Sky News at the time. I was very impressed by the fact that ALL the contestants in the Tory primary were fairly treated by the media. The British media gave uninterrupted air time to all of these wannabe Tory leaders, and TV watchers could get their agendas in full. As for the general election (for the UK Congress, the “Parliament”), the British Press published detailed comparisons, on three-column pages, between the three parties’ agendas. Britain is a great democracy.

(((I am not familiar with British politics, unfortunately, over than a good overall impression. For more on the interactions between British politics and betting, visit Mike Smithson’s blog, Political Betting.)))

[...] Iran seized the 15 British sailors and marines at sea last week, saying they were inside Iranian waters. Britain say the personnel were in Iraqi waters.

How the hell can you kidnap soldiers???

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