BetFair

News Release
21st November 2007

Betfair Launches Climate Markets [#1]

And sets out its own environmental strategy [#2]

[#1] Betfair, the world’s leading betting exchange, has launched a series of innovative betting markets which will provide clear indications of how public opinion views the on-going debate about climate change, by allowing people to speculate on climate indices developed to track the extent (or otherwise) of global warming.

Betfair’s unique exchange model will create a market price for climate change related outcomes, including the HSBC Investable Climate Change Index, the ECX CFI Futures Contract, and Highest and Lowest UK Temperature.

‘Decision markets’ have historically proved to be accurate gauges of political, economic and cultural change and better forecasters of the future than opinion polls and expert forecasts. Efficient market theory suggests that these climate markets will be the best aggregation of all the available information on the subject. This is the ideal place for experts, academics, businesses and interested parties to put money behind their views on long-range forecasts.

Mark Davies, Betfair’s Managing Director Corporate Affairs, said: “Whilst these climate markets are experimental, they demonstrate a commitment to use our assets to innovate and make a difference.”

The commission that Betfair earns from operating these markets will be ring-fenced and invested in the development of technologies to tackle the wider issue of climate change.

[#2] At the same Betfair is launching its own environmental policy to tackle climate change head-on. It has set ambitious targets to reduce the environmental impact of its business and work with peers, customers and suppliers to reduce theirs. Betfair has committed to reducing its carbon footprint by 30% per pound of revenue by the end of 2010, as it sets out its vision to be a leading online business in the area of environmental responsibility.

Its carbon footprint has recently been measured at 3,277 tonnes, which is about 17 tonnes per £1m of revenue. The target is to reduce this by 30% by the end of 2010 to 12 tonnes per £1m of revenue.

Commitment to this ambition has already been demonstrated over the past year by significant enhancements to its recycling and green procurement efforts. Its own ‘Green Supplier Award’ best illustrates efforts to stimulate and challenge its suppliers. Betfair is essentially a technology business and therefore ‘Green Computing’ is particularly pertinent. As well as a focus on more energy-efficient machines, storage virtualisation and power reduction have also been tackled.

Betfair is now in a position, having had these early initiatives in place, to progress more ambitiously with its full environmental strategy. The programme has four main themes:

– Operations: Challenging the business to minimise its environmental impact
– Partnership: Engaging partners and customers on these issues
– Innovation: Exploring new technologies and ways of working
– Leadership: Learning from others and sharing what it learn.

“We recognise that the day-to-day running of our operations has an effect on the local, regional and global environment and it is therefore our responsibility to manage this impact. Climate change is a priority for Betfair across all parts of the business,” said Mark Davies.

Conservative MP Greg Hands, from his constituency in which Betfair’s head office is located, supported the strategy: “Reducing carbon emissions requires fresh and innovative thinking and therefore it is encouraging to see a company in my Hammersmith & Fulham constituency like Betfair transforming the way it does business and developing new technologies to reduce its environmental impact. Effective methods for cutting emissions need to be developed as part of all businesses’ long-term strategies.”

From Stevenage, where Betfair’s second UK office is situated, Labour MP Barbara Follett added: “Betfair’s decision to adopt an Environmental Strategy is very welcome. I am particularly pleased that the company is now committed to reducing its carbon footprint by 30% per pound of turnover by the end of 2010.

Betfair’s has recognised that climate change is not just a problem for governments. If we are to reach our carbon reduction targets everyone, including business, has to get involved. So, well done Betfair. I hope that others will follow where you have led.”

ENDS

Notes to Editors:
1. Betfair (www.betfair.com) operates a betting exchange – concept it pioneered. A betting exchange allows punters to bet at prices set by punters themselves rather than by a bookmaker, which means that Betfair is the most accurate barometer of public opinion.
2. Betfair was launched in June 2000 and is the UK’s No 1 online betting company. At peak times the exchange matches up to 300 bets a second.
3. The company employs over 1200 people in its main offices in London, Stevenage, Malta and Tasmania, Australia.
4. Existing environmental initiatives include:
- recycling decommissioned IT equipment through Computer Aid International
- comprehensive recycling policy and a general “Paper Use” policy
- ‘cycle to work’ scheme as the start of a review into employee travel
- members of the Green Grid Consortium
- Betfair Green Supplier Awards to stimulate and challenge our suppliers.

APPENDIX: HSBC Investable Climate Change Index – PDF file + European Climate Exchange

NEXT: BetFair’s Global Warming Prediction Markets — CFM’s Views

Anybody who had money on last November’s US MidTerms Senate market with Betfair will know what happens when the rules are not tied down tight enough. Then Betfair settled the election on the basis of a tie even though the actual outcome was that the Democrats took control of the Senate. Then the problem was the position of two senators who had not gone into the election as Democratic candidates but had said they would caucus with the [Democratic] party. An added complication for Betfair was that the Labour MP, Nick Palmer, had written to Betfair ahead of the election asking for clarification about Lieberman’s position and had received a written reply confirming that if he won he would be regarded as a Democrat. Palmer had posted this information of this site influencing, no doubt, a number of other punters in the process. [...] [FYI, the rest of the story is on another alleged BetFair messing up.]

Chris Masse, circa November 2006:

[...] BetFair sticks with the ORIGINAL contract —as CLEARLY written ON DAY ONE on their “RULES” tab, and as understood correctly by everybody who can read plain English. NO SURPRISE, NO CONTROVERSY. “Which of these parties will have MORE SEATS in the US Senate following the 2006 US Senate Elections?” is a very different question than “Which of these parties will CONTROL the US Senate?”. There is no ambiguity in the first question. In the second question, it’s understood that you could control the US Senate with your allies (the Independents).

Now, let’s contrast that with the 2006 North Korea Missile scandal prompted by a TradeSports-InTrade mistake.

#1. John Delaney, CEO of the firm managing TradeSports-Intrade, acknowledged recently in writing that the poorly defined contract was their fault.

[...] We experienced an issue with our North Korean market definition. [...]

#2. Nevertheless, the TradeSports-InTrade who were right on the outcome (i.e., who bet “yes” on whether North Korea would fire a missile) got screwed up and lost their money.

#3. TradeSports-InTrade did nothing to compensate the victims of its mistake.

#4. Only the bloggers (like Donald Luskin or Barry Ritholtz, alerted by Chris Masse) came to the rescue of the screwed-up traders. The main media were mum about this scandal. (Rachel King of BusinessWeek told me she asked the question to John Delaney, but, unfortunately, she did not have enough space in her news article to talk about that. Pffff… Pretext.)

#5. None of the prediction market scholars published a statement on the North Korea Missile controversy. The scholars are dependent on the three main prediction exchanges (BetFair, TradeSports-InTrade, Hollywood Stock Exchange, NewsFutures)…yeah, I know, I’ve listed four of them… but the “Three Musketeers” were four, too… anyway… my point is that the prediction market scholars are dependent on the data provided by the four main prediction exchanges (betting exchanges) to fuel their research, just like the heroin addicts are dependent on their dealer. The prediction market scholars will never, ever, ever, utter a word against the prediction exchanges. Remember: no prediction market data, no research, no academic career. The exception is Robin Hanson, who does not beg for data. The guy is a new institution designer (idea futures, decision markets, MSR, etc.).

#6. None of the prediction market commentators (whom you see blablating on this group blog and elsewhere) published a statement on the North Korea Missile controversy. The Midas Oracle readers should know that many of those fine blablaters have as a goal to get hired by one of the prediction exchanges (betting exchanges, futures exchanges). Of course, if you’re goal is to flatter exchange executives, then you won’t deliver the truth for your readers.

#7. John Delaney, CEO of the firm managing TradeSports-Intrade, insisted to let know to the general public (and the prediction market scholars) that Chris Masse lost $10,000.

#8. And I won’t mention the e-mail insults I received from Ireland.

#9. John Maloney, the mediocre, second-tier organizer of phone-booth, vendor micro-conferences (sponsored by TradeSports-InTrade) unleashed on Chris Masse, “the one-trick pony”.

#10. Contrary to BetFair, InTrade is unregulated in Ireland and TradeSports is unregulated in The Netherlands Antilles. It is thus impossible for the screwed-up traders to appeal to a higher authority. You will notice that the prediction market scholars, the bloggers and the journalists never mention this fact.

#11. Contrary to BetFair, both TradeSports and InTrade are not members of the Independent Betting Arbitration Service. It is thus impossible for the screwed-up traders to appeal to a higher authority. You will notice that the prediction market scholars, the bloggers and the journalists never mention this fact.

#12. Contrary to BetFair, both TradeSports and InTrade have a track record of screwing up traders. You will notice that the prediction market scholars and the journalists never mention this fact.

• TradeSports — SportsBook Review rating: C+ (Scale: A+ to F-) — Bookmakers Review rating: 3.5 / 5 —
• InTrade — SportsBook Review rating: C+ (Scale: A+ to F-) — Bookmakers Review rating: 3 / 5 —

#13. You will notice that when a big trader vents his frustration with TradeSports-InTrade (A Big Trader’s Open Letter to TradeSports-InTrade), the prediction market scholars, the bloggers and the journalists don’t follow up.

#14. You will also notice that when TradeSports-InTrade obviously screws up a prediction market (InTrade-TradeSports – Next Major Sportsbook to Withdraw from US), the prediction market scholars, the bloggers and the journalists don’t utter a word.

#15. Contrary to BetFair, both TradeSports and InTrade do not have a responsible gambling program. You will notice that the prediction market scholars, the bloggers and the journalists never mention this fact.

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CFM and Midas Oracle tell the full truth on the prediction markets: the bright side AND the dark side. THANKS FOR YOUR SUPPORT.