- JusTrade is a prediction exchange located in South Africa —as all our faithful Midas Oracle readers already know.

- Best wishes to Rory Mackay, its (injured ) manager.

- [Rory Mackay and Nate Kontny should meet. ]

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JusTrade

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JusTrade Blog

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The key facts:

• JusTrade is a real-money prediction exchange. FYI, South Africa’s currency is the South African Rands (ZAR).
• At this stage, they list financial contracts, only.
• CDA.
• They welcome customers from anywhere —just be over 18, and do comply with South Africa’s anti-money laundering legislation called the Financial Intelligence Control Act (FICA).
• “All customer funds whether reserved for margin or not receive interest, of which we take 1% of the interest earned.”
• JusTrade was granted an exchange license by the Financial Services Board (FSB). – (Security Services Act of 2004)
• JusTrade is launched by Rory Mackay and Michael Franze. (Mike is the one who wrote the software.)
• They created a joint venture with the Bond Exchange of South Africa Limited (BESA).

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JusTrade

JusTrade Blog

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May 2007′s Blog Post: INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports?? -

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For Aprils’s Fool Day 2007, Kenneth Rogoff wrote the following hoax.

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ForeignPolicy.com

MEMORANDUM:
TO: World Bank Staff
FROM: Paul Wolfowitz, President of the World Bank
RE: Insider trading in “Paul Wolfowitz resignation” contracts

Dear Staff:

As long as I remain Bank President, I intend to continue enforcing my signature anti-corruption initiative at the world’s most important international development agency. My past life as Deputy Secretary of Defense under Donald Rumsfeld has taught me the importance of carrying out a plan with unwavering certainty.

In that regard, I am writing to you with a stern warning. It has come to my attention that many of you are turning your internet browsers to TradeSports.com, where there is an active market in “Paul Wolfowitz resignation” contracts for 2007. (For those of you who don’t know, this is a website where you can take bets on a variety of political events.)

I hope you understand that any attempt by World Bank Staff to buy or sell these contracts will be considered insider trading in clear violation of my anti-corruption guidelines. Your knowledge of normal World Bank personnel procedures gives you a clear information advantage in predicting whether I will be forced to resign. You must not abuse it. Please note: the Bank’s prohibition on insider trading applies not only to immediate family but also to significant others (e.g., girlfriends).

Some of you have already queried my office about whether it would still be insider trading if, when you buy “Paul Wolfowitz resignation” contracts (betting that I will leave before 2008), you also sell short “Alberto Gonzalez resignation” contracts. (This is a bet that my friend, the U.S. Attorney General, will hang on through end 2007.) My emphatic answer is no! Long Wolfowitz, short Gonzalez is only a “relative value play” that hedges out the value of loyalty to President Bush. You would still be guilty of insider trading on your Bank-specific knowledge. (And who says I don’t know enough about finance for this job!)

I hope that by now, most of you have accepted my sincere apology for the unusual pay and promotion package given two years ago to your colleague, Ms. Shaha Riza. That is, when I arrived here from my position helping to plan and manage the Iraq war for the Bush administration. I have acknowledged my mistakes (at my present job, that is), and asked for your understanding. As staff, you understand how difficult it can be to navigate the Bank’s complex rules and procedures. Please do regard my small slip as providing moral cover for poor developing-country client states that are not able to meet the good governance conditions we ask before disbursing aid.

I trust you have not been unduly influenced by the recent letter calling for my immediate resignation, signed by forty-two former World Bank managing directors, senior vice-presidents, vice-presidents, and directors. You and I can surely see through this thinly-veiled attempt to manipulate the value of “Paul Wolfowitz resignation” claims. I want to assure you that the World Bank Internal Investigations Unit will look into this matter. If any of the letter’s signatories are found guilty of price manipulation, they will be dealt with harshly. Let’s not forget who is paying their pensions…

Some of you may wonder how I can remain at the Bank when so many staff are openly seeking my dismissal. (Thank goodness most of you have tired of wearing those silly blue protest ribbons.) And what about the claim that my deputy, New Zealander Graeme Wheeler, told me I should resign at a supposedly-closed senior staff meeting last week?

Let me fill you in on the facts of life. Ever since the World Bank was founded shortly after World War II, the President of the United States has always hand-picked the President of the World Bank. That’s life; stop whining. We Americans may hold only 16 percent of the shares at the World Bank, but we insist on keeping its presidency as our birthright. So what if there might be better qualified candidates from the developing world or Asia? I am tired of hearing people say that South African finance minister Trevor Manuel would be far more effective in my job than I am. (Trevor is a good guy, but dream on. He has neither the right passport nor the right friends.)

Speaking of which: Some of you may also wonder whether World Bank staff, directors, or presidents are permitted to buy “George W. Bush Impeachment” contracts, which are also presently listed on TradeSports,com. Tricky question, but the bottom line is that your employment generally precludes political activity of this type. You will be relieved to know, however, that I have already instructed the Bank legal staff to allow exceptions to the insider trading rules for anyone who can demonstrate a truly compelling need to hedge against a change at the White House.

Thank you for your kind attention, and I appreciate your continuing to focus on your important work in relieving poverty during this unfortunate episode.

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Ultimately, Paul Wolfowitz resigned from the World Bank on a Saturday. The next Monday, he was back at the American Enterprise Institute —the nest (with the Heritage Foundation) of all neo-cons and warmongers who have destroyed the Republican Party.

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Paul Wolfowitz’s profile at the American Enterprise Institute

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- How the neo-cons drove the United States of America into the unecessary Iraq war

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Previously: The CFTC is going to close the comments in 15 days. We have 15 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).

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• Composer: Jean-Michel Jarre (French);
• He is into electronic music, mainly. [Disclosure: I'm one of his fanboys. ]
• Title: “Industrial Revolution Part 2” from the 1988 album, Revolutions;
• The version that was broadcast in stadiums and on TV is a symphonic version of that title. (Much better than the studio track.)
  

South Africa (“the Springboks”) will win:

It should be said that the prediction markets got it wrong betting on New Zealand and then on France, in previous rounds.

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The other prediction exchanges (betting exchanges) are far less liquid for this competition: – Betdaq – TradeSports – NewsFutures -

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UPDATE ON OUR PREVIOUS BLOG POST ON THE SAME SUBJECT:

Niall O’Connor said:

This includes one bet from a mystery gambler of $A5 million ($NZ5.8 million) on New Zealand to win the tournament.

Tony Clare of BetFair:

Just FYI when a market is partially settled (for instance New Zealand being settled as losers after they got knocked out) the market volume data only includes bets still running. In other words the volume figure shown doesn’t include the bet [Niall O'Connor] mentions (or any other bets on New Zealand or any other team knocked out). Only bets still running on England and South Africa are included in the figures displayed on the site.

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UPDATE:

South Africa: 15 — England: 6

BetFair: 2007 World Cup of Rugby

South Africa will win (against England, who did beat France, who did beat New Zealand), BetFair says.

On this South Africa chart, spot the volume, lately. Seems like the English have been betting en masse since their team made it to the finale.

The picture above (from the archives) represents the New Zealand’s team performing their “haka” before an international match.

Here are the static BetFair charts, just after the France vs. New Zealand game. (TradeSports has little liquidity on Rugby Union events.)

First, the BetFair chart representing France’s side at the end of the France vs. New Zealand game:

Secondly, the probabilistic probability that France will win the 2007 World Cup of Rugby:

And, finally, the probabilistic probability that South Africa will win the 2007 World Cup of Rugby:

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NEXT: They perform their haka to intimidate you? Look at them straight in the eyes and stand up to them.

Corporate and Operational Overview

Corporate Overview

Betfair is a registered bookmaker in the UK, where it operates an online betting exchange. Betfair also operates under licences in Australia, Austria and Malta and is seeking licences elsewhere within the European Union and further afield, notably in South Africa. Betfair welcomes regulation and is committed to paying the appropriate product fees in every market in which it operates.

Betfair’s main source of income is from bets placed on its exchange, from which – in line with other betting operators – it derives its money by paying out less in winnings than it takes in in losses. This core activity will continue to grow as Betfair gains access to new markets and more people turn to the internet as their preferred betting channel. Betfair is developing new revenue streams, such as providing price feeds from the exchange via its API (Application Programming Interface) to third parties, white label exchanges, and through the Betfair Mobile product.

Betfair Games, which operates Betfair Poker and Betfair Casino, as well as other exchange-enabled games, is hosted from Malta under a licence which was granted in May 2005. The Maltese licence enables Betfair to offer these products as well as the innovative P2P games, based on the betting exchange concept, to its customers.

Betfair has invested significantly in technology and employs over 200 engineers to produce one of the fastest and most resilient betting platforms available on the internet today. Betfair processes more than 5 million transactions a day and more than 300 bets a second. Supported by Oracle, Betfair processes 99.9 per cent of bets in less than one second. Betfair has more than 1,000,000 registered users and over 100,000 active monthly users.

Betfair employs over 1000 people in its offices in Hammersmith, west London, Stevenage, Dublin, Australia, Malta and Denmark. Since its launch in 2000, Betfair has won several prestigious awards, including in 2003 the Queen’s Award for Enterprise in the Innovation category from the Department of Trade and Industry and in 2004 Company of the Year at the Confederation of British Industry Growing Business Awards. Betfair became the first ever company to retain its title of ‘Company of the Year’ at the 2005 Growing Business Awards. In 2002 its founders Andrew Black and Edward Wray jointly won the Ernst and Young Emerging Entrepreneur of the Year award.

Operational and Product Overview

Operating Activities:

Betfair Ltd – A company incorporated and registered in England and Wales providing the sports betting exchange product.

Betfair Games Limited – A company incorporated and registered in Malta providing the Betfair Games product.

Betfair Poker Limited – A company incorporated and registered in Malta providing the Betfair Poker product.

Betfair Casino Limited – A company incorporated and registered in Malta providing the Betfair Casino product.

Betfair Australasia PTY Limited – A joint-venture company incorporated and registered in Australia operating under a licence issued by Tasmanian Gaming Commission providing the Australian Exchange.

Betfair Counterparty Services Limited – A company incorporated and registered in Malta providing the Betfair Multiples product.

TSE Development Ltd – A company incorporated and registered in England and Wales which exploits the intellectual property of The Sporting Exchange Limited (parent company of Betfair Limited and its subsidiaries).

Betfair pioneered the betting exchange concept. Based on the New York Stock Exchange, a betting exchange allows punters to bet at odds set by other punters rather than the bookmaker itself. Betfair’s bookmaking model results in odds which, according to one study, are on average more than 20 per cent better than the starting prices offered by conventional bookmakers. Bets are only accepted by the exchange if the full risk of each can be matched with a punter or set of punters with the opposite view. Any unmatched bets are voided, either by the punter or by the exchange at the start of an event. Betfair has no interest in the outcome of any event, as it makes its money from charging a small commission on net winnings.

Betfair has given punters greater control. They can now directly express a view that an event will happen or won’t happen. Betfair also offers genuine ‘in- running’ betting, including all horse races. Since prices tend to fluctuate during the course of an event, ‘in-play’ betting is a truly exciting development for punters, who are now able to “trade” their betting positions. Horse racing is the dominant product, followed by soccer. Golf, cricket and tennis are growth areas because of their international following and because they are well-suited to “in-play” betting.

Strategy

Our aim is simple: we want to be the unassailable choice of the punter by providing the best value, service and protection. We intend to achieve this through continued investment in our technology to ensure that our betting platform is the fastest and most resilient available on the internet; through staff training and through the adoption of best practice in relation to customer protection.

Betfair has a long-standing policy of not accepting US customers, funds or bets and in that regard ensures that it is able to detect and block unwanted usage. Betfair will only operate and market in countries in which it believes that it is legally able to do so.

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FAQs
Please find below some frequently asked questions about Betfair and betting exchanges.

Background Information

Q. What is Betfair?
A. Betfair is a registered bookmaker in the UK with additional licences in Australia, Austria and Malta. It operates a ‘betting exchange’ model which is a concept it pioneered.

Q. What is a Betting Exchange?
A. A betting exchange is a bookmaker that offsets all its risk through the use of sophisticated technology. This brings together two counterparties with directly opposing views and often results in better odds being available to all customers.

Q. When did it start?
A. Betfair launched in June 2000 and was the brainchild of Andrew Black, a former professional punter and derivatives pricing modeller. He partnered with Edward Wray a former JP Morgan Vice President and the company was formed. Andrew (known as ‘Bert’) still works at Betfair today, whilst Ed is non-executive Chairman.

Q. Who owns Betfair?
A. Betfair is a privately owned company with a range of shareholders.

Q. Have you won any awards?
A. Betfair is very proud to have won a number of awards. These include a Queen’s Award for Enterprise in the Innovations Category, an extremely prestigious business award in the UK. We are also the only company to have won the ‘Company of the Year’ award from the CBI twice, in 2004 and 2005.

Business Metrics

Q. How many customers do you have?
A. We have in excess of 1,000,000 registered customers with over 100,000 active in any given week.

Q. Where do your customers come from?
A. They come from over 140 different countries and on any one day over 50% of new registrations come from outside the UK where Betfair originated.

Q. What do your customers bet on?
A. Betfair offers a range of betting products. For sports betting there are over 50 different sports on the exchange covering events from 122 different countries. We regularly have football from 30 different countries and cover over 1000 horse races each week, added to this is a large range of other subjects such as reality TV and financial markets. Sports betting on betfair.com is complimented by an online poker site betfairpoker.com, an online casino with an innovative zero edge, and a set of unique Exchange Games offered by betfairgames.com.

Q. Where are you based?
A. Betfair HQ is situated in Hammersmith, London. We have a large call centre in Stevenage (about 40 miles north of London) and a Southern Hemisphere office currently being developed in Hobart, Tasmania. In addition to this we have a number of satellite offices around Europe including Malta, Denmark and Germany.

Q. How many staff do you have?
A. Currently 1000 around the world but expanding all the time.

Betfair’s Technology

Q. What technology platform do you use?
A. We use Oracle on Sun Solaris for our database servers. Our software is proprietary, custom software developed by us. Betex was launched in September 2003, it is a brand new n-tier J2EE based exchange platform and allows punters to place bets globally in 18 different languages.

Q. How good is your IT?
A. Betfair’s business is founded upon technology which has proven itself to be far ahead of the competition. We match over 5,000,000 bets a day which is 15 times as many as the London Stock Exchange (Betfair has the added burden of 24/7/365 operation and settlement is immediate). Oracle view Betfair as one of their top five most important customers in the world today which puts us alongside the likes of eBay and Google.

Q. What sort of volumes do you deal with?
A. At peak times Betfair matches over 5,000,000 transactions a day, serves over 3 billion page requests per week and 99.99% of our bets are handled sub-second. The technology required to do this is immense and requires significant investment and development time.

Tax Questions

Q. How do you make your money?
A. People betting on the exchange pay commission of between 2-5% from their net winnings on each betting market. Losing customers pay no commission. With our poker product customers pay a set fee (known as rake) in the same way as many other online poker sites.

Q. How much tax do we pay?
A. In the UK we pay tax in exactly the same way as every other bookmaker; that is a gross profits tax at 15%.

Q. Why is gross profit taxation a good system?
A. It provides a level playing field for all types of bookmaking. Historically other systems of taxation have favoured the more traditional bookmakers who do not have the technology to offset their risk as efficiently as Betfair does. In the modern world where internet access is widespread it is easy for customers to move around to many different suppliers and find value for money.

If a system of taxation exists in any jurisdiction which prevents high volume/low margin bookmakers (such as Betfair) from competing then customers will simply choose to bet through the internet with an offshore provider or worse are pushed into the unlicensed, unregulated black market in search of value.

A gross profits tax allows all types of bookmakers to compete for custom on an even footing and ensures a well regulated and safe environment for all punters.

Integrity Issues

Q. What is a Memorandum of Understanding (MoU)?
A. This is the name we give to an information sharing agreement signed by Betfair and a sport governing body. It allows us to share certain information about betting patterns and customer behaviour for that particular sport. We currently have 25 such agreements with many international sporting bodies and aim to cover every betting market we offer in the future. Betfair has taken an industry-leading stance.

Q. How do you monitor betting?
A. We have a large integrity team of specialists who monitor the betting patterns across all the betting markets offered by Betfair. They use a combination of software tools and experience. As the details of every bet are recorded any market can be investigated, current or historic.

Street address of BetFair corporate office (BetFair headquarters):

BetFair
The Waterfront, Hammersmith Embankment
Winslow Road – (Chancellors Road)
London, England
W6 9HP, United Kingdom, European Union

• BetFair – Markets — BetFair Lite — Betfair Mobile —
• BetFair RSS feeds - (a.k.a. BetFair Results Service) —
• BetFair Historical Data —
• BetFair Calendar —
• BetFair Extras —
• BetFair Forum —
• BetFair Radio — BetFair Live Video — BetFair TV – TV Listings —
• BetFair – Site Map – (HTML) —
• Entry point for traders: BetFair Member — My BetFair — Betfair – Know Your Customer (KYC) — Betfair Payments —
• Sub-websites: BetFair dot Info — BetFair Promo — BetFair Demo — Betfair – About Us – (including BetFair Charges) — BetFair FAQs — BetFair Help & BetFair – Help —
• BetFair Service — BetFair Content — BetFair Content Cache — BetFair Cache —
• BetFair Live Odds — BetFair Live Odds Comparison — BetFair Live Odds Comparison disclosure —
• Betfair Solutions Directory — Betfair Developers Program — Betfair Developers – Find-A-Developer —
• BetFair – Refer & Earn —
• BetFair Labs — BetFair Preview —
• BetFair by TimeForm — BetFair Racing – (Time Form) — TimeForm —
• Greyhound Racing Guide —
• BetFair Soccer Zone — BetFair American Football Zone — BetFair Basketball Zone — BetFair Baseball Zone — BetFair Tennis Zone — BetFair Rugby Zone — BetFair Cricket Zone —
• BetFair’s partner: Stats on Sport —
• The Official BetFair News Site — BetFair InPlay – (montly magazine) —
• BetFair – Australia – (Technopark, Glenorchy, Hobard, Tasmania, Australia) — 50% owned by Australia-based Packer family’s Publishing and Broadcasting Limited (PBL). — Traders should use the Australian wallet.
• BetFair – Germany – (Germany, E.U.) — Deutsche Sportwett GmbH of Dresden (DSG) acts an intermediary between customers and Betfair in respect of the transmission of betting data and other personal data.
• Licensed in Austria and Malta. — South Africa, next.
• Inactive websites: BetFair USA — BetFair Europe — BetFair Ireland — BetFair France — BetFair Italy — BetFair Spain — BetFair .NET (unclaimed) —
• Memorandums of understanding with European, U.K. and Australian sporting bodies —
• Betfair Corporate — BetFair is owned by The Sporting Exchange Ltd. — Founded in 1999 by Andrew Black and Edward Wray, and launched in 2000. —
• BetFair is regulated by U.K.’s Gambling Commission. —
• BetFair is a member of the Independent Betting Arbitration Service. —
• BetFair — SportsBook Review rating: A+  (Scale: A+ to F-) — Bookmakers Review rating: 4.5+ / 5 —
• BetFair prediction markets: chart file extension & deep links = Chris Masse’s tips