SportingExchange Financial Statement for Year Ended 30 April 2009

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&#8220-The profit on ordinary activities for the year was ?24.8m (2008  ?50.5m). &#8230-.During the year the company disposed of its investments in BDD Holding A/S and Invest World A/S, two companies in Denmark, which closed during the year.  The company recognised a loss on disposal of these investments of ?11.9m).&#8221-

I am trying to determine whether the loss of ?11.9m relates to Betfair&#8217-s acquisition of Pokerchamps.

Betfair Australasia Pty Ltd had, according to Reuters, recorded a net loss of around A$11.8 million for the year to the end of April 2009.  Betfair&#8217-s marketing costs had allegedly increased to A$7.7 million for the year, up from A$1.3 million, &#8220-following the lifting of bans on interstate advertising&#8221-.

Betfair the Masonic Lodge

The relationship between William Hill and the betting exchanges has not been a good one. On January 29, 2003, David Harding on the subject of Betfair’s impact on the the over-round said- “Some racecourse markets now return overrounds of only 1.2 to 1.3 per cent per runner. That is not sustainable. I cannot have a price mechanism for 50% of my business being desecrated.

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

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

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

EDITOR&#8217-S NOTE: BetFair&#8217-s Mark Davies has his own take on the Topping statement.

Mastercard and Visa online gambling crackdown

Credit cards Mastercard and Visa have recently imposed restrictions on online gambling transactions to US customers, in preparation for the implementation of the anti-gambling legislation in June this year.

The following was reported by eGaming Review:

Mastercard crackdown leaves US players unable to pay

US-facing operators have been hit by an overnight crackdown on online gambling payments by credit card giant Mastercard. The US company is believed to have toughened its stance on the widespread practice of operators coding egaming transaction as other kinds of online commerce, which will all (sic) its US customers from using their cards to gamble online.

Rival US card giant Visa is rumoured to have taken a similar measure, although this could not be confirmed at the time of writing.

The action is a sign that banks and payment companies are preparing for implementation of America&#8217-s Unlawful Internet Gambling Enforcement Act (UIGEA), which bans the facilitation of online gambling by payment companies. This was originally supposed to have been enforced from 1 December 2009, although the US treasury later approved a delay allowing companies until 1 June 2009 to comply&#8230-(more)

In the followup article, it was established that Visa was also implementing the restriction on US customers:

Visa declining US egaming payments

The crackdown on US online gambling credit card payments that began on Wednesday is being operated by Visa as well as rival US credit card giant Mastercard, EGRmagazine has now confirmed, with tens of thousands of US online gamblers likely to have been affected.

As reported yesterday, US-facing operators were hit by an overnight tightening of restrictions on the use of credit cards for egaming transaction ahead of the implementation of America&#8217-s Unlawful Internet Gambling Enforcement Act (UIGEA) law on 1 June, which bans the facilitation of online gambling by banks and other payment companies.

The action was at the time of writing confirmed as applying to US-registered cards issued by Mastercard, but rumours that a crackdown had also been launched by Visa had not been substantiated. However eGaming Review has now confirmed that these too are subject to the ban. Repeated attempts to use a US-registered Visa card by an eGaming Review reporter on PokerStars last night were declined, with the American poker giant sending an email in response that read:

&#8220-Status: DECLINED.

Your credit card transaction has been declined. If your credit card information was entered correctly and you have sufficient funds, your transaction was probably declined due to Internet gaming restrictions set by your credit card issuer&#8230-&#8221- (more)


In order to better avoid of the USA anti-gambling radar, some gambling operators accepting US customers have been coding their Visa and Mastercard transactions in a manner as to not appear as gambling-related. The correct &#8220-internet gambing&#8221- merchant code is 7995- some operators have been putting their transactions through thus, and taking a chance as to whether or not the deposit goes through- others have not.

To put it another way: they&#8217-ve been trying to cheat the system.

Since the February crackdown appears to have been applied retrospectively to January, players now face the prospect that their deposits &#8211- with which they will have had plenty of time to play, and lose or win on accordingly &#8211- will now almost certainly not be honoured by Mastercard and Visa, resulting in an effective chargeback. This may have a knock-on effect when it comes to winning players receiving their payments.

And while the general tone of the internet discussion on this matter has been one of condemnation of the US administration in the wielding of its prohibitionist axe, I would personally like to ask this question: why should we not lay the blame for this squarely at the door of the online gambling operators, still dealing to US customers, who tried to cheat the system in the first place?

Their motives were purely profit-driven in attempting to stay below the radar. But it is the players, who committed no wrongdoing, who may suffer as a consequence.

It is of course also the case that not all operators have been trying to cheat the system. Some, such as Pokerstars, have been coding their transactions upfront as &#8220-internet gambling&#8221– in fact, in another EGR article they made a point of distancing themselves from the practice:

PokerStars does not, nor ever has engaged in the practices of mis-coded credit card transactions. We have therefore been unaffected by any crackdown by Visa or MasterCard to close down such mis-coded processing accounts.

So, all well and good for the folks who&#8217-ve behaved honestly.

But the casinos and sportsbooks that have been trying to put one over Mastercard and Visa, whatever the ultimate cost they pay as a result of this matter may be, do not deserve any sympathy.

They particularly do not deserve any sympathy from those players who may end up seriously inconvenienced, and possibly out of pocket, as a result of their duplicity.

There&#8217-s been, predictably enough, quite a lot of discussion of this move that has such potential sweeping effects on the industry: see the No more Mastercard article at Bookmakers Review, and the Mastercard blocks US poker discussion at 2+2 Poker (&#8220-Intentionally mis-coding a CC transaction is a crime in many places around the globe.&#8221- &#8211- I quite agree)- also my own Mastercard and Visa online gambling crackdown article, and one tiny piece of mainstream media coverage, the Timesonline online gambling comment &#8211- actually, quite funny, so I&#8217-ll quote it:

Operators including PokerStars which continue to defy the US ban have been hit by a crackdown on internet gambling payments by Mastercard and Visa, the credit card companies.

Great. The one piece of mainstream media coverage gets it completely wrong. :D

Betfairs Liability in relation to its software failing

As somebody who likes to &#8220-back and lay&#8221- on UK horse racing, I was more than annoyed, when having placed a bet on a UK horse race, Betfair&#8217-s software malfunctioned, meaning that I was unable to lay off my bet as was my intention.

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

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

&#8220-As the site was not available to any customers between 2 &#8211- 4pm, no bets were placed during this time and as this was due to matters beyond our control, our terms and conditions (11.3) state that:

We are not liable for the failure of any equipment or software howsoever caused, wherever located or administered, or whether under our direct control or not, that may prevent the operation of our betting services, impede the placing of orders for bets or the matching of bets, or prevent you from being able to contact us. In particular you should be aware that if you place a bet with the intention of subsequently placing a separate bet to reduce the liability incurred by the initial bet, there can never be a guarantee that the Exchange will be available at the point you wish to place the subsequent bet.&#8221-

As it happens, the race concerned was the 2.45 at Fontwell, which somewhat contradicts Betfair&#8217-s statement that- &#8220-As the site was not available to any customers between 2 &#8211- 4pm, no bets were placed during this time.&#8221-

That aside it would seem that I have been snared by Betfair&#8217-s all encompassing exclusion clause, to the effect that-

&#8220-In particular you should be aware that if you place a bet with the intention of subsequently placing a separate bet to reduce the liability incurred by the initial bet, there can never be a guarantee that the Exchange will be available at the point you wish to place the subsequent bet.&#8221-

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

Betfair are rumoured to be lining up for a 1.5bn flotation- it is a disgrace that they do not have back up servers to prevent their site from crashing.  When such an occurrence does take place, it is in Betfair&#8217-s interest to return all bets.  Betfair, the revolutionary betting company, have much to learn about the concept of goodwill.

Ladbrokes data scandal: personal information of millions of customers offered for sale to national newspaper

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Ladbrokes suffered a mighty embarrassment, earlier this week, and 4,500,000 customers had cause to get nervous, when the Mail On Sunday revealed that the UK uber-bookmaker&#8217-s customer database had been offered to them for sale:

For sale: Personal details of millions of Ladbrokes gamblers, offered to the MoS by a mysterious Australian

The confidential records of millions of British gamblers who bet with top bookmaker Ladbrokes have been offered for sale to the Mail On Sunday. The huge data theft is now at the centre of a criminal investigation after this newspaper was given the personal information of 10,000 Ladbrokes customers and offered access to its database of 4.5 million people in the UK and abroad.


This is no fake claim, as attested to by the fact that a &#8220-taster&#8221- of the full database was handed over by the culprit, fully ten thousand names and highly confidential personal details for the purpose of whetting the potential client&#8217-s appetite.

Hey-ho. The gambling industry at its predictable worst.

These incidents are not new &#8211- I reported on an occurrence a few years ago in which an online gambling industry leader touted a database of 100,000 UK players to the highest bidder on his forum. Neither are they remotely hard to believe- while the average customer service representative might struggle to access his company&#8217-s full customer list, an employee higher up the chain in the IT department should have no such difficulty &#8211- a quick copy, paste and save&#8230-and it&#8217-s time to start lining up the buyers. I daresay the names of four and a half million bona fide gamblers would fetch a very fine price.

And while our data watchdog, the ICO, huffs and puffs its righteous indignation, I&#8217-m sure they know there really is very, very little you can realistically do about this. Just one employee with access is all you need.

It serves as a reality check: when you put your details online, they are just that: online. Assume that, at some future point, someone will be hawking your phone number, email and physical address to the highest bidder.

I commented also in my Ladbrokes data theft post, and see also the Racing Post&#8217-s Ladbrokes reassure users over data protection article.

Oh well, I don&#8217-t know- maybe privacy is overrated. :)

Gold Bulls and Dollar Bears Silenced

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The price of Gold has plunged and the dollar has rallied strongly after the US government reported a surprise drop in the unemployment rate to 10 percent.

Those that felt that Gold was not a &#8220-dangerous&#8221- trade are looking a little shifty this evening. Gold is currently trading at $1149 an ounce, down nearly $59 on the day and way below the mystical $1200 mark, much beloved of the recent bulls/bandwagon merchants.

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

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

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

&#8220-When the 10000 number came in, there was an audible gasp, followed by silence&#8230- then everybody rushed to close out their positions. Once again the market has taught us all a hard lesson&#8230- I don&#8217-t know of a single person who was short Gold, long the dollar at this time.&#8221-

What happened to Betfairs Arnault card?

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Bernard Arnault is the 14th richest person in the world with an estimated net worth of $16.5 billion US dollars. (Forbes). In 2007, Arnault was listed among Time magazine&#8217-s 100 Most Influential People in The World. No bad thing for Betfar then, that Europeatweb, an internet-based fund controlled by Arnault, holds a 10 per cent stake in the company.

In August 2009 it was reported that Betfair would be allowed to apply for a betting licence in France, ahead of the partial liberalisation of the French betting market in 2010. It was said that Betfair&#8217-s application had been approved by the French authorities, after heavy lobbying by Arnault.

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

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eLab eXchange – Will Twitter Rule the World?

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Will Twitter Rule the World?

Rising along side of the social networking revolution, Twitter, the short message and microblogging service, has become nearly as popular as social network sites like Facebook. With China blocking Twitter on the anniversary of Tienanmen Square, and Time magazine publishing a &#8220-how-to,&#8221- it&#8217-s fair to say that Twitter is now a global mainstream phenomenon.

Join us at the eLab eXchange and judge which ideas have the greatest potential for using Twitter as global a marketing tool.

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eLab eXchange – Which real estate search site will see the most traffic?

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The eLab eXchange is up and running again with new markets and more to come on a regular basis!

Spring is the traditional home buying season and many real estate professionals are predicting a significant &#8220-spring bounce.&#8221- Will it happen? Try your hand at predicting the rise (or fall) in web traffic to 5 popular real estate search sites.

If you haven’t visited us lately, come back and see what we’ve got for you to judge:

Judge right and you can win $25 and have a chance to win the quarterly mega-prize.

Hope to see you soon,

Lawrence D. Wright, Ph.D.

Research Associate, UCR eLab eXchange