Slow innovation: Aside from a few cosmetic tweaks, reliability improvements and the Starting Price feature, Betfair hasn’t innovated much over the last few years. For a company that boasts several hundred developers, it should be able to release more major new features. Betfair gets very little traffic from organic search and has no social features apart from a forum.
Tax on top traders: About a year ago Betfair introduced a “Premium Charge” on their most successful traders, taxing their profits up to 20%. This runs contrary to typical volume rebate schemes where the more one trades, the smaller the transaction costs one incurs. The company claims the tax is to offset the cost of bringing new punters to the platform, but appears to outsiders as a clear move to increase revenue taking advantage of Betfair’s position as a monopoly.
Expensive transaction costs: Betfair takes 5% of traders’ winnings. If a trader bets ?100 and wins ?1000, Betfair will charge ?50 for the transaction. This is very expensive in a world of $8 online stock executions. As betting exchanges become more financial in nature, these transaction costs will shrink substantially.
Market Size and Competition: As Greg Wood from the Guardian wrote recently, horse racing liquidity has hit a ceiling. Will Betfair be able to maintain the revenue growth? With high costs and a smaller profit margin than Paddy Power, Betfair has found itself in a bit of “grow or die” situation. It will need to find ways to entice more customers to join its platform and spend their betting dollars with them. Betfair is looking to new sports – particularly football – and overseas markets like the US, China and India as opportunities for growth.
Headcount: Betfair has a tech team close to 500 people. While there is strength in numbers at times, the most successful tech projects in history started with small, nimble teams. The more tech people involved on a product, the less agile a company can be. Adapting to changing tech trends can be a crucial ingredient to remaining competitive in today’s internet startup world.
– In the Harry Finlay case, the BHA appeal panel says that in its view, “-a clear distinction needs to be drawn between a lay bet placed as part of a corrupt practice or even conspiracy and a betting strategy which has not interfered in any way with the integrity of the race and in particular the running of the horse in question.”-
We have decided that the strategy for the U.S. is to enhance our horse racing offerings and to support our global product development initiatives and therefore, at this point, Betfair wants the U.S. horse racing and engineering teams to integrate more closely with [United Kingdom] operations. Given these changes, Gerard decided to leave the company to pursue alternative opportunities.
Stephen Burn will now run Betfair’s US horseracing business and Los Angeles office, reporting to Betfair’s UK-based managing director of exchange, Mathias Entenmann.
Ravi Keswani will continue to run the US engineering and product management teams and assume responsibility for the San Francisco office, reporting to Betfair’s London-based chief technology officer Tony McAlister.
If you wanna know what Stephen Burn looks like, here’-s an old video:
MY VIEWS: Some years ago, I e-mailed Stephen Burn (2 or 3 times) for info on BetFair (not knowing that he was not in the PR department), and he graciously forwarded each e-mail to right person at BetFair (instead of killing them, wrong recipient), and my requests got always satisfied. So, to me, the chap sounds like a nice gentleman. As for Gerard Cunningham, I was told by one betting exchange industry insider that he was not very enlightened.
[*] Technically, David Yu is the upper boss at The Sporting Exchange USA, if I remember well. Go to http://corporate.betfair.com/ for more info. (Well, actually, you won’-t find that info there. Their corporate site is quite elliptic.)
“-The profit on ordinary activities for the year was ?24.8m (2008 ?50.5m). …-.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).”-
I am trying to determine whether the loss of ?11.9m relates to Betfair’-s acquisition of Pokerchamps.
Betfair Australasia Pty Ltd had, according to Reuters, recorded a net loss of around A$11.8 million for the year to the end of April 2009. Betfair’-s marketing costs had allegedly increased to A$7.7 million for the year, up from A$1.3 million, “-following the lifting of bans on interstate advertising”-.