Monday, 1 March 2010


There are contrasting pieces relating to Betfair in today's Daily Telegraph. First, Boris Johnson gives us a great plug in his comment article about the chances of Gordon Brown winning the election. Then 'Aussie' Jim McGrath has a pop at us as he discusses Racing for Change and last week's BHA AGM. The appearance of neither makes for earth-shattering news.

I met Boris when I was invited to a Tory dinner a couple of weeks ago - a dinner notable for its attendance by a number of betting industry people - and he was, in my opinion, a different class. It was a curiously flat affair, all things considered, although I won't bore you with my political opinions about why. But Boris's speech, like his banter afterwards, was entertaining. I'm not surprised to learn he's a Betfair convert!

Neither does Jim's opposition come as a shock. Last time I discussed racing with Jim at any length, he walked (or should that say 'stormed'?) out of a pub in which the two of us had been having an increasingly heated and certainly too alcohol-fueled debate about Betfair's status as a bookmaker and its payment of levy - the very topic of his piece today. Given that his parting words that evening were two in number and totalled seven letters in length, today's latest contribution to that debate is significantly more printable.

Unfortunately, it doesn't, in my view, make it any more convincing. Quite apart from Jim's assertion that 'just about everybody in the game' disagrees with us - he and I must speak to very different people - the fact remains that Jim's argument is based on perception of our business, and mine is based on the reality of its set-up.

I'm not actually trying to argue our case against him, though; nor were the adverts we published last week - the hat on which Jim hangs today's comment - designed to do that. The point that we sought to make in those adverts, and which I keep trying to reiterate here, is that it almost doesn't matter which side of the argument you happen to be on: it seems to us, quite simply, that the time has come to park the debate and move on to something else. Another decade arguing over Betfair's levy payment is not going to achieve anything other than have us all go around in circles, when there are so many other things we need to discuss.

For example, imagine that Jim is right: imagine that everyone in racing really is against us, and we are wrong, but we stubbornly, irritatingly, refuse ever to accept it. Imagine that we base our arguments on nothing of substance, but just argue our way out of a corner.

There is a view out there which is very close to this. But does it matter?

The fact is that that argument of little substance has still meant that every time we have gone to independent arbitration - through the UK government (twice), through the Australian courts, or through Sir Philip Otton - the result has been the same: whoever has come out in judgment has agreed that there is no way that you can distinguish between a fixed-odds bookmaker which takes risk and a fixed-odds bookmaker which manages its risk perfectly through technology, without being discriminatory towards the latter. On that basis, it surely makes no sense to underline Einstein's theory of madness: keep doing the same thing in expectation of getting a different result.

Jim has told me many times that the reason for this consistent set of results is that people 'stick you in the too-hard basket', and that all it needs is a proper assessment to get a change made. I have suggested to him, in contrast, that it is because the arguments we propose stand up; and that until we hear a substantive response to those arguments, that's what I will continue to believe.

But when I ask Jim whether he has ever read any of the papers I send him, he replies that I have sent him "enough papers to wallpaper the downstairs loo", and that if I "can't put the argument onto a single page, then it isn't worth looking at". Who's making use of the 'too hard basket' now?

The irony of Jim's piece is that the print edition has the following sub-headline: "Cheaper race-going and help for punters is all that is needed to bring in public". By my understanding, that means that Jim's solution is to cut margin and allow punters to win.

Yet the article itself says that what Betfair ought to be doing is to increase its commission in order to help the levy grow. While Jim is quite right in saying that we could do that in our terms and conditions, what baffles me is why he and many others in racing think we don't just do that, if it's such a simple solution to the debate.

The answer, of course, is that we price our product like any successful business venture: we charge the price that attracts the largest number of our target customer as we can, while extracting the best commercial return we can in exchange. Primark sell cheap clothes in both senses of the word; Armani sell at a premium to a specific type of customer. In Jim's terms, the Telegraph sells for £1 a copy; the Sun sells for 20p. They have different types of customer, and the arrival of the Sun brought a whole new set of people to newspaper readership. But having got them on board, if you now sold the Sun for the same price as you can sell the Telegraph, you wouldn't increase your profits five-fold; instead, you'd lose most of your customers.

That's not really one for the 'too hard' basket, is it?

1 comment:

  1. Whilst you know where J.Mc is coming from, and where he is 'having a dig' at Betfair, to the casual observer the article is simply muddied, unclear and has no particular conclusion. It's either badly edited, or just bad journalism.