A view from Barnes village

www.markxdavies.com

2010-10-09T02:35:00.001-07:00

Please note that this blog has moved!

If you are looking for my thoughts on integrity in sport, funding of sport, the racing industry, and the betting industry (and a tale or two about how we started Betfair and some of the happenings in the first decade), please visit www.markxdavies.com

Moving home

2010-08-09T06:46:00.000-07:00

Well, not me. But my blog. It's not the reason that I haven't posted anything for a week: that's for a combination of being very busy, and not having anything particularly interesting to write!

But in the interim, my blog has been moving. You can now find it at www.markxdavies.com, complete with cheesy photo. Not all the links on it are working at the moment - it's work in progress - but I'll be updating it there from now on.

Many thanks indeed to Nick Garner for having worked tirelessly to help me out.

Economist debate

2010-08-09T06:42:00.001-07:00

Very interesting, if you didn't see it. Not least for the closeness of the vote.

Peter V'Landys interview

2010-07-30T10:42:00.000-07:00

I came across this piece of audio, in relation to the vote of no confidence which I mentioned before.

I post it without comment. It speaks for itself.

Old hat, new hat

2010-07-30T02:54:00.000-07:00

It's all been kicking off, everywhere you look: Ladbrokes are in the frame to get the wagering licence in Victoria; Barney Frank's bill has got out of Committee (hoorah, hoorah); William Hill are moving their telephone betting operation offshore; and Bwin and Party have finally announced what we know they've been talking about for years, that they're going to merge. The times, they are a-changing.

Maybe, maybe not. As half the world moves towards the future, the other half is intent on trying to legislate for the 20th century.

Let's start abroad. Greece, it would appear, want to introduce a high turnover tax a la francaise and limit the number of operators, in the belief that this is the path to the future; Cyprus, rumour has it, has similar plans; and the French themselves are running around trying to enforce their absurd legislation, today taking seven ISPs to court to ensure that they block access to sites.

Good luck with that, mes amis, although it strikes me as being a bit like Agincourt: a battle you're never going to win. The Right2Bet campaign highlighted this week just how short-changed European consumers are by countries which are seeking to limit choice in a way that they'd never get away with for any other industry, and whatever you do try to the ISPs, consumers today will vote with their mice: unless you have the co-operation of the betting operators, attempts to prohibit are doomed to fail, as the United States has clearly shown. All sorts of sources suggest that the number of offerings is spiralling, a process accelerated if consumers are forced to look outside the country for a product which satisfies their demands. (Incidentally, I wrote snippets about this last month but only got around to publishing them today. Other newly-published short thoughts appear here about Australia, and here about the French, and I've also put up a posting about Svenska Spel).

I know: I'm boring; I say it all the time. But sometimes, things people say all the time make for front page news. Like today, for example. Victor Chandler, a man previously notable for saying of betting exchanges that "the only thing wrong with them is that I wish I'd thought of them first" calls for action on "exchange layers", and it leads the Racing Post.

In itself, a call for 'action on layers' can't constitute a news item. (Indeed, you would think that anything on the levy debate didn't constitute news any more... It's been rumbling on for so long and there's been so much said and written about it; although if you're a levy debate junkie, I have posted a previously-unpublished post on it today). But here's the twist... Chandler says that if every lay bet were treated as a bet by a bookmaker, he would pay levy from his offshore business and encourage others to do the same.

Excuse me for a moment while I pick myself up off the floor and put my cotton socks back on, but this must be one of the funniest things I've heard in a decade.

For starters, I can't see why anyone thinks it is relevant to listen to a point about levy from a man who, as I understand it, has been offshore and therefore not paying it since around 1995 (on anything other than one shop in Mayfair).

But more importantly, the premise of his argument is hugely ironic. Because if anything in the world proves the fallacy of the oft-cited adage that Betfair's prices are better than anyone else's "because its layers don't have to take into account the costs a bookmaker would have", then it is Victor Chandler's business.

Why? Because ultimately, the point that is always made is that it's too hard for bookmakers to compete with Betfair's prices because Betfair's prices, so the story goes, are made by people who don't have to account for tax and levy. But Victor Chandler makes his prices without having to account for tax or levy either, so how come his prices aren't the same as Betfair's?

Of course, the reason is that the pricing of bets has nothing to do with the levy debate at all. The price differential is created by superior risk-management: Betfair manages risk perfectly, and so doesn't have to add a risk premium into its prices. The commercial margin of both exchanges and traditional operators is not all that different, which is why the price differential on football is so much less obvious (with fewer outcomes to add risk premium for) than it is on horseracing.

Which brings me back full circle to William Hill's decision to move their telephone business offshore. Ralph Topping cited as the reason for the announcement "Government’s inertia over the issue of creating a level tax and regulatory playing field. William Hill," he continued, "pays more in taxes and levies than it makes in profit while the betting exchanges flourish under a favourable system where they only account for taxes and levies on the commission they charge to exchange users."

Ignore the fact that the commission that Betfair charges its users is the differential between what Betfair take in in losses and what they pay out in winnings, which was what William Hill got charged on too, last time I looked. Instead, consider the thoughts of a coffee companion of mine on Tuesday - a man who left the horseracing industry back in 2003.

"It's hilarious," he said to me. "If I stepped back into horseracing today, I could pick up exactly where I was when I left off. It's all the same arguments, with all the same rhetoric. You'd think they'd have worked it all out by now. When will they see the light? The rest of the world's moving on."

So the times are indeed a-changing, at least for some. How ironic that it's the French who should sum it up so well: plus ca change, plus c'est la meme chose.

Update

2010-07-21T16:02:00.000-07:00

It's been another long but interesting day. In just short of three weeks since I left Betfair, I've picked up a couple of clients; am pursuing a number of interesting leads for whom I am in the process of writing proposals; have been roped onto one Board and another Advisory Board; and am now hiring. It's been quite a whirlwind of meetings, absorbing advice from all quarters, and trying to get used to the shortcut keys on my new Apple Mac.

In the midst of all of which, the endless stream of meals and drinks appears to have continued unabated, and the only thing suffering is my waistline. Thankfully, between servings I've had time to fit in a couple of pummellings on the tennis court, so all is not yet lost.

I met up on Monday night with an old adversary from Ladbrokes, who was among the first to suggest a beer on hearing the news of my leaving Betfair. Wags out there have been quick to insinuate that opponents who have suggested getting together have just done so to make damn bloody sure I'm off; but if that's been the intention, they've all been great company while they check on my departure.

Monday's couple of beers in Cork Street, round the corner from Ladbrokes' corporate office, consisted mainly of highly-enjoyable industry tittle-tattle. Included, inevitably, was discussion around the apparently mass departures of PR people from betting companies, what with Neal Wilkins and David Hood following me swiftly through the exit door. Who would ever have imagined that articles would one day be published mentioning Hoodie and me in the same paragraph, with no apparent mention of a fight...

Talking of fights, I lunched yesterday with a racing journalist and broadcaster with among the most forthright views in the business. Unfortunately I had to leave with only the single bottle of wine consumed, so the level of invective was lower than we've become accustomed to together over the years. We laughed at the news that one of racing's advisors is running around telling people I lost my job because I was rubbish at it, didn't have a decent argument to put, and couldn't put it anyway. He used to work with me, so I guess he ought to know...

Someone else who used to work with me made for another lunching companion today: Betfair's first proper commercial director, Tim Levene. I say 'proper', because in the very early days, I was in charge of the company's business development; and indeed Tim (who was at Flutter) and I were direct competitors. That was before the merger saw him take reins to which I was ill-suited (thereby saving the business, I suspect) and me move to a pure communications role; but after, amusingly and completely by coincidence, I had gone to see him - before either Betfair or Flutter launched - with a view to working for him at a betting start-up still hiding under the cover name of 'Insight Markets'. (He didn't hire me. I can't believe we still speak. :))

We ate at a Japanese restaurant on St. James's which seriously ought to be used as a set in a Bond film (if it hasn't been already), and discussed business ideas and strategies. Tim's dad is Chairman of Lloyds and was formerly Lord Mayor of London. I suspect Tim will be both before he's 45. I leave every lunch I have with him feeling well-fed, full of bonhomie, and entirely dubious about my own ability to do anything.

It wasn't because of that that I spent the rest of the day taking advice from various quarters about Camberton, honest: those meetings were set up well before! But I had a full afternoon and evening getting helpful hints and tips from kind people who are giving me the benefit of their knowledge about company infrastructure and visibility. One wishes to remain anonymous; the second, Will Rolt, take a bow. Thanks for your help.

By the by, if you're terribly interested in what I think the relevance of Betfair's Premium Charge is to the debate over levy, you can find out about it here. If you're not, you might be happy with the short version: "it isn't".

Australia, Australia, Australia

2010-07-19T14:56:00.000-07:00

In between charging from pillar to post today, during which I picked up an exciting new client, I've been enjoying another fabulous piece of analysis from Cyberhorse on the SMH advert that I mentioned yesterday.

I don't have time to write anything else today, and if you have a spare moment, you'll want to be reading that anyway... But as it happens I've written plenty more about Australia in the last month which I have not yet published: if you're interested, you can see thoughts about the court case over there here and here, and the stuff I wrote relating to the Productivity Commission report here.

Judgment

2010-07-16T01:39:00.000-07:00

I received a text yesterday morning from a name well-known in the racing industry which read: "Have you seen the news about the Findlay fine? It makes the BHA look like twats."

Harsh words, perhaps, but to the point.

I can picture much wailing and gnashing of teeth on High Holborn. But as I mentioned yesterday, they need only create a decent rule and they wouldn't get themselves into this sort of pickle. I see Greg Wood has written as much in typically robust and sensible terms in the Guardian today.

I lunched soon after (someone asked me in the afternoon if all I do is have lunch and dinner; not far off, I admit) with another racing face, whose view it is that there'll be a change of leadership by November, on the grounds that increasing numbers of people are scratching their heads in dismay at the insistence on a strategy and numbers never justified when they were announced in 2008 (before the world's economy fell apart), but adhered to since, nonetheless; and supported with dubious theories and crazy plans. There are previously unpublished posts relating to each which I have published today here and here.

Meanwhile, Down Under, it appears possible that Peter V'Landys time as Chief Executive of NSW is finally drawing to a close. If you compare the interviews he is giving newspapers and the adverts that his organisation is putting out about there being a logic to their strategy (in the Sydney Morning Herald today on page 36) with the no-confidence vote they are receiving from the trainers in their state - brilliantly, as ever, written up by Bill Saunders on Cyberhorse - you will draw your own conclusions about that particular racing leader's rationality.

Me? Well, no time for that. I'm off for another client pitch. :)

Harry

2010-07-14T00:08:00.001-07:00

I've been asked my view a number of times about the Harry Findlay laying story which goes to appeal today.

I haven't changed my opinion on the rule he has fallen foul to since it first came in: I think it is a bad rule which doesn't address the issue it purports to deal with, when a small tweak to it could make it a good rule that does. That's what I told John McCririck when he interviewed me at Sandown the evening that it was introduced, back in 2003 (I think it was).

It seems to me perfectly sensible to ban owners from being in a position that they profit from their horses losing - I am not sure that anyone would argue with that - but in my opinion that needs to be done howsoever they will profit. That ought to mean not being able to back another horse in the race to beat your own. It's about time racing's authorities and rules recognised what DCMS long ago pointed out: that backing and laying are two sides of the same ccoin.

It should obviously also mean not laying your own, but crucially that rule should in my view be extended to "to a position of net profit if it loses". The idea that you cannot lay back a back bet, if in doing so you are reducing your net backing position or locking in a profit on a previous bet is stuck in the dark ages. If there's an audit trail to prove that you are a net backer of the beast, and you stand to make more money from it winning than you do from it losing, then I think you should be able to lay it as many times as you like.

Integrity issues

2010-07-13T13:08:00.000-07:00

There seems to have been a lot of stuff this week on issues relating to integrity in sport.

I got a call on Friday from Newsnight ahead of the piece they put out about Nigeria's football team; I saw there was speculation around tennis with news that officials were assessing reports of irregular betting on a first-round match between Richard Bloomfield and Christophe Rochus at the Hall of Fame grass-court tournament in Newport, R.I.; and I was delighted to see the announcement of an education deal with the British Athletes' Commission brokered by my old colleague Susannah Gill.

I was surprised to see Patrick Collins of the Mail on Sunday, a journalist I normally very much enjoy reading for his in-depth knowledge, have a go at the last of those. "If there were no sports gambling industry," he wrote, "there would be no question of corruption, nor any need to ‘safeguard the integrity of sport’".

Of the many places I might direct you, Patrick, can I suggest you have a look at this?

Poker push

2010-07-13T12:41:00.000-07:00

Interesting that within a week of each other, both Time magazine (sadly, subscription only) and the Economist have had big 'special report' pieces on the changing face of poker, and the quantum of gambling that is taking place online out of the United States, despite it supposedly still being illegal.

Someone out there in the PR world is doing a good job!

Sharpe, and not so sharp

2010-07-13T11:30:00.001-07:00

The news today was full of the fact that it is 25 years since Live Aid, but every bulletin I heard neglected to mention that yesterday was twenty years since the American jockey Chip Termini was suspended for 30 days for dropping his towel as he emerged from the shower at Louisiana Downs in full view of a 'jockette'.

You think I'm kidding? It's 100% true: and I know it because it's the 'Strangest Event' listed in the Racing Almanac given to me this afternoon by its author, Graham Sharpe of William Hill. He was kind enough to invite me out following news of my heading for pastures new ten days ago, and we ended a very agreeable, anecdote-filled, lunch with him signing a copy he had brought along specially. I've been perusing it ever since, and very interesting it is too.

I went from lunch to chew the fat with an old friend in Westminster, who was full of interesting snippets himself. Much of the hour-and-a-half we spent together over a mid-afternoon bottle of wine was split between bemusement and amusement at the latest public offering from the BHA, published yesterday (apparently in a fit of pique) and entertainingly written up in today's Independent by James Moore, who clearly read the press release with an eyebrow raised in the manner of his namesake. The 'it's everyone else's fault!' approach also seemed to be the much-derided subject of most of the discussions I joined last night at Windsor, where many racing stakeholders were the guests of Arena Leisure at their annual world-beating barbecue. Making friends and influencing people, I think it would be fair to say, the BHA is currently not.

Previously-unpublished posts today, if you care, are put out here and here.

Bwin

2010-07-09T00:38:00.000-07:00

Just seen the news about Bwin re-branding Italy's Serie-B as Serie-Bwin.

You've got to give the credit for ingenuity. It really raised a smile.

Onwards and upwards

2010-07-09T00:08:00.000-07:00

It's Betfair's 10th anniversary party tonight at the HAC in the City - what I suspect will be a fabulous event given the hard work that I know has gone into it from the events team.

Many Betfairians have sent me notes asking if they will see me there, but disappointingly, the answer is no: sadly my ten years as an employee fell a week short of the official celebration, so I'm no longer invited. Lucky people who joined the company this week and can attend after five days' service!

I had a successful day yesterday meeting three potential clients, so I'm spending the day writing them a few thoughts about how they might take their ideas forward.

Fresh back-catalogue posts today here and here.

Clients and back catalogue

2010-07-08T00:52:00.000-07:00

It's been an incredible week. This time seven days ago was my last day employed by Betfair.

I have finally replied to the mails that I was sent, and this morning will embark on the voicemails which I have not been able to get around to yet. And I'm running off this morning to meet a potential client - my third in two days - so, fingers crossed.

With all this running around, I'm resorting to previously-unpublished posts on subjects which remain current, for those wanting something new to read.

If you're interested, you can see them here and here.

Two oldies

2010-07-07T05:24:00.000-07:00

I've published two old posts today, if you're interested: here and here.

Come on down - the price is right!

2010-07-07T03:34:00.000-07:00

There is a certain gameshow feel to the Levy Board's statement that it is opening a consultation on whether Betfair has any customers who are liable for levy.

I can almost picture them hiring Cilla Black to make the announcement, given David Zeffman's article in May's Racing Post, which so obviously heralded the start of a concerted campaign that I wrote at the time, "I guess that only if the HBLB were suddenly to open up a consultation exercise on the issue on the back of the article, might the view that [the newspaper] was wittingly or unwittingly kicking off a campaign be reinforced."

Surprise, Surprise!

Perhaps the Nic Coward view is that if this time, racing plays its cards right, it might get what it has failed to get in every past exploration of this subject. Presumably Stuart Hall will be next up, declaring on Coward's behalf that "It's A Knock-Out!" and revealing the killer blow.

Except, a cursory glance at the Levy Board's consultation announcement reveals that there is nothing new in the paper. As Martin Cruddace, Betfair's Legal Director, declared in a statement published by the company yesterday, "After a thorough, independent review of this very issue throughout 2004 and 2005, the Treasury came to the conclusion that the treatment of betting exchanges and their customers was fair. Since then, there has not been one scrap of evidence produced by anyone to suggest the situation has changed".

Indeed, the opening section of the Levy Board's consultation document merely reiterates the extent to which we have covered all this ground before; and paragraph 112 is extraordinary: "First, there is a difficulty with a necessary premise: that there are customers of a betting exchange who are carrying on a business. That is ultimately a question of fact which would need to be demonstrated and in truth cannot be. Leaving aside that fatal initial objection, the following points arise."

So to my mind, this seems to me an admission that the Levy Board already knows that it is about to draw another Blankety Blank. Although I received an e-mail yesterday from one of my favourite racing journalists, who told me that, "David Zeffman I know not. What I do know is that bookmakers operate their business (rather than stand, uselessly, at the course) on Betfair.... Love you to death, love Betfair to death - but none of you are bookmakers and the nuances (dark arts) of racecourse betting are perhaps not your strong suit", in reality, perception and fact here are a long way apart.

While people might be making money as punters, that doesn't make any of them bookies. And as I tried to explain to Racing many times when it was my job to give a monkey's about it, laws, and law enforcement, need to be based on something other than rhetoric. Unfortunately for Racing, rhetoric is all that Nic Coward has on his side in this debate.

To give him credit, at times that rhetoric is Shakespearean in its stature. But at others, like in his statement yesterday, it is laughably poor. So desperate is he to connect Betfair to racing's ills, that he name-checked it in isolation in the most absurd manner, apparently missing completely the fact that the company has decided to pay a voluntary contribution to racing directly into projects of its choosing, rather than into coffers he controls. That decision, taken while I still worked there, was the direct result of Nic's approach to running the sport: he gave Betfair no credit for its voluntary contribution (despite the fact that it was unique at the time it was paid); he insisted it was not levy at all, but a payment Betfair should do what it wanted with; and he spent much of it on legal fees aimed at damaging the company's business.

It continues to pain me, even in my post-Betfair world, that he should keep leading Racing on a hopeless cause, just as it does that people in racing should blindly follow him. There are so many other things they need to get on and address, and their task in addressing them gets harder with every day that they waste tilting at windmills.

Swamped

2010-07-05T01:11:00.000-07:00

I've been totally swamped by kind messages following my posting with news of my resignation on Friday, and I will be spending my morning trying to answer the 400-odd e-mails I've received before I head to a lunch.

It's been really extremely flattering to receive so many messages of support, both from people inside the company and outside; and both from those I have always known to be good friends, and from others who have traditionally been on the other side of the divide from me.

Tim Ryan, who famously once tried to get me arrested in Australia on the grounds that I was apparently running an illegal gambling operation (a blog for the future, perhaps), sent a note wishing me good luck; and first on the telephone at 9am was Ralph Topping to say all the best.

Wags will doubtless suggest that he was calling in delight at seeing the back of me, but nothing could be further from the truth: in fact, he was extremely kind and generous in his assessment of my Betfair career. Not that that surprises me about him: Ralph was the subject of one of my unpublished posts from my back catalogue, which I have today posted here. Another old post which I couldn't publish previously has gone up here.

So, the first working day of my post-Betfair career is going to be an even more e-mail-filled one than was my time spent there. Which means, not a lot of time to blog. We'll save that for later in the week.

Dorset Rise

2010-06-30T23:51:00.000-07:00

There was a certain irony to the start of my day yesterday. I went to a Social Mentoring briefing at KPMG's offices, which meant walking up the hill between Tudor Street and Fleet Street along a small road called Dorset Rise.

It was on that very street, in December 1999, that my senior salesman at the time chatted to me, unknowingly, about the multiple moonlighting from JPMorgan that had seen me taking numerous days off over the previous few months to fulfil commitments with BBC Sport and the Daily Telegraph.

He put his arm around me and said, "Mark: can I just say, as we head into the new year and a new decade, that I hope your luck changes... I've never known someone suffer so much illness, the loss of two family members, and the death of so many friends in one year." It was at that moment that I realised that doing two jobs alongside my main contracted one was untenable in the longer term, and I resolved to quit.

So it was ironic that I should have found myself on that same street yesterday morning, the very morning that I quit the job that I went to from JP, at Betfair. Ten years on from last resolving to do so, I have resigned.

It's been fun. But in recent months I haven't been able to offer Betfair as much as I'd like to of what I think I am best at; so I think it's time to move on to new things.

I have set up a company of my own, Camberton, which will offer to a broader church (i.e. I'm on the look-out for clients!) the sort of thing that I have been responsible for at Betfair over the last decade: reputation management, public affairs, PR, communications, and external stakeholder management. It's something I have talked about for a long time and now is the time to do it. And I'm pleased that Betfair think I still have a role in offering that kind of thing to them, because they are my first client! Many of the challenges that I have worked on for them remain, and I will be continuing to advise and work with them on those for at least the next twelve months.

On that, I've had various thoughts, which I have been jotting down but not publishing, on many of the industry issues in recent months. Now that it is clear that the thoughts are mine and not an official Betfair position, I'll stick them out over the coming days and weeks for those who are interested, in the order I wrote them, starting here and here.

Friendbet

2010-06-29T06:42:00.001-07:00

I was interested to see that a company called Friendbet has been licensed to operate in France.

I always knew the French hadn't understood what a betting exchange was.

They set out to ban exchanges, and came out with legislation that they think has done it.

And then they license Friendbet.

What do they think that is, if not an exchange?

Dixon and Blatter

2010-06-28T07:23:00.000-07:00

I read the comments from Paul Dixon about the need to return to a turnover-based levy system with my head in my hands. It's taken me 48 hours to get them out again, and even know I wonder if it is worth writing about which bit of it I found the saddest.

Perhaps it was the particular and pointed exoneration of Sportingbet for paying a voluntary levy suspected to be in five figures, without mention of the voluntary levy paid by Betfair, which is comfortably into seven.

Or maybe it was hearing that notion repeated that a turnover system, which in my view encourages a high margin from operators and therefore will ultimately kill the racing completely in a competitive world, is somehow a lifeline.

I'm not sure. But it reinforced my view that racing continues to be led by people who claim in one breath to want innovation, and then with the next want to pick and choose parts of an innovative model, as if doing so doesn't destroy the whole.

I saw a great Tweet from BBC Sport's Jacqui Oatley this weekend, which read, "Blatter saying there's no need for goal-line technology is like your grandpa saying the internet's pointless."

I would categorise Paul Dixon's comments in the same category, because he insists - in line with racing's other 'leaders' - that the levy is having problems because of the single most notable innovation in betting in the last decade. The reason that the levy is struggling, he says, is that the betting landscape has changed because of "the extraordinary growth of betting exchanges. Exchanges have changed the whole dynamics of betting in recent years and, in particular, they have had a major effect on margins. Indeed, a by-product of returning to a turnover system would deal with the problem that racing has with the exchanges not paying an adequate amount into the Levy in one fell swoop – they would simply be paying a lot more than they are now.”

Leave aside the clear demonstration from this excerpt that the levy debate has nothing at all to do with what is right or logical, and everything to do with the 'we just want more money' attitude that is endemic in racing's upper echelons; and consider instead what that statement is actually saying. If you ask me, it reads, "the betting industry has moved towards the future; racing's response should be to try to stifle its innovation by moving back to the past."

Dixon for the FIFA job, perhaps?

Productivity Commission

2010-06-24T14:37:00.000-07:00

It doesn't surprise me to find myself amused by the reaction of Tabcorp's Chief Executive to the findings of the Productivity Commission report in Australia, but somehow, despite everything, I still find myself astonished at the way some people believe that they have a right to protection from market forces that everyone else has to deal with as a way of life.

I'm not suggesting that everything in life should happen without regard to potential consequences, but to argue that the Productivity Commission's report 'shows a serious lack of understanding of these industries, both in Australia and around the world" is just arrogant and insulting.

I would say precisely the contrary is true: the report shows a complete understanding of the industries and the issues, and, shaking its head in bewilderment at the way in which those who are part of them believe that they should be able to maintain the status quo which has seen them spend many years in the sun, it suggests ways to allow more people to play.

Cyberhorse put it like this yesterday: "This clutch of multi-millionaires want a racing industry structured so that literally millions of little people - punters, low paid workers, small breeders and hobby owners, dutifully contribute to bloated service fees and artificially inflated bloodstock values. They have achieved this position over a long time by basically ignoring the Trade Practices Act and the Australian Constitution, arranging state laws and Rules of Racing to bolster their position."

For the second time in a week, well said Bill Saunders.

Svenska Spel

2010-06-24T04:35:00.000-07:00

Really, you have to laugh your little cotton socks off.

Although, inexplicably, I can't find a link to the press release on the web, among ones which laud their brilliance in combatting problem gambling and things, I gather from other websites that Svenska Spel have fired their CEO.

This in itself is not amusing. I'm sorry for the lady. No-one wants to lose a job.

But it's when you get lines like this in news reports that you have to suppress a smile:

During Persdotter’s first quarter in charge, net gaming revenues at Svenska Spel’s online division fell 15 per cent for poker while lotteries fell 18 per cent, games fell 10 per cent and sportsbetting fell 3.5 per cent. The company however welcomed the decline as evidence of the effectiveness of newly introduced responsible gaming measures and a reduction in marketing expenditure.

On that basis, why fire your CEO for 'mixed results'?

The hypocrisy of the monopoly systems around Europe has surely never been laid barer. You're hired to introduce measures to limit gambling because it sounds good politically in defending your monopoly to the European Commission, but when you are entirely successful in doing that, you lose your job.

Let's just admit what we all always knew, that they don't want gambling limited at all: they just want the people who can profit from it limited.

In firing their CEO, Svenska Spel have just proved it.

More on Australia

2010-06-21T14:17:00.000-07:00

There's some great stuff appearing on the court decision in Australia.

If you've missed them, there's another brilliant piece from Cyberhorse here. And Betfair's Australian CEO Andrew Twaits gives his view of the world here.

Racing NSW case

2010-06-17T00:45:00.001-07:00

The reaction to the judgment handed down in Betfair's case against Racing New South Wales is fascinating.

Some have pointed out that there are fairly technical reasons for Betfair's case being dismissed (the judge accepting that the turnover fee was discriminatory in favour of TabCorp and against Betfair, but dismissing the claim that it was protectionist), such that the eventual outcome may well change; others outline that it is not the victory for racing that it immediately appears; and others still, pointing to the Sportsbet victory the same day, show how the combined judgments will impact the future governance of racing.

Others close to racing, though, are hailing it as a 'great opportunity' for the sport.

I find racing's thinking, as exemplified on the final link, incredibly muddled. The dispute shouldn't be over the idea that racing should be able to charge. The question for me is what basis of charge is the best for the industry's future.

But consider the Racenet article referenced immediately above. In one line it says, "Racing in effect is now free to claim a percentage of every dollar wagered on its sport, no matter where in Australia it is wagered – a stunning opportunity to be sure" and a few paragraphs later it accepts that 'Huge amounts of money can churn around within the system with the same dollar going through a bookie then the tote as it’s laid off. A new turnover tax on that amounts to a double dipping."

So, which do you want it to be? A turnover tax is not a tax on punter drop, by definition. It's a tax on turnover, and turnover has nothing do with what the punter spends or what the operator makes. That's not my judgment alone: Justice Perram thought that turnover had no utility as a measure of the number of times race field information is used, and felt that as a proxy for numerical use, the fee was “hopeless”.

Aside from legal argument, though, the question has to be what is most effective in taking racing into the future, in a world with multiple product. In other words, what charge maximises take across the global marketplace, taking into account consumer behaviour, and a desire not to create something that then alters consumer behaviour in order to facilitate avoidance.

There is only one sort of tax which doesn't incentivise the person paying the tax to change their behaviour in order to reduce exposure to whatever it is that is being taxed, and that is a tax on profit. Taxing anything that has a variable need just encourages people to reduce the need for it (look at the old window tax), but reducing your profit to pay less tax is clearly cutting off your nose to spite your face. A tax on turnover clearly incentivises you to reduce your turnover, particularly given that you can do so without reducing your profitability. You just raise your margin. a 2% margin on turnover of £1000 clearly generates the identical profit to a 4% margin on £500.

So, a turnover tax, by definition, incentivises the operator to keep prices high, in order to keep turnover low. Keeping prices high means being less competitive; being less competitive means reducing innovation; reducing innovation means opening a gap between what punters want in their regulated market and what they are being offered; and opening up a gap creates demand for a black market.

The thing is, even people who argue what a 'great opportunity' this is, seem to recognise that. Take that Racenet article again. it says: "Turnover needs to be maximised, markets need to be competitive."

So, how do you maximise turnover by taxing it? And if you want racing to be competitive, why tax it in a way which encourages higher prices?

Technology

2010-06-15T03:28:00.001-07:00

Not that it's my usual style to comment on corporate stories, but the news which has been published on various blogs, and formally announced on the official website, of a deal which puts Betfair onto Samsung televisions, is one of the more exciting releases I have seen in a long time, and in my view a huge personal success for the amiable and extremely capable head of Betfair TV, Simon Miller.

The wider picture here, though - following on so soon after the equally exciting launch of Betfair's iPhone application, which was downloaded 20,000 times in the first month - is the same as I was making when I was interviewed the other day as part of the BBC's coverage from the Aegon Championships at Queen's. Asked by John Inverdale what should be done about people betting on laptops court-side, I commented that there is little point in dealing with any 'issues' perceived to be associated with betting by trying to hold back technology. It's far better to address them through transparency and co-operation.

On that track, I recently spent some time with a number of sporting Chief Executives, who gave up some of their time to come and understand how betting is tracked today. I think it is fair to say that they were wide-eyed about what they described as 'almost anti-terrorist style' means of tracking any problematic betting. We agreed that the biggest deterrent to malpractice is getting the message out there that the proliferation in online betting has tipped the risk/reward ratio dramatically in favour of risk, by virtue of the trackability, and not - as is commonly perceived - in favour of reward.

The more sports leaders who understand that, the better for all of us, because the message will be easily communicated to the players and officials (who are the only people who can genuinely impact the outcome of a sporting contest). I'm very encouraged that organisations like the Professional Players' Federation and the British Athletes' Commission are so willing to engage in the subject. It's good news for everyone - except the would-be corruptors.

Name and logo

2010-06-15T03:11:00.001-07:00

I did the presentation to our new starters the other day, in which invariably I get myself lost in stories of the olden days rather than sticking to the corporate script, and I was reminded, as I mused, of the very first 'focus group' that we had as we got Betfair up-and-running.

'Focus group' was something of a misnomer, given the people who were involved: our group of six comprised mainly old university footie mates of mine, not known for focusing on an awful lot other than the bottom of a beer glass. But they fitted the bill (i.e. they had nothing better to do), and we sat them in a room to ask them questions about how people might react to the proposition we were about to launch. We started by presenting the six of them with a single piece of paper which we placed in the middle of the rectangular table around which they were sitting.

All it had on it was our proposed name and logo. We wanted to know what came to mind.

The first two comments that were made as the piece of paper was put down will stay in the memory forever, I think.

"Well that's pretty stupid," said one. "Betting isn't fair, is it?"

There was a pause.

"Oh - but look" piped up a second. "They recognise that. Because there's a great big arrow going in, and then just a tiny little arrow coming back out..."

Sex

2010-06-15T02:50:00.001-07:00

It takes an Aussie to say, of gambling, that "It's a bit like sex: everyone thinks they're good at it but not many people are."

But that isn't actually the reason I was drawn to Max Presnell's article in yesterday's Sydney Morning Herald.

Rather, I thought it interesting for two things.

First, because, at last, someone, somewhere in the world, who can be considered part of racing's older guard has recognised that the biggest threat to racing is from competitive product.

And second, because of the line that says, "the Australian Productivity Commission estimates Australians gamble some $800million on online poker and casino".

If anyone wants proof that prohibition is a waste of time, this is it. It is clearly, explicitly, 100% illegal to gamble online on poker and casino products in Australia. The Interactive Gambling Act 2001 makes all online gambling illegal unless it is covered by Section 8A, which explicitly allows wagering on sports and horseracing.

So that $800million is money gambled and not taxed, and lost to Australia.

Someone explain to me how that makes sense.

And on it rises

2010-06-08T02:59:00.001-07:00

I note that, according to a research piece put out by Barclays today, "investir.fr estimates that there are 20,000 websites operating in France that offer gambling."

So, from 5,000, to 15,000, to 20,000, in the space of months.

Good legislation, that.

The Oaks

2010-06-04T00:37:00.001-07:00

So here we are, then - back to where it all started. Our actual anniversary may be 9th June, but philosophically, it will always be Oaks Day, because Oaks Day 2000 it was, and the Oaks was our first ever market. Love Divine won it. From memory, I think about £3,400 was matched.

I can well remember the thrill of the first few bets being matched - compounded, perhaps, by the technical difficulties we had had on the three occasions we had showed off the product in the days before launch. Two of those were launch parties, and rather public; the other was in the privacy of my parents' house in Datchet, to the Times' racing correspondent, Alan Lee.

I forget now why it was that I had called Alan. I suspect it would have been that he had formerly been the Times' cricket correspondent, and the previous year I had got myself a gig working in the Press Office for the Cricket World Cup, based at Lord's. I think - although neither of us can remember for sure - that we must have met there; and that, just under a year on, with us both having moved jobs, his was the only name in the racing press that resonated. Whatever the reason, and however cold the call, Alan responded with great interest. He'd be fascinated to see it, he told me. A date was set. Bert and I rocked up to my folks' place, which was a happy half-way house between our Putney office and Alan's Cheltenham home.

We talked him through the product. Bert, in his customary shorts, wilder-haired than he is today (there was a touch more of it then), extolling the virtues of his baby - this exceptional product that had gone from drawing board to launch pad over a period of many months. Alan was wide-eyed at the explanation. Come on then, let's see the real thing. Here it is! Look! Oh no... Sorry... The system's crashed...

The first of our launch parties was in Covent Garden, targeted at (I think) 24 people who we had chanced upon through friends and friends-of-friends as potential clients or potential investors. We went to a small bar which was bizarrely lit in blue, on Shelton Street, I think it was. I can't remember if there were really fish tanks there or whether my memory has now just imagined them, but the whole place had a feel of being under water. It was an unfortunate metaphor, given that before we had even started, we were.

There they were, the High Rollers (as we thought of them then); gathered together in hushed expectation, enticed by news of a ground-breaking product which they were going to be first in the outside world to see. Twenty-four computers set up around the room; state-of-the-art not-quite-flat screens (it was ten years ago); the eerie blue light adding just a frisson of excitement. "Gentlemen, thanks for coming. What you're about to see is going to change the world of gambling. Err... Sorry. The system's crashed."

A day later, we were at the Sports Cafe on Haymarket, showing a rather larger crowd. Anyone we knew from the City was asked along to an evening which we had decided would best generate interest if we staged a mock demonstration outside.

Many people remember our mock funeral which made the front page of the business section of the Sunday Times, when we paraded a coffin around Finsbury Circus and its environs proclaiming, "the bookie is dead - make your own market!". Far fewer remember the demo we arranged outside the Sports Cafe, where a rag-tag-and-bobtail group of actors donned mackintoshes and flat caps, and held up placards saying "stop the launch".

The irony was two-fold: first, some who were invited that night never made it, turning away as they approached and telling us later that there seemed to be some kind of a demonstration going on, and they thought they should keep clear. The second, of course, is all too obvious: at the time, the idea of traditional bookies protesting our existence was all tongue-in-cheek. Little did we realise just how much the bookmaking industry would genuinely line up against us in the years ahead in protest at how competitive we were.

The Sports Cafe launch was the 'official' launch, but it wasn't a whole lot more successful than the private one. Most of my former brokers who came along were baffled by what I'd left JPMorgan for: despite their deep understanding of markets, they didn't see what the demand would be for our product, and told me it would never be more popular than the spreads that they loved (Sprouty, Stokesy - hang your heads in shame!). The system that night was up and down - more up than down admittedly, but it still felt hairy. We were heading towards D-Day with some trepidation.

But D-Day went like a dream. Alan wrote a back-page piece for the Times heralding the start of a new dawn which, he advised in words that went entirely unheeded, people in racing would be wise to notice. The market was posted, and prices went up, in fivers and tenners. We all stood around the computer screen as they appeared and disappeared, placed and matched with slightly more of a delay than they are today. By the time Love Divine was in the winner's enclosure, we were all jumping around in glee. Betfair was up and running!

Funny to think, really.

Charging towards turnover

2010-06-02T14:00:00.001-07:00

I see that owners and breeders in Victoria, Australia are the latest group in racing to come out against a gross profits tax and advocate a turnover charge.

I find it bewildering, to be honest. It's like voting for an ancient by-gone age in the naive belief that you can go back to a world that was, instead of dealing with the world that is.

How does anyone believe that the solution to a funding crisis is to stifle innovation and competition? I could see it if racing were the only game in town, but it isn't: it has to compete with lots of other gambling product.

Voting for turnover on the basis that it brings a short-term boom, without recognising that it encourages people to bet offshore, that it keeps domestic prices high, that it makes it impossible to compete on price and that it therefore makes it less likely that new market entrants will keep up with consumer tastes is a very short-term approach.

It's like being a recording artist and insisting that you want to keep selling vinyls, on the grounds that vinyls sell for a higher price and all your longest-standing fans still have turntables. Your old fans keep buying your songs, and you might well sell them records at higher prices for a bit. But by the time you turn to the people who are using MP3 players, you realise that the people who might have become your fan-base are listening to someone else.

Still, I guess by then, both you and your old fan-base are dead.

Premium Charge and the levy

2010-06-02T02:45:00.001-07:00

I had an interesting lunch yesterday with a group of racecourse Chief Executives, talking about the racing industry, the levy, and specifically Betfair's impact (as they saw it) on both.

They were all extremely focussed on the Premium Charge, and argued vociferously as follows: if Betfair has identified people who consistently make money, and then charges them a premium, why should racing not be able to charge those people money as well, on the basis that they are profiting from racing.

My first reaction was mild amusement that racing should believe that our Premium Charge customers should necessarily be racing customers. There's a naive belief which persists that betting means racing, when racing is an increasingly small proportion of the betting industry's business.

But that aside, the logic of their argument just doesn't stand up.

Racing derives money from betting operators, and as it derives a percentage of their profits, it should be comfortable that operators and racing are incentivised in the same way. If we maximise our profits, then their take is maximised in turn.

Now, their argument is that if we charge a consistent winner 20%, then they only get 10% of that 20%. But that argument is seriously flawed.

Like all operators, Betfair is out there trying to maximise profit, and balancing that desire with ensuring that its customers get value. Unless it achieves that balancing act, then its profit by definition cannot be maximised, because it has no customers to make a profit from.

Part of Betfair's USP is that it welcomes people who win. This is an important selling point, as was seen by the outcry that its introduction of a Premium Charge created. As was said at the time, only 0.6% of its customers pay the premium charge, but around 50% of its customers were seriously up in arms about it. The dream of winning is very important, as was made clear by the many, many customers who claimed (falsely, in my view) that the Premium Charge took away that dream.

Allowing customers to win is therefore important to the success of the business, but it cannot be done in a way which costs the business money. Successful punters (who, incidentally, are not necessarily the same group of people year in, year out) have to win from someone, which means that Betfair needs to provide a never-ending stream of customers who contribute to the liquidity of the pool.

So, Betfair's business model is that it makes sure that it markets to a fast-growing customer base, and keeps the money circulating in the system. The longer the money stays in the system, the more often Betfair clips the ticket. Betfair's aim is therefore to keep the money in the system for as long as possible.

One of those present said to me (repeatedly) that what we ought to do is just stop people winning. Now there's a good business model: why doesn't racing tell all its punters that they're not allowed to win, and if they do, then they'll be banned. I can see that working well for the future of the industry.

But that aside, let's return to the argument. Betfair's business model is to maximise money not by closing down people who make money from it, but by spending money to ensure that it keeps clipping the ticket all the time. In other words, it has a business model, like any other business model, based on costs of doing business, and revenues gained from what those costs provide. The fact that it is using revenues to pay the costs is not a matter of concern to racing because racing gets paid on the GROSS revenues, not on the net revenues. So the fact that Betfair chooses a business model where, having paid some of its gross revenues in tax, it then spends some more of those gross revenues to cover costs which then in turn generate revenues, is not relevant. By that stage, it becomes a matter for Betfair's Executive, and Betfair's shareholders. Racing should be delighted that Betfair is out there maximising its revenues.

So, for racing then to dip into a part of Betfair's business model and say 'oh - we'll have a bit of that too' is absurd. Racing has decided that its funding model is to take a percentage of the profits of operators. Not customers, but operators. So it is simply not racing's position then to play with individual parts of Betfair's business model and say that it likes this bit but doesn't like that bit. Either it takes the model and a percentage of the revenues that are generated, or it doesn't.

Now, racing is of course perfectly at liberty to change its own funding model in turn. It could absolutely say, "we no longer want to get a percentage of the profits of operators. We want to get a percentage of the profits of all those who benefit from racing over a given amount of money in a financial year'. But if it is going to do that, it has to do it consistently across the board.

For example, take a successful punter who also wins the Scoop 6. Maybe he wins it more than once, as a very savvy, Premium-Charge-paying punter.

If he were to win the Scoop 6 betting through Betfair, and is paying the Premium Charge, should his Scoop 6 winnings be included in the money he makes from racing, and therefore then be included in the event that racing secures money from non-operators who make money on racing? If so, should they also be included if he wins the Scoop 6 betting through the Tote, rather than on Betfair's Tote product?

The fact is that, like Paddy Veitch (who was written about at length in the FT this weekend), racing isn't interested in that kind of even approach. If they were, I'd have some sympathy with them. They could, in my view, absolutely change the target of who they want to get money from, providing they do so on a consistent basis.

But for the life of me, I cannot see how anyone thinks it is equitable to dive into one operator's business model, picking and choosing those aspects of it that suit, when it has made a decision to charge operators on their profits.

Evening Standard

2010-06-02T02:14:00.000-07:00

I'm not sure which bit of yesterday's 'Big Interview' with Nic Coward made me laugh most.

First it was the way it was dubbed 'exclusive', as if to give the impression that other papers had been fighting to get it.

Second, I suspect, was the line that the "even more pressing problem, Coward believes, is the failure to address the issue of foreign races shown in betting shops or on their offshore operations. Coward estimates such online offshore operations set up by Betfair to be in the region of £10m-£15m."

Come again? Is that a journalistic misunderstanding, or is Betfair - onshore - responsible for the companies that are offshore? In a world where Betfair is to blame for everything, you can never be quite sure. I'm told Nic once started a meeting he was chairing with the comment, "you have to remember, these people are pure evil." So anything's possible.

And third, this delightful non-sequitur:

"Lord Triesman was secretly taped making claims — subsequently investigated and denied by FIFA — that Spanish officials were attempting to bribe officials and fix the results of matches at this summer's World Cup. “Where there is betting on any sport including racing there is an ever present, very severe threat of corruption,” Coward tells me."

Does Nic genuinely think that Triesman was implying that the bribes were for betting purposes, or is that, too, journalistic misuderstanding of the case that he was putting?

Paddy Power's turnover tax call

2010-06-01T13:29:00.000-07:00

Interesting to see today that Paddy Power have called for a 1% turnover tax on Irish racing from Irish betting customers as a solution to that country's funding problems.

While it is clear that their motivation is to ensure that all those who profit in some way from Irish racing get caught by the tax, rather than just betting operators, it seems curious to me that any competitive operator should call for a turnover tax, which by definition builds in an incentive to keep turnover low and therefore margin high. Having high margin built into the domestic system is a recipe for stifling innovation and creating (or fuelling) a black market.

It was precisely to create innovation and stifle the black market that bookmakers in the UK advocated the change to a gross profits tax and away from a turnover tax in 2001. And it is precisely for that reason that progressive governments have since moved towards GPT, and protective monopoly ones have opted to try to ingrain turnover, since then.

As Paddy Power themselves are clearly in the innovative and progressive box, not to mention extremely competitive, it seems a curious move. Perhaps there is politics behind it that I don't understand.

BOA AC

2010-06-01T13:12:00.001-07:00

Congratulations to a former university contemporary of mine, Sarah Winckless, on today being named the first Chair of the new BOA Athletes' Commission. I'm delighted for her.

It's hard to hear of her appointment, though, without wondering whether the existence of the BOA AC will cause further confusion in the world of British sport. There is, after all, already a British Athletes' Commission.

I understand from the Chief Executive of the BAC, Pete Gardner, that the BAC will continue to represent British sportsmen who take part in the Olympic sports, while the BOA AC is an advisory group for the British Olympic Association, comprising Olympic athletes; and I have seen a very good document advising of the difference in jurisdiction between the two.

Maybe I'm the dunce, having once turned up to the offices of UK Sport for a meeting with Sport England.

But you have to wonder how many bodies there are in sport in our country, and how many people who don't have the privilege of being able to ask a million questions about who has responsibility for what, just give up the ghost on the basis that it's all too hard to work out who decides what, when.

Betting in cash

2010-05-31T01:47:00.001-07:00

I was at the SportsAid quiz at the end of last week, which, I can't resist mentioning, my team won for the fourth year on the trot.

But boasting aside, the most interesting part of the evening for me came before we had even started with any questions, when I fell into conversation early on with one of racing's most amicable and sensible Chief Executives.

Inevitably, conversation turned almost straight away to the levy, which has fallen to £77m this year, which takes it back to where it was about six years ago, if memory serves me right. I think much of the world is where it was six years ago - the price of my house certainly is, for example - but of course this drop has led to a lot of wailing and gnashing of teeth. As Ralph Topping has pointed out in his own inimitable way, the racing industry seems to believe that in the face of the biggest recession in a generation and amid calls for austerity measures from everyone, its funding ought to hold up.

But we weren't actually arguing about the rights and wrongs of the levy. Instead, I suggested a solution to the 'problem' which I had presented to me, which, specifically, was punters using hospitality boxes at racecourses to trade 'live'.

This is, of course, racing's new bugbear. It is evidence, they seem to think, that Betfair punters are trading 'in the course of business'. It is muddled thinking if ever you came across it, and I thought it was about time I tried to explain why.

When it comes to the levy debate, I personally have no argument about 'professional punters'. It just has an argument about professional punters being singled out at one operator specifically. As the Weekend FT as amply demonstrated this weekend, professional punters are not limited to one platform; and it is irritating that racing should attack successful punters on Betfair and not anywhere else, just because Betfair tracks what its customers do.

I pointed out to the said CEO that if I were racing, I would give up arguing, bogusly, that guys who are prepared to spend money in order to try to give themselves an edge are 'in business', when they clearly are not. They happen to be at differing levels of professionalism, but that is an entirely different thing. The minute 'having an edge' makes you in business, then all Racing Post readers are in the net. It's an absurd argument that will never stand up to any challenge, so they might as well drop it and find something that might.

All this I told the CEO, and he asked me what, therefore, I would do about the fact that nobody else tracks betting. And, like our Australian CEO Andrew Twaits did recently, I suggested that if I were racing, I would be making the case to government that betting should be made account-based. It would solve all sorts of problems at one fell swoop.

First of all, it would deal with all the problems which exist in an environment where large amounts of cash change hands: money laundering and fraud would be reduced dramatically.

Second, it would provide data for problem gambling research, which government always says is so bad (without much evidence), and it would save separate and less accurate data collection exercises for prevalence studies.

And third, it would allow us to see how punters made or lost money across the board. If you made money on Betfair but lost it on Ladbrokes, you wouldn't be taxed on your winning portion without being able to offset your loss. And if you made money on one platform, you were not discriminated against relative to someone who made money on another.

People will argue that this is pie in the sky. But is it? I'm not advocating that betting has to be cash-free (although I don't agree that a move away from cash is so difficult, myself... The move out of cash to card-based transactions has been embraced by the younger generation, at least). I'm just suggesting that you swipe your betting account card at the moment you place your bet. It's not difficult; it takes no time at all; and it provides fantastic data for marketing purposes which any other industry would embrace (indeed, most other industries incentivise you to use a card precisely so that they can get that data: do we all think Tesco give us points out of altruism), but which racing and betting seem to think is somehow so problematic that they won't entertain looking at any solutions around it.

Anyway... that was the argument. You can take it or leave it, and I am sure far more will disagree with it than think it has merit. But the response? I kid you not: word for word, it was this:

"But what happens about the person who comes along with £20 grand cash in a briefcase?"

I think my jaw hitting the ground took him aback slightly, because even before I'd had the chance to comment that of all the possible reasons for rejecting the idea, this was not a great defence, since there is only one reason why someone comes along with £20 grand cash in a briefcase, he went on: "People like to be able to use cash without it being tracked. I do it. I pay my builder in cash. That way I save 17.5%!"

I'm not for a second suggesting that my companion is the only person who has ever done that, but there was a certain irony in hearing one of racing's most senior figures arguing against a solution designed to capture so-called 'levy-evaders' by commenting that any move towards greater traceability of funds would make it harder for people to avoid tax that is due.

Change of view

2010-05-24T00:58:00.001-07:00

Many of you have asked me why the 'view' of my blog title has changed geographical location from my office to my home, and why I've suddenly cut down the amount that I'm writing.

The reason is that with my job at Betfair having recently changed so that I have responsibility for regulation but no longer for our public positioning, I have been asked not to blog about industry and company issues. Rather than stop writing completely, I have only been publishing things which cannot be construed to be a Betfair view.

This blog has been a useful communications channel for me in my role running our external affairs, but for some people it has now become a cause of confusion as to whether it is an official Betfair channel of communications, or just my blog.

With responsibilities changing, it's now the latter, and is therefore confined to non-industry issues for the time being.

So if you've kept coming back in the last ten days wanting to know my thoughts on David Zeffman's article about betting exchanges; the Ways and Means hearing in the US; the sports integrity survey in PR Week; Paul Roy's interview in the Racing Post; the reaction in Australia to calls from Betfair's Andrew Twaits for betting to become account-based; apparent evidence of the growing black market, judging from EU Commissioner statements; the latest with regard to France now that legislation is in place; or rumours of an attempt to get horsemen to strike; I'm afraid that I didn't publish my view on any of them, but instead merely wrote them up for my own record. Maybe my draft blogs will be like the Beatles' long-undiscovered back catalogue, and one day will all get published at once!

In the meantime, I'm afraid you're confined to anecdotes about where I've been and what I remember from my past, which will no doubt please those of you who have asked for less corporate-speak and more stories!

Ralph Topping

2010-05-21T07:21:00.001-07:00

Ah, you clicked on this link quickly, didn't you... Expecting a tirade? Go on, you know you were.

In fact, it was to say, hats off to him. I sent a note out to various CEOs in th gambling industry today, asking them to support a Betfair six-a-side football tournament we are holding in aid of the Anthony Nolan Trust.

Despite our commercial differences, Ralph was the first to answer, confirming that William Hill would be there, happy to be taking part.

Good on him.

Strike!

2010-05-21T07:19:00.001-07:00

Words reaches my ears that Paul Roy and Nic Coward have been holding secret meetings with trainers with a view to calling a one-week strike, should racing not secure what it is after in the current levy debate.

Surely not? It seems such an odd strategy that I struggle to believe it. But my source was at one of the meetings in question, and I can't believe he dreamt it!

Paul Roy

2010-05-21T01:16:00.001-07:00

It comes as no surprise that BHA Chairman Paul Roy should once again repeat verbatim the wording that he gave the Racing Post last week, and that David Zeffman put in his article two days earlier, about professionals operating on exchanges, in today's 'exclusive interview' in the paper.

It's no surprise either to see him making statements like, "exchange prices which are very keen but have minimal liquidity at those keen prices".

But both statements go to show that racing has not lost its old knack of saying things it wants to believe, and then believing them just because it hears them said.

The idea that we have 'minimal liquidity' at prices that are 'keener' than those that traditional bookmakers would otherwise make is easily dismissed by anyone who actually looks at our markets.

It may well be that Paul Roy wishes that there was minimal liquidity, and that somehow the traditional price on-course is a fairer price to the punter because it is more reflective of proper volume.

But unfortunately, Paul, it isn't true. However many times you say it.

Queen's Award

2010-05-20T02:32:00.000-07:00

I went to a lunch the other day with the chairman of British Airways, Martin Broughton, who was also once the Chairman, of course, of the BHB (as it was then). He was extremely warm and friendly, and made a point of coming to say hello before we sat down, which was kind.

But my reason for mentioning it is not to talk racing, much as that encounter brings thoughts to mind in a week where there has been plenty to discuss. Rather, it was because at the lunch I sat next to someone whose company has just been given the Queen's Award for Enterprise, and as I told him the tale of how we had gone to collect ours back in 2003, I remembered that it was a story that I had said I would blog.

There are two awards ceremonies when you get the prize: one which takes place at your offices, attended by Her Majesty's representative, the Lord Lieutenant; and the other at the palace, where, if you're lucky, you get the Queen herself.

Neither of ours went entirely according to plan, but both are hard to forget.

The Lord Lieutenant's visit to Betfair's offices in Hammersmith took place on a hot summer's day in which we had decamped from the clutter of desks and television screens on the first floor of our office building, to the wide open and uninhabited top floor of the building. The landlord had given us special permission to use the space so that everyone in the office could come and see Bert accept the large glass bowl, which was displayed prominently on top of a pedestal in front of a fairly cheap hoarding of the type you see at convention centre booths.

Because the fourth floor was uninhabited, it had no air conditioning; and with 150-odd people gathered in the airless space, it was quite warm. The room was plenty big enough; but it is surrounded on all sides by big glass windows, and with the sun shining through, it was a bit like being in a greenhouse.

Unfortunately, the Lord Lieutenant was late. And it was getting hotter, and hotter, and hotter. Eventually, someone decided to do the sensible thing: let's open a window.

Er... let's not. Oh. Too late. Just as the Lord Lieutenant comes out of the lift and walks into the room, the window is opened: a rush of air blows through the building, catching the cheap hoarding like a kite, and collapsing it onto the pedestal, which topples over and - crash! - the Queen's Award hits the ground and smashes into a thousand pieces. Ooops. The photo of Bert receiving recognition from the Lord Lieutentant sees them both clutching only the framed certificate confirming its authenticity.

Weeks later, we were off to Buckingham Palace. It was Ed, Bert, and me; and the start was no more auspicious, when, as our car pulled up to the Palace's gates, I realised I hadn't brought my passport, as identification procedures required. But they let me though, somehow, and in we went, led into a large room where other award winners were milling around, and the Queen was being taken round those who, for reasons unknown, had a yellow sticker on their name badges. Ours were plain white.

We took a glass of wine, as offered, surveyed the scene. Bert was hopping from foot to foot, slightly nervously and in need of a pee. Did we know where the loos were, he asked. A door to the right was indicated, and off he sets - no sooner having stepped away from our little group of three than Ed and I clutch each other in horror: in a straight line between us and the door through which Bert will have to pass is Her Maj, with a bodyguard standing just close enough to her to protect her, but just far enough away that in a normal cocktail party, it was a gap you'd happily slip through with a hand on the shoulder and a quick 'excuse me'. Bert was heading straight for it, and we had visions of him being in a half Nelson, on the floor, within seconds. Closer, closer, and closer he got... And at the last minute, he spotted her, and veered away. Crisis averted.

By the time he got back, we were being briefed on what the procedure was for us to go through and formally be congratulated. Speak when spoken to; 'Your Majesty' first time, "ma'am" or "sir" after that; don't be the first to initiate anything. Three rules. Don't forget them.

We joined the queue: Bert leading, Ed next, me bringing up the rear. Bert still hopping foot to foot, even though he'd had his pee. Just as we approach the door, a change of plan: "you go first" he tells me, slightly panicky, and I get pushed through.

Seeing the Queen for the first time in real life is quite an odd experience. It might seem obvious to say so, but she's a little old lady, and it's a bit like standing in front of your granny. Only, for some reason, you're terribly nervous. She extended her gloved white hand and offered her congratulations. "Thank you, Your Majesty," I said, and went on to the Duke.

The Duke was an altogether different proposition, and not just for being about two foot taller. He looked less bored, and he wanted to chat. "Aaah..." he says, in a drawn-out sort of way. "Congratulations! But tell me... what is it exactly that you doooo?"

I thought that there was a long answer to this and a short one. On the basis that he wasn't going to be over-interested in our risk-management processes, I told him, "we're a betting exchange, sir".

"Aaaah!" he said, like he knew all about it in an age where I suspect Harry Findlay had only just heard about us, "a betting exchange!" I half expected him to tell me his mother-in-law would have been a customer had she still been alive.

Ed followed on behind me, and we greeted each other with a smile and a nervous laugh once we we through. And then came Bert, all of a fluster.

"I can't believe it!" he said. "I fluffed my lines!"

"You what?" we asked.

"When I found myself in front of her, I got slightly covered in confusion. So before she had done anything, I thrust my arm forward to shake hands, and said, "hello!""

Ways and means hearing

2010-05-20T02:24:00.000-07:00

The opening statement for the Republicans in yesterday's hearing into the mooted McDermott Bill, had the California senator Wally Herger question the need even to have a hearing on Internet gambling.

“Given the fact that just four years ago the House voted overwhelmingly – 317-93 – to ban Internet gaming , I have to ask why we are even holding this meeting when so many other more pressing issues confront us,” he said.

The bit he seems to have forgotten is that the 317-93 vote was in favour of the Safe Ports Act, onto which the UIGEA was tagged at the last moment. The vote wasn't a vote against internet gambling at all - certainly not by 317-93 - but a vote on a bill aimed to protect the United States against terrorism, which few were ever going to vote against.

I have no idea what the vote would have been had it been on UIGEA alone, and had UIGEA been properly debated. Who knows, it may have been a bigger majority. But it would seem less disingenuous to accept that no proper debate on this issue has yet been had, and then to have it.

Thinking out of the box

2010-05-20T00:12:00.000-07:00

I'm surprised by the aggressive response to the proposal by my Australian colleague Andrew Twaits that betting should be made account-based to increase transparency.

Harness Racing Victoria chief executive John Anderson has said the proposal is "absolute nonsense", and "ridiculous", and has said that It would "totally cripple the racing industry."

Meanwhile, the Tabcorp spokesman takes the opportunity to take a pop at the part of our business model his company can't compete with, saying that "If betting exchanges were serious about maintaining Australia's high levels of integrity in betting, they would also agree that backing a horse to lose is one of the biggest risks to the integrity of racing." I wonder if he'd like the spreadsheet I have which allows me to do exactly that, undetected, on the TAB.

It seems to me that having something sold on a predominantly cash basis, and gravitating it to a card-based system, is not actually all that difficult. We have, after all, managed it in our everyday lives, such that many of us now prefer to pay by Switch and Maestro than we do carry around a wallet stuffed with notes and a pocketful of change.

And further to that, what about the advantages? There's a reason why the supermarkets introduced loyalty cards, and it wasn't so that they could give us things for nothing. They have the most comprehensive understanding of our spending habits as a result of it, and they know when to target us, and with what. Why should knowledge of a punter's habits be any different.

Who knows... Maybe all the critics are right. But the comment that ""We haven't done the numbers, but I think it would be catastrophic" is telling. It seems to me to translate as, "Hey, it's new; it's out of the box. We're the racing industry. Please, we don't want to consider something like that."

Encore...

2010-05-19T08:23:00.000-07:00

I see more operators are pulling out of France. Some of them, of course, are doing so in order to apply for a licence, but others because their product offering is banned under the new legislation.

Specifically, Betclic has shut down its casino;
Sportingbet has blocked access to French customers while applying for a licence;
Paradise Poker has blocked access to French customers. And it is rumoured that BET365 is to close French accounts.
Meanwhile - quelle surprise! - the PMU have applied for a sports betting licence
Two thoughts spring to mind.
First, any lingering doubts from those among us who still believe in fairies that the French legislation is designed to protect the encumbent player must finally have exploded. The PMU is not obliged, as others are, to close its existing business while it goes through the application process.
The other is that experience has shown that it is actually remarkably difficult to win an account from another operator, because standard levels of customer lethargy mean that however good and competitive your product, people still tend to stick with their existing provider, because it's just too much like hard work to change. Famously, this is why people keep their bank accounts, on average, for longer than they keep a spouse.
This means that all those customers who are having their accounts closed, who will then go to open an account wherever they can, will be relatively unlikely to return where they were once their first operator is licensed. They have to go through the account opening process, submitting details, and perhaps having Know Your Customer checks done as well. Some simply won't be arsed.
This would be wonderful for France if they all, instead, opened with the PMU in the interim; but as the PMU offers neither innovation nor value, the chances are that they will, instead, open with an operator which is acting in breach of French law: in other words, in the black market.
Makes a lot of sense, this French law, non?

The growing black market

2010-05-19T07:58:00.000-07:00

I've just seen a report of the presentation in late April by the EU Commissioner Michel Barnier on his work programme for the immediate future of the European Parliament's Internal Markets Committee.

Aside from the fact that he praised the Schadelmose report, my response to which was pre-blog and was therefore published in Parliament Magazine and can be seen here, it is notable to me that the new Commissioner warned against the existence of 15,000 illegal gambling sites.

When the French did their lengthy report into online gambling, the Durieux report, they talked about there being 5,000 illegal sites.

Many times since, I have commented, on this blog and publicly, that 5,000 is an awfully large number of operators, when you consider that after 10 years in the industry, I could probably name you 30 at a push. Now, it seems we have 15,000 operators - three times as many!

To me, it suggests one of two things: either politicians are pulling numbers out of the air for effect; or the failure of politicians to regulate in a way which allows competitive product to be offered to people has resulted (and will continue to result) in the massive growth of the black market.

Which is it?

PR Week, and integrity in sport

2010-05-19T07:39:00.000-07:00

There's a very interesting reputation survey in PR Week this week, which asks 3,000 members of the public what impact they think sports scandals have on sport.

It found that 73% of people did not think rugby was damaged by the 1999 drugs expose on Lawrence Dallaglio; 58% think boxing was not damaged by Joe Calzaghe's revelations of cocaine use; and 40% of people felt that snooker's reputation would take less of a knock than John Higgins' and the News of the World's as a result of the recent story there.

I found it interesting in light of my time sitting in the Parry Commission which looked at the issues of integrity in sport.

One of the things that set the betting industry and the sports industry at loggerheads during the meetings for that Commission was the betting industry representatives' view that the extent of the problem which the Commission was being asked to investigate had never been quantified or addressed; and the response of the sports' representatives that it really didn't matter that it hadn't been, because 'just one instance' is 'catastrophic'.

The PR Week investigation doesn't actually cover betting scandals, or indeed other sporting scandals like l'affair Renault or 'Bloodgate': it is restricted instead, to instances of 'entrapment' and undercover newspaper stings.

But it's interesting to see just how sanguine the public is in these instances. I find it hard to believe that they view different types of scandal in a significantly different light; which rather suggests that addressing the quantum of the problem is a relevant starting point.

Sports Industry Awards

2010-05-14T10:27:00.000-07:00

Someone asked me earlier in the week if I am now a little bit obsessed by Sir Alex Ferguson, and do you know what, I am beginning to think he is following me around. I was at the Sports Industry Awards last night, and there he was again. That makes three meals I've had with him in a week. Of course, I told everyone I saw at the dinner, for most of the night. Remarkably, though, Sir Alex didn't mention me in turn when he made the acceptance speech for her Lifetime Achievement Award. I guess he didn't want to namedrop.

I have to say that the Sports Industry Awards make for one of the best evenings in the calendar, and I was delighted to get an invite from Tim Lawler, the Chief Executive of SportsAid - the charity which produced the remarkable hit-rate of having supported 18 of Britain's 19 Beijing gold medallists when they were nothing more than promising youngsters.

Because SportsAid was the event's benefitting charity, my evening started through the VIP entrance, rather than fighting through the crowds. Walking up the red carpet, surrounded by snapping photographers, is an experience. I'd imagine so, anyway. Unsurprisingly, I didn't actually find out: the bouncer advised me to 'wait until they've had the chance to get some clear shots of Annabel (Croft)' who was walking in ahead of me. And of course, having done so, I then marched down to witness them peering my way, quickly working out that they had no idea who I was, and taking the few spare moments to look down at their digital screens and check out what they'd snapped to date. Still, it was a bit of fun.

It also meant that once I'd got inside, I was in the little area roped off for the rich and famous, and given that there were plenty of them and it was not a huge enclosure, I can say with absolute honesty, and not even having to pretend a teeny bit, that I was rubbing shoulders with them. Half, it seemed, had been at the League Managers' bash the other night: well, Fabio Capello, Brian Barwick, and the aforementioned Glaswegian, at least.

When I walked in, all of them of them were standing in a little circle which also included Alastair Campbell and Brendan Foster, but Barwick was having none of my brazen attempt to break into the group. As I greeted him, he told me to say hello to my dad - who was, he said, "one of the sports true gents and a proper, proper bloke" - and then promptly turned his back on me to talk to the others. He's a big man, Brian Barwick. There's no getting past that back. It's almost as wide as I am tall.

Never mind: there were plenty more to see. In a week that has seen me recapture lots of moments of my youth, I then spotted a chap called Steve Walford, who, back in the days when I would trail around behind dad at a football ground a week, worked as a liaison officer for Match of the Day. I made a beeline for him, only to discover as I got to him that he was talking to Michael Lynagh, the former Australian fly-half.

I once interviewed Lynagh back in the days when I was working for Five Live at the same time as we were trying to set up Betfair, and it made for a reasonably amusing story which almost saw me lose both jobs at once.

There was a gathering of rugby greats at a lunch at the Rubens hotel in Victoria, and Five Live sent me down to get as many short interviews as I could get. But, they said, on no account miss either David Campese or Michael Lynagh. Doing so was on pain of... well, probably not working for them again.

At Betfair, though, we were having a bit of a crisis. I can't remember why, now; I just know that we were having a lengthy conference call, and my input was required. So there I was at the Rubens Hotel, waiting for the rugby lunch to break up, and trying to do this call somewhere quiet so that no-one got annoyed with me. The place I found was one of the phone booths in the hotel, which is clearly not intended to be a booth for someone on a mobile, but a booth for someone without a mobile, who needs a phone. No matter: I was in it. Anyone needing a long-distance call would have had to go elsewhere.

Every few minutes, I would poke my head out of the booth to see if the lunch had broken up. On and on it went, so after a few "every few minuteses", it became "every five minutes" and then, "every seven minutes or so". You'd think that the longer it went on, the more frequently I would check, not the less. But I was into the call, and you can guess what happened next.

How long it was between the penultimate and the final check, I'm not sure. But, it almost goes without saying, it was too long: the lunch had not only broken up, but half the guests had disappeared; among them, of course, Lynagh and Campese.

Crisis! And not just for me, but back at TV Centre. Lynagh, aware that he had been asked to do an interview, had called them. Where was this bloke they had asked him to meet? My editor that day had tried to contact me; but of course my phone was engaged. As I hung up on the conference call (which, at least, had just ended), my voicemail called me immediately. Three messages. The middle one was "where the bloody hell are you?"; the others, set either side, formed a linear progression from polite enquiry to outright abuse.

Thankfully, Lynagh appeared, moments later, and we did our interview. He, in turn, then called Campo, who had gone to his room. We ended up doing his interview sitting on his bed.

Back to last night, though, where we were lucky enough to be on a table right at the front. It was a hugely entertaining evening: Martin Bayfield, as compere, was as brilliant as ever (even if, inevitably, he re-told half the jokes he had made doing the same job on Monday for the LMA); Betfair was nominated for a sponsorship award for its Fan versus Fan campaign, which was some achievement; Clare Balding came over all weak-kneed after meeting Alastair Cook; and Alastair Campbell got booed.

The highlight for me, though, must have been the moment when Fabio Capello made a short speech, after making a presentation, which left everyone scratching their heads in utter bewilderment. He was absolutely, 100%, impossible to understand. When I woke up this morning to hear on the sports news that the England manager is considering a complete change of tactics before the World Cup, I was left wondering: is he really? Or is it just that the team have spent his first couple of years not understanding a word of what he tells them?

Olswang: Once more unto the breach?

2010-05-13T02:31:00.000-07:00

I haven't yet commented on the article written by David Zeffman in the Racing Post on Tuesday, which was followed up on Thursday.

The more eagle-eyed among you will have noticed that I did, briefly, put up a post entitled 'Olswang' that said, "I won't get into the ins and outs of the piece by David Zeffman in today's Racing Post. I do find it curious, though, that an article flagged as a 'news special' on 'betting exchanges and the law', and headlined 'Frank Exchanges', should be written by someone whose firm is currently acting for the BHA in matters relating to the levy and betting exchanges - but the fact should, inexplicably, not be mentioned." But in the end I took it down.

I did so for a number of reasons.

First, I thought that the Racing Post, which was apparently not aware of David Zeffman's link to the BHA, would do the decent thing and make it clear themselves that what purported to be a full-page article was in fact, through no fault of their own, not much more than a free advert; and I didn't think there should be any suggestion that I was pre-empting that.

Second, I rather took the view that this is a technical legal argument which has, frankly, been done to death. David Zeffman can have his view; he's expressed it before, as I have mine. But the thing is that every time to date that there has been an independent assessment of it, no-one that matters has agreed with him. I'm all for having the debate again, but I thought it was easier to have it in full with the people who will have to decide. As David Zeffman proved, you can't make a watertight case on one page of the Racing Post. Writing statements like, "it seems very likely that some users are conducting themselves as a business" might be enough to persuade people who really want to believe something, but it clearly isn't based on any evidence. It might once have seemed very likely - indeed, for a very long time and to an awful lot of people - that the earth was at the centre of the universe, but saying so repeatedly didn't actually change the facts.

But those caveats notwithstanding, I'm afraid that today I can't resist. The follow-up piece in this morning's paper is surprising, at best.

Consider the facts: a lawyer who is retained by a given organisation which has long been in dispute with a given company on a matter which over the years has repeatedly been considered by various government departments, writes a full-page newspaper article, without declaring his interest or connection, relating to the dispute in question. That this has happened is pointed out by the given company to the newspaper in which the article was published.

Two days later, the paper uses the original article to headline a renewed call by the client of the lawyer to re-open the much-considered issue, on the back of the fact that there has been an article by a lawyer which suggests it could be done. The connection between the lawyer and his client is only included in a quote from the company which is the target of both the original article and the follow-up, in paragraph 9 of an 11-paragraph piece. Paragraph 3 of the article, meanwhile, repeats the unfounded comment deemed by the lawyer to be 'very likely' mentioned above; while paragraph 5 quotes the client using the unsubstantiated view of his lawyer to state that, "we are not just going to sit here and watch professionals operating on the exchanges, in business, negotiating and taking bets when they are not licensed and not paying tax and levy."

You will no doubt have your own view on whether that constitutes journalistic balance. I guess that only if the HBLB were suddenly to open up a consultation exercise on the issue on the back of the article, might the view that it was wittingly or unwittingly kicking off a campaign be reinforced.

But aside from that, let us consider the argument.

Mr. Zeffman claims that "the accuracy of my analysis is not affected by whether or not I'm instructed by a client."

Let us accept that this is true. I have commented above why you should not just believe something that is generally-accepted just because it is generally-accepted, so I will assume that there is not actually any truth in the the generally-accepted notion that lawyers do what you pay them to do.

I therefore accept without question that the accuracy of Mr. Zeffman's analysis can absolutely be unaffected. But on that basis, it can also be not very accurate, whoever is paying his bills.

Let's consider it.

The law is absolutely clear that two things have to be established for someone to become liable for levy as a bookmaker: that they are negotiating or receiving bets, and that they are doing so in the course business. Mr. Zeffman says that the 'key question' is the latter, and it is true that this is the point on which most debate has raged over the years. But let us not forget that it is a two-stage definition, and Mr. Zeffman predicates his entire argument by dismissing the first part with the boldly-stated and entirely unsubstantiated opinion that, "There is no doubt that an exchange's customers are receiving or negotiating bets".

Mr. Zeffman will not be unaware of the response to this opinion of his, since the BHA had were sent it, in full and in writing, eighteen months ago. Let me quote directly the answer they received responding to the question, "Is any party ‘receiving or negotiating bets’ on an exchange?":

"The fact that a betting exchange customer has the flexibility to request a price different to that available, provides no determinative answer because so does a betting shop customer and a racecourse punter asking a bookmaker for ‘the fractions’. All gamblers, whether betting on an exchange or with a traditional bookmaker have the ability to ‘negotiate’ the odds available. It seems to us that no gambler ‘negotiates’ a bet; the arranging of the rules which govern the placing of the bet (and indeed all consequences following therefrom) is conducted by the betting operator (whether Ladbrokes or Betfair).

There is nothing ‘received’ by any customer on a betting exchange – or at least nothing is ‘received’ by a betting exchange customer that would not similarly be ‘received’ by a betting shop punter (a betting receipt, winnings in some cases etc). If the word ‘bets’ in the context of the 1963 Act means ‘stakes’, then of course the stakes are received (and held pending the outcome of the event) exclusively by the exchange operator. If however ‘bets’ equates not to ‘stakes’ but to the standing of loss, then even the exchange operator does not appear be covered by the definition within the 1963 Act.

In short, we do not believe that any exchange customer is ever ‘receiving or negotiating bets’. However, if this interpretation is wrong and the unique nature of exchange betting means that customers are ‘receiving or negotiating bets’ then it is strongly arguable that Betfair (as a pure intermediary) does neither. In this case, what is the justification for Betfair continuing to account for Levy and on what basis has HBLB been accepting Betfair’s Levy payments over the past 8 years?

The argument that both Betfair and its customers are ‘receiving or negotiating bets’ is symptomatic of a ‘cake and eat it’ attitude from the BHA."

Now, whether you agree with this analysis or not, one thing is undeniable: when David Zeffman says that "there is no doubt that an exchange's customers are receiving or negotiating bets," he is clearly, 100%, wrong. There is a doubt. And it would need him, or his client, to persuade a judge that his version of the argument is right, and Betfair's is wrong. This is what the BHA has been trying, unsuccessfully, to do for the last eight years, just as it has, equally unsuccessfully, the whole argument about 'can you be in business purely on an exchange?' - another whole debate which we've repeated continually and can of course repeat again, in my view with the same result. The BHA clearly believes that in doing so, it is not wasting its time over matters it cannot and will not win, when so many other things under its control are being ignored.

"Behind all the myths, the legal reality is relatively straightforward," Mr. Zeffman wrote on Tuesday - a quote repeated in today's article as if it supports the BHA's argument. Anyone would think that in making their deliberations in the past and coming down on Betfair's side, the last government decided to ignore the law, rather than base their analysis on it.

In the Racing Post today, BHA Chairman Paul Roy suggests 'a new approach to a new government', just as racing has made a new approach every time there has been a new Minister, or a new Shadow minister, or a new set of officials at DCMS. Every time, the BHA gets knocked back, because what they need is not new people, but a new argument that actually falls in line with legislation; or, failing that, a new law.

Personally, I don't mind which it decides to work on creating. But continually pretending that their existing position, expressed unsuccessfully for so many years, suddenly becomes true when you tell it to someone who hasn't heard it before, is just insulting to that person's intelligence. Any in-coming administration will have to look at the issues in far greater detail than could be afforded to Mr. Zeffman even in a double-page spread of the Racing Post, and it seems unlikely to me that careful and objective analysis of the position as it stands will come to a different conclusion from any reached to date.

So if I were Paul Roy, I would be deciding what it is I actually want - levy from betting operators, punters, traders, backers, layers, successful backers, successful layers, or professional punters - and then trying to get a law which secures that. Any administration that thinks that reworking a 2005 law deemed to be at least to some extent future-proof makes sense three years after it was actually implemented, can then write a new one.

If that one, as is true now, is consistent in its treatment of the individual interest groups (betting operators, punters, traders, backers, layers, successful backers, successful layers, or professional punters) whoever their customers are (if they're operators) or wherever they choose to place their bets (if they are customers), then Betfair will be quite happy. But you can bet the exact same argument will rage, because this was precisely the debate, held between 2003 and 2005, that led to the perfectly sensible law we've currently got.

People and places

2010-05-12T00:21:00.000-07:00

I think, when I left my last job at JPMorgan 10 years ago, that if someone had told me where the next decade would take me in terms of who I would meet and the places I would walk into, I'd have been hard-pressed to convince even my mother that I was anything but a fantasist.

But last night, as half of my friends were updating their Facebook statuses either with glee or in mourning, I was adding a name to my list of People I Never Expected to Meet: sitting immediately to my left at dinner was the controversial Conservative Party donor Lord Ashcroft.

And as a result, as David Cameron moved between the Commons, the Palace, and his new home, I got thinking about just how many people and places I have met and seen during my Betfair adventure. It really has been a spectacular world tour, the like of which you might expect to have to hold some serious Office of State to achieve.

OK, so the House of Lords and the Commons are perhaps somewhat run-of-the-mill; so, too, the European Commission. But St. James's Palace; Buckingham Palace; Clarence House; Number 10, Downing Street; the Office of the Majority Leader of the US Senate, where Lyndon Johnson brokered so many unlikely deals; the floor of the Senate itself at the signed invitation of the current incumbent (I still have the ticket!); the Australian Parliament; the Office of the Australian Prime Minister... All are places I never expected to see inside.

Nor did I ever think it likely I would sit next to a Prime Minister at dinner, as I did Down Under (John Howard wears a hearing aid in his right ear, I discovered when immediately to that side of him; that's presumably why he always cocks his head slightly when on camera, so it can't be seen); shake hands with the Queen or the Duke of Edinburgh (a story that merits telling another time for what the Duke said); or be kissed by a Princess. But the last ten years have, I realised as I thought about it heading home around midnight, brought all of the above.

Last night's dinner was held under Chatham House Rules. To be honest, I'm always slightly confused by what that means: if a dinner party comprises company and conversation, can you reveal either one or the other, providing you don't reveal both? Or does reeling off a guest list set you up for the firing squad?

I'm not sure. But, tempting though it is to relay the names of some of the fascinating people present - Ashcroft, though the most high profile currently, was certainly not the best-known in the room - I shall err on the side of caution in the interests of not upsetting my hosts.

Suffice it therefore to say little more than that in a crowded field, it was the most interesting and educational political evening I have spent in a long while, in part because of the obviously fortuitous timing for such a gathering, and in part because of the breadth of views expressed.

A leading politician was asked to grade his party's election campaign on a scale of 1 to 10. The question, 'is it better to have principles without power, or power without principles?' led to vigorous debate. Some present were significantly exercised and outraged by City remuneration packages, and demanded that others justify them. One person genuinely suggested that you are more likely to be over-paid as a bus driver protected by a union than you are if you're a hedge-fund trader protected by no-one; another argued eloquently that the obvious requirement for any government was to pluck its wealthy geese for as many feathers as possible without actually killing any of them off.

On which note, I was sent the following by e-mail the other day.

I think it's rather elegant.

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100.

If they paid their bill the way we pay our taxes, it would go something like this...

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7..
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.

So, that's what they decided to do..

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes.

So the first four men were unaffected. They would still drink free of charge. But what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share?

They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid £2 instead of £3 (33% saving).
The seventh now paid £5 instead of £7 (28% saving).
The eighth now paid £9 instead of £12 (25% saving).
The ninth now paid £14 instead of £18 (22% saving).
The tenth now paid £49 instead of £59 (16% saving).

Each of the six was better off than before. And the first four continued to drink free of charge. But, once outside the bar, the men began to compare their savings.

"I only got a pound out of the £20 saving," declared the sixth man. He pointed to the tenth man,"but he got £10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered that they didn't have enough money between all of them for even half of the bill.

Glowing tribute

2010-05-11T00:58:00.001-07:00

I was, as I mentioned in my previous post, at the LMA dinner last night as a guest of its Chief Executive, Richard Bevan, and I was sitting next to my host when he was paid probably the most extraordinary public tribute I have ever heard. I had to turn around and check that he was still alive.

It came from Sir Alex Ferguson, who addressed the 400-odd guests - all invitees, no tickets sold - before the organisation's annual awards were announced.

Fergie asked what the LMA would do when, one day, Bevan leaves them, because, he said, what Bevan had achieved on behalf of the association was simply outstanding. Then, to add context, he told the tale of the conversation he had with Carlos Quieroz when Quieroz was offered the top job at Real Madrid.

The Portuguese went to tell his then boss of the approach, and asked his advice. Ferguson apparently replied that of course Quieroz had no option but to take the role: it was, after all, one of the leading jobs in football.

But, he added, Quieroz should realise, in accepting, that in fact he would never have a better job than the one he held at Old Trafford. He was, explained Ferguson, loved at his present club; revered; and appreciated in a way that no organisation would ever be able to top.

"And that," concluded Fergie, "is how it is with Richard Bevan here at the LMA."

What a nice thing to have said about you.

What's in a name?

2010-05-10T16:17:00.000-07:00

In what is a week of continuous dinners, I spent a fascinating and extremely enjoyable evening tonight at the League Managers' Association's annual shin-dig at the Marriott Hotel on Grosvenor Square.

More detail on various parts tomorrow, perhaps; but for now, I shall tell one passing story.

The night's entertainment started quite oddly. It is, in a way I had never considered, really weird to walk into a room of people who are instantly recognisable, when in reality you don't actually know anyone.

It's made even worse when you've actually been introduced to a bundle of them: every fifth person, it seemed, I had met in my youth, courtesy of trailing round - happy as a sandboy - after dad, as he went from weekly match to weekly match.

But I could hardly expect any of them to remember: Garth Crooks, Ron Atkinson, Steve Coppell, Martin O'Neill, Mick McCarthy, David Pleat, Jim Rosenthal, Brian Barwick, Trevor Brooking (although in his case, he was remarkably, and impressively, on the ball, and greeted me with great warmth).... So many had been contacts, colleagues (or bosses!) of my father's, whose acquaintance I have made on numerous occasions; but bumping into them tonight, way out of context of any past meeting, didn't really seem a good reason to accost them while they were deep in conversation.

Neither did my recent association with the first person I saw as I walked in: I thought that, to be fair, Sir Alex Ferguson probably wouldn't have taken our brief lunch on Wednesday as good enough reason for me interrupting his tete-a-tete with Fabio Capello.

I found refuge in David Sheepshanks, the former Chairman of Ipswich, who I sat next to last time I attended an LMA function. He was utterly charming, and with great skill almost successfully covered the fact that he didn't remember that we had met before (why should he, frankly?). But having heard the latest good news about the National Football Centre, I felt it would have been rude to keep his company for too long; and I moved from him to one of football's managerial names whom I regaled with a story from my youth...

I first met him at the Dell, I think in 1977, when I went down with the Match of the Day cameras; and the Monday after the Saturday before, I had to write, as kids do, about what I had done over the weekend.

Aged six, I had a spelling book which had to be filled in by the form teacher with the spelling of any word which you couldn't write yourself. I wandered up and asked about the first name of the Southampton manager.

It was only when I got back to my desk that I discovered that my form teacher was under the impression that I was too stupid to know how to spell the name of a long vehicular conveyance. Even as a six-year-old, I wasn't over-amused.

Hearing the story thirty years on, Lawrie McMenemy was polite enough, despite being surrounded by many greater calls on his time, not just to laugh at some length; but also then to ask, in great detail, after both of my parents.

What a gent.

Florida

2010-05-10T01:52:00.000-07:00

I'm a bit slow on this, but I was fascinated to read Lloyd Levine's take on hearings about poker licensing in America - in Florida, specifically - in which he states that

"Representatives from several current foreign online operators also spoke and suggested that the Committee adopt alternatives proposals that would advantage foreign operators over Florida licensees. They proposed allowing current operators to simply be licensed in Florida, rather than create a state-owned hub in which current land-based Florida licensees could participate."

One of those 'foreign operators' was Betfair, but Mr. Levine's version of the position we have always taken - worldwide - on licensing, just goes to demonstrate how different people see things differently.

Our view of licensing has always been that the best way for governments to retain control of (and a portion of tax from) the greatest number of players in their jurisdiction is to ensure that offered within their jurisdiction is product that consumers want. Given that consumer tastes change, and that things move on, this is not best achieved by issuing a fixed and limited number of licenses and then hoping that that fulfils consumer demand.

A far better option, as I see it, is to require operators to achieve a given standard in whatever areas you legislate for, and then grant them a licence if they achieve that standard. If you want, it's the basis on which people get driving licences: if you're good enough on a series of measures, you get one. You don't get told, even if you prove to be Best In Class, that it's a great shame, but your neighbour got your street's (or even your town's) allocation first.

This is the position which Betfair put at the hearings in Florida. I know that even though I wasn't there, because we were represented at the hearings by one of my team, Laurie Itkin.

She put forward my oft-repeated (as nauseam, you might argue) proposition that in an internet age, consumers will go and find the product they want at the price they want to pay for it, and if they can't find it in their home jurisdiction, they will go and find it on the web. It is very difficult to stop them from doing so without taking a draconian, Chinese-style, approach to the internet;and even there, it doesn't work in preventing it happening.

I'm surprised that anyone should think that this approach seeks to advantage foreign operators over state ones: it simply means everyone needs to achieve the required standards, whether those standards are tools to protect people or levels of tax to pay.

Personally speaking, I'd certainly never defend the idea that any individual or set of operators should get special treatment, to any government. But I would certainly advocate future-proofing legislation, to the extent possible, in a fast-changing world.

Lucky Luc

2010-05-09T11:15:00.000-07:00

Betfair's first commercial director, Tim Levene, told me over lunch the other day that he has started to take his son Luc to Stamford Bridge this season for the first time. Tim has been a season-ticket holder at Chelsea for many years.

Luc's first appearance at a football match was the home game against Sunderland on Saturday 16th January. As most of you will know, it finished 7-2.

You can see where this is going, can't you?

On Saturday 27th March, Luc was trotting along down Fulham Road to see the Villa game and telling his dad he's looking forward to seven more goals. No, says Tim, that doesn't happen. You were very fortunate the first time, but don't get used to it. Luc is confused, and asks, "but Daddy, what will happen if they do score seven goals?" Tim promises that they will dance all the way home. I guess it could have been worse.

Enter Luc on Sunday 25th April to watch the 7-nil demolition of Stoke. No rash promises from Tim this time, but also no bets placed. Foolish man.

Seems like a safe assumption that Luc would have been there this afternoon. Perhaps we can persuade Tim to let us know when he's going to take the nipper along next? After all, seven or more goals was matched at 17.75 on Betfair today...

More AFL stuff

2010-05-08T15:50:00.001-07:00

In a similar vein, I thought this was an interesting piece. Again, I have a view; but I don't want it to be confused for an official Betfair one, and I know that some recent posts have been seen by some of my readers to confuse the two, so I shall leave you to guess at it!

http://m.theage.com.au/afl/afl-news/afl-penalties-on-gambling-a-fair-hand-20100508-ukyx.html

Tabcorp up in arms

2010-05-08T15:17:00.000-07:00

I thought this was an interesting piece, and perhaps you will too in the context of stuff I have written to date. You will doubtless draw your own conclusion. I will leave you to guess at mine (assuming you're bothered by my view!).

http://www.abc.net.au/news/video/2010/05/07/2893740.htm

That was the week that was

2010-05-07T03:00:00.000-07:00

I've been a bit quiet this week on the blogging front, partly because I've been out of the office a bit. My first week into my new decade has been interesting, starting at the one racecourse in the world which fights Goodwood for a place in my heart as my favourite horseracing venue: Chester.

I went up on Tuesday night to catch up with the racecourse's MD, Richard Thomas, who treated me to dinner at a fantastic new on-course restaurant (well, new since I last went) called 1539. We chatted all things racing, over a good meal and a decent bottle of Sauvignon Blanc.

If you're of the view that racing is short of progressive thinkers, I recommend you make a visit and fish Richard out. Over the years, I've grown used to discussing ideas which in my view would do no more for racing than start the game of catch-up on time that has long-since passed; but on Tuesday evening, I enjoyed listening to some genuinely strategic thoughts designed to get ahead of the curve. It made for stimulating conversation.

I stayed overnight at the new Abode Hotel overlooking the racecourse (genuinely new this time: it had been open a week; and very nice it was too), and on Wednesday did something that you can't claim to do every day: I sat next to Sir Alex Ferguson for lunch.

I kept my BBC history quiet in case it meant he didn't speak to me, and I found him very friendly and down-to-earth, if for some reason remarkably more difficult to understand in real life than he is on the telly. I don't think that was because we chatted mainly about racehorse ownership, although with my limited knowledge, that's always possible. Still, it didn't seem appropriate to grill him for footballing wisdom, tempting though it was. It was, after all, a day off. For him, I mean. :)

A large part of Manchester United's squad came with him as guests in our box, while in the box immediately next door, Michael Owen was hosting family and friends, including our very own Bert, who has, of course, gone into partnership with him at Manor House Stables. They sponsored the opening race of the day, and won it, to great celebration across the two balconies. No-one was booked for taking off a shirt, though.

It was a shame to head back down south, particularly as doing so also meant a trip back down to earth. From relative glitterati, I was soon back in the world of French forums, which are inevitably buzzing with chat from consumers planning to get around French legislation. That and the Higgins snooker story have dominated the questions I've been asked by people this week. I suspect my personal view of neither will come as a surprise to anyone who has spoken to me or has been a regular reader of this blog, because I've written in the past about the issues which form the basis of both stories. If you've missed them and are wondering, you can see them here and here. I'll save the rest of you on-going repetition!

Happy Anniversary

2010-05-02T01:57:00.001-07:00

It's been three thousand, six hundred and fifty-two days, which is 87,648 hours, or two days short of 522 weeks. More traditionally, it's exactly ten years: Tuesday, 2nd May 2000 was the first day I walked, as an employee, through the door of a tiny office in Putney, along from East Putney tube station, to begin the adventure that has been Betfair. It seems incredible to think it.

I'd spent the previous two months reluctantly working my notice in the City, having signed a contract with two enthusiastic Founders on the back of a prototype idea whose execution was eye-poppingly brilliant, and a long-standing desire to get the hell out of a job that didn't suit me. The two Founders, in turn, had spent the same period furiously trying to raise money, and hiring people. Jojo Primrose - the best-named girl outside a Bond film - had agreed to join and started straight away, such that she already had a couple of weeks under her belt; and the picture that has always stuck in my mind of that first morning is of the 6ft 6in Jon Cumberlege, his head almost touching a protruding beam in this tiny and largely empty room, extending a long arm in welcome. He had, it turned out, arrived about ten minutes earlier; but somehow, at the time, he already seemed like an old hand.

The adventure we were embarking on was completely different from anything I ever thought I would do, and despite a naive confidence that we were going to be building a business which we would one day sell for a billion, my expectations were not high that I would be there very long. Partly, that's because Betfair was only meant to be a stepping stone to my goal to be a broadcaster; and partly because this was, after all, the dot.com era: I'm not sure anyone in those days had a time horizon longer than about 36 months.

When I went through the five-year mark and realised that nothing I had ever done in my life had lasted as long as that (five years at pre-prep school; five years at prep; five at senior school; five at university; and four-and-a-half at JPMorgan), I was surprised to have stayed for as long as I had. But now here I am, a further five years on: not quite the old man of the company, but probably a little bit wiser than the 29-year old who walked into the converted Edwardian building called Dunkerry House on Upper Richmond Road, opposite a branch of the Tote that we used to joke (as we went to get our lunchtime sandwiches across the road) had no idea what was about to hit it.

Within a fortnight, it wasn't just Jon who didn't seem to fit in the space we had, and we moved to larger premises at 45, Russell Square. There, there was a room on one floor of a townhouse for the contractors who were writing our code, and then two more upstairs for us: one became an office shared by Jojo, Jon and me; and one had Ed, Bert, our first finance director Sean Paterson (who started as a consultant before signing full-time after our launch), and, a few weeks later, our first legal director, David Williams.

Jon, Jojo and I would joke that theirs was the serious room and ours was the fun one, and on regular occasions they would complain that we were doing nothing but giggling, and say that none of them could concentrate because of the noise coming through the wall. Bert would wander through occasionally and say he wanted to change seats because it sounded more of a laugh with us, and we would throw paper balls at him and tell him to go back to the library.

People often ask me what I think was the secret of Betfair's success, and aside from the obvious answer about the brilliance of the product and its execution, my view is that we had the happiest and arguably most fortuitous combination of people, whose various strengths came to the fore at crucial moments. Whether Ed, who did all the hiring (to the extent that Bert would sometimes wonder if any of his own contacts would ever get a look in), realised just what a combination he was putting together, or whether we all fell into it by chance, I honestly don't know. But what is clear to me is that the complimentary skills of that Founder Team was crucial in making the business a success.

My own contribution in the early days was pretty well zero. The key player, in my view, was Jon, whose can-do attitude and set of organisational skills - both the legacy of his army career - were the main driver, I always felt, in making the first year as effective as it was. Jon had energy which I suspect matched the rest of us put together, and his enthusiasm was infectious. So, too, was his sense of irony and his black humour. The day, late in 2001, when those of us who hadn't been working overnight to try to bring the site up from its longest and most painful outage ever got into work to the unhappy news that we were still down, will never be forgotten: with his hands in the air and his body falling forwards in the mock-dramatisation of a man being shot, Jon greeted us with words, "That's it! It's all over! We're totally and utterly f*cked!"

After the first eighteen months or so, Jon's mantle as the most important player was, in my view, passed to David Williams. I've often been credited with the company's public positioning from late 2001 into '02 - principally with the Morning Line appearance from Lingfield which many have kindly said was transformative in our development, and subsequently in the run-up to the Gambling Act 2005 and the various battles that have come since - but the reality is that I was just a mouthpiece: David had all the ideas, nailed all the arguments, and did all the work. When he first arrived on the scene, we didn't get on terribly well (he even fished Ed out for a drink to ask him why the company didn't just fire me, given that I was adding no value: a fair enough shout, frankly), but we ended up a good double-act: I've never been briefed as effectively as I was by him, and to this day I have his voice ringing in my ears whenever I explain anything about the actual mechanics of our system relative to the marketed product. He set the standard which our exceptional legal department has continued to this day: I don't think we have ever made a bad legal hire.

Of course, the caveat I put at the start ("aside from the obvious answer about the brilliance of the product and its execution") is a huge one. It's easy to forget, now, just how ground-breaking it was; and I've lost count of the number of people who tell me that they'd had the idea before, as if it's something that anyone could have come up with, and Bert just happened to luck out.

It may well be true that plenty of people were thinking about it: the idea that you can effectively (although not actually) take out the middleman and therefore deliver better pricing is hardly revolutionary, and five other competing products being released in a six-week period around our own launch prove that it was front and centre of many minds. But they also prove that it's not the idea that matters, but the way it was executed, and that was Bert's genius. His eureka moment has been well-documented, and probably needs no further embellishment from me.

So, too, has Ed's role, and the tale of how the two of them got together. Ed's biggest strength is analysis: in the face of some now serious competition from some of Betfair's current commercial team, he remains the best analyst of a business that I have worked with, and he'd be the first person I'd speak to if I wanted someone to look at a spreadsheet and point out the cell with the error in it. His attention to strategic detail is microscopic and impressive: it's easy to feel stupid and ill-informed in front of it.

Ten years on, none of the members of that Founder Team remain in an executive capacity, other than me. Ed is our non-Executive chairman, of course, and is often around; and Bert is a non-executive director, although that makes him a very rare visitor. But the others have all moved on.

Jojo, who was behind the coffin-carrying launch that I will perhaps blog about next month when we hit our birthday, left in 2003 and is now a full-time mother in Shropshire, actively supporting a number of charitable causes in whatever time her children leave her spare. Sean departed the same year, and has since spent his time between London and Monaco; a business angel.

Jon went in 2004, and briefly helped a start-up called Glasses Direct before embarking on a new career teaching maths at Whitgift School. And after briefly coming down to Australia, to help Ed and me get the business licensed and set up down there, David left in late '04 to go and work with homeless children, first in Mexico and now in Thailand.

Their replacements, today, have taken up their legacy, inasmuch as Betfair continues to be an exciting and vibrant place to work.

Of course, it's a very different place from that first week: we now have a global headcount north of 1800 people.

But as I celebrated my ten-year anniversary on Friday by taking our Events team out for a long and enjoyable lunch to thank them for having done a brilliant job at Cheltenham this year, I was reminded (if indeed I'd ever forgotten) that while it might be different, Betfair is still, because of its people, what it always was: a lot of fun. The Founder Team can be confident that from the bottom of the company up, their legacy is in good hands.

For my part, I go through ten years much as I went through five: surprised, in a way, but still loving the place and the people I work with. It might be a long time since we started the company, but in relative terms, we're really still only just embarking on a journey. There's a long way for Betfair to go yet.

Dunkirk?

2010-04-29T04:51:00.000-07:00

As French legislation moves ever closer, more and more operators appear to be lining up to suggest that it simply isn't going to work.

An op-ed piece in Le Monde the other day, signed jointly by Betclic, Bwin, and Unibet, laid out the reasons to be fearful. Isabelle Parise, co-chair of Mangas Gaming, told the IGaming 360 conference in Madrid yesterday that there are "many things that are dreadful" in the legislation, which, as it stands, is "the worst you can imagine". And Gigi Levy, CEO of 888.com, threw into a results presentation yesterday the thought that it would be more difficult for foreign operators to get a French licence than it will be for French ones. He commented that his company operates happily under its Gibraltar licence by the terms of European law, which seems to me to indicate that they plan to continue to do so when the law comes in, just as the amiable and eloquent Patrick Partouche suggested would be true of his eponymous outfit a few weeks ago.

At Betfair we had the latest in a long series of meetings about France this morning, pondering how absurd and ridiculous the new law is, and discussing whether our since-foundation stance of complying with national legislation obliges us to withdraw from the market until we are in a position to apply formally to operate, if it ever becomes commercially viable to do so. It would be an arduous and depressing task to contact our French customers with that sort of unhappy news; but the law as it is written would require us to close accounts and block French IP addresses, with risk of arrest for non-compliance. Operators who do comply with it would have to pull out of France.

Absurd and ridiculous, though, the law unquestionably is.

The simple fact is that we know, and customers know, that there are plenty of work-arounds for IP blocking, should people chose to use them; and without operator co-operation, the chances of the French government enforcing their legislation - short of sending the police randomly into people's front rooms and catching them on their computers - is zero. Operator co-operation will only come from those with brand names to protect, so the law will shut out precisely the sort of company that ought naturally to be welcomed in.

Anyone else who wants a bit of the action in defiance of the French government has the playing field wide open, so the black market will flourish. By France's own estimates, it already equates to around 5,000 sites, even before the addition of new rogue operators which are likely to pop up in the way that music file-sharing sites did when Napster first got banned. The music industry has struggled to recover from that position ever since, but the French have chosen not to learn from past mistakes. Instead, they will deny people proper choice and competition and force those who want it to find it in the illegal market. They are failing their citizens in consequence, and it's a shame to see it.

Meanwhile, should you be sunning yourself on the Cote d'Azur this summer and realise you've forgotten to place your weekend's bets on any sport back home with the account you opened in London, unlucky. You can quite legally call your bank which is licensed in England, order from your local bookshop at home, or change your utility provider online while you think of it - not to mention whatever other uses you might want to put the internet to while you relax on your hols. But you can't both adhere to the law and type in the URL of your betting account and place bets in your own country on your domestic sport, because in their wisdom, the French say that's interdit.

Looks like it'll be Tuscany for us this year, then.

A bit of Xenophonobia

2010-04-28T08:22:00.001-07:00

I see that Australian Prime Minister Kevin Rudd has been encouraged to 'take on' the gambling industry by the independent South Australian senator Nick Xenophon. Xenophon told ABC's breakfast programme that he thinks online gambling is 'a bad idea', and he says that there is great 'potential for corruption' in online sports betting.

Not that this is anything new, but what sort of world do some people live in?

Surely if a 'potential for corruption' were the basis for whether something was allowed or not, we wouldn't be able to do anything? There's 'potential for corruption' in being a politician, and Lord knows there are plenty of examples of that potential for corruption coming to fruition globally over the years to suggest that it is a risk we should take seriously.

Of course, I would stress that I am not suggesting that Mr. Xenophon himself falls into the category of risk; but it seems to me that his sweeping statement doesn't allow the same caveat for me, or the company I represent.

It's one thing to say that you think something is a 'bad idea', even if millions of people (that's three million at Betfair alone, as you may have seen this week) disagree with you and believe that they ought to be allowed to make their own grown-up decisions about what they do. But to suggest that the reason for it being so is that there is a 'potential for corruption' is just ludicrous. Why not legislate the potential down to a minimal risk, like we do in every other regulated walk of life?

Come back Chris, all is forgiven

2010-04-27T14:05:00.001-07:00

I got a text earlier this evening from an old mate who wanted to know why I wasn't at the Betview Annual Awards at the Hilton Park Lane. Not long after, he texted me again to ask me my tip for the Online Company of the Year.

The short-list, it transpired, was Betfair, William Hill, and Ladbrokes.

I texted him back pretty quickly: I said I thought it would be William Hill.

Well, I wasn't going to say Betfair - it would have been too predictable an answer, coming from me, it was unlikely we'd be a realistic option (and as I gather we were trading at 1000 on the night and were booed when the short-list was read out, I suspect that view was shared by many there).

Of the other two, it seemed a no-brainer: Hills have done a lot online in the last year, while Ladbrokes are considered to have done so little in comparison that they recently fired their CEO, Chris Bell, and - passing over their MD of e-Gaming, John O'Reilly, for the top job, and appointing Richard Glynn who was welcomed by the City on the basis that he has 'online expertise'.

Ladbrokes won.

I wonder what Chris, John, the Ladbrokes Board, and the City make of that?

Paxo - a great stuffing

2010-04-27T02:16:00.000-07:00

I saw something last night that you don't see very often.

Having missed the 10 o'clock news, I switched on Newsnight, and watched as Jeremy Paxman got well and truly roasted by the unlikeliest looking fellow from Plaid Cymru.

Paxo was repeatedly told that he hadn't done his homework; was sent scuffling through his papers after allegedly quoting a misleading figure and being corrected; and had seemingly fair challenges thrown back at him with interest. By the end of the interview, he really looked something of a interviewing novice. It is fair to say, in my opinion at least, that he got totally stuffed.

Paxo came in to see us at Betfair once, back in 2007. Newsnight were doing a feature of 'Ten Years of Blair's Britain', and they selected three businesses as case studies: an iron foundry that had been going for hundreds of years before Blair arrived (and was responsible, among other things, for Big Ben); a yuppie hotel which had been founded in the years before Blair came to power; and a business which had not existed before the election of the Labour government: us.

For a man with a reputation as something of a rottweiler, Paxman was sweetness itself. He wandered around the office seemingly in complete awe, and was repeatedly extremely complimentary about the success of the business. In fact, he was a pleasure to chat to. But what was striking was how little he understood the financial markets. He walked around our telephone betting floor and was clearly completely baffled by the numbers being quoted; but my attempt to put them into context by talking about the City left him even more confused.

Most amusing on his visit, though, was that he had clearly come with an angle, and his angle was this: isn't it ironic that a Labour government should have put in place legislation (the Enterprise Investment Scheme) which allowed a group of people to get seed funding for a gambling company - an organisation that surely must, by definition, take the shirt off the back of people who couldn't afford it (the very people, in other words, that a Labour government was meant to protect).

We were recorded, of course; and the interview was conducted in very relaxed circumstances, walking around - nothing like the stark, no-place-to-hide, environment in which he has been quizzing the party leaders this week.

But it was the closest I have got (or am likely to get) to the full Paxo treatment: not happy that I was not giving him a line in response that allowed him to run with that particular slant, he must have asked me basically the same question upwards of twenty times. Taking a leaf from Michael Howard's book, I wouldn't answer in the way he was hoping. It's probably a good job I hadn't had the chance to learn from the Plaid Cymru bloke, or I might have come back with both barrels.

What would you wish for?

2010-04-26T09:37:00.000-07:00

I had a meeting today in which I was asked what I would wish for from an in-coming government. From a purely professional point of view, you'll understand...

I think I'd probably wish for two things - one for the industry as a whole, and one for Betfair specifically.

From Betfair's point of view, I'd love an incoming government to say, "you know this debate about bookmakers on Betfair? Well as far as we can see, you've been raising it for a long time now and you've presented nothing new. Go away, and do not darken our doors again, unless you have something new to say."

OK, I know I'm onto a loser on that one. So, I'd make do instead with them making that statement after one more round of the old debate: if it helps to put it to bed, we'll go through it one more time on the understanding that when we win that one as well and once again it is decided that there really is no case to answer (as it will be), then we get that response.

As for the industry wish...

This one would be that the new government makes decisions about us as if we were any other industry, rather than starting from the premise that we are, ooh, just a little bit embarrassing and not something they really want to touch - or would ever touch, were it not for the significant contribution the industry makes to the public purse.

I said it a few months ago, but if there is any appetite from the new government to attract more betting to the UK's jurisdiction, then it isn't just the tax rate that needs to be addressed for online gambling (as many imply): there has, in addition, to be a proper assessment of what the government gives the industry back for the payment that it (the industry) makes.

Having as a starting point the idea that gambling is a legitimate, licensed industry, and that decisions relating to it should be taken accordingly (without the ledger being balanced with the 'oh yes, but darling, they're gambling!' that you get the impression exists at the moment), would be a great way to kick off a new relationship.

It would also allow the in-coming government to make a proper stand for the industry in Europe and around the world - something that I can't help feeling currently happens much more sporadically than would be the case if we were selling widgets.

Sacré bleu

2010-04-23T05:56:00.000-07:00

I see that the French are expecting to have 30 applications for licences under their new gambling legislation.

That's down from the 200 that they originally expected; and from the 100 that they revised that estimate to; and the 50 that they then settled on.

And it's a far cry from the 5,000-odd online gambling sites that they identified in their government-commissioned Durieux report.

I wonder what that tells us.

Fostering support

2010-04-22T05:06:00.001-07:00

While we wait for the second round of the leaders' debate on television tonight, and exchange views on the Chancellor and his shadows squabbling yesterday, it's nice to see that the agreement between the betting industry and the Professional Players' Federation to help raise awareness among players of the issues in sport gets a positive airing in the Sports Ministerial equivalent in today's Independent.

Just one volcano; and how to get a job.

2010-04-21T23:15:00.000-07:00

It's been a busy week, you might think, from the lack of postings.

Well, you'd be wrong. But it's certainly been an odd one. I've spent most of it stuck in Bangkok, between a volcano and a pile of protesters, in a hotel which 'ran out' of internet connection. Such was the price for having gone to the Asian Racing Conference, and not having got out in time. I took off from Sydney on the afternoon of 15th April to the news that a volcano had erupted, and by the time we'd got to Bangkok, it was clear that our one-hour transit might last rather longer. But the sun was out in Thailand, at least, so it could have been worse.

Hats off to British Airways, who proceeded to put us up and feed us. (Passengers with Thai Airways weren't so lucky after the first day: they were apparently told to get their things together, and were taken back to the airport in expectation of getting on a plane. Only when they arrived did they discover that they were just being dumped...) But even bigger hats off to my parents, who held the fort at home with four kids while we awaited news on a 24-hour basis.

When we eventually took off, five days late, it was without knowing where we would be landing. The captain welcomed us aboard 'this flight to as close to London as we can get you', and, as we ticked off city after city on the moving map, updated us with an hour to go: "UK airspace is still closed. It may open up in half an hour, but if it doesn't, we have enough fuel on board to go round in circles for some time until things change." Thankfully, half an hour later, it did. We were one of the first planes to land, late on Tuesday night.

Betfair people were caught all over the globe by the eruption. Our two founders remain stranded - Ed Wray in South Africa, and Andrew Black in Montego Bay - both, at least, with their families. A number of my colleagues on the Executive Board had plans disrupted: Mathias Entenmann, who runs product, is still in California; Tony McAllister, our CTO, had to drive back - albeit only from the South of France; and our Commercial Director, Niall Wass, was (ironically) stuck in London (he lives in Malta). With another non-Exec, Josh Hannah, unable to get across from his home on the Pacific coast, yesterday's Board meeting was rather less crowded than usual. Meanwhile, one of my team, Susannah Gill, had to endure 32 hours by train back from Stockholm, via Hamburg and Brussels (among, presumably, many other places). What fun.

It's fortunate, then, that there doesn't seem to have been a great deal going on this week (just as was apparently true 80 years ago when BBC radio reported that there was 'no news' on 18th April). But in any case, if the ARC finished with a different kind of bang than we might have expected, it was still a well-organised event, and well worth even the extended trip.

I caught up with a number of people including our Australia CEO, Andrew Twaits; breakfasted, lunched, and dined with someone every day, including television presenter Bruce Clarke (whose girlfriend's expecting a baby), Government Relations Australia director Robin Harris (ditto), and former BHB head (and now solid Betfair man) Greg Nichols and his wife Victoria (who I should think have had quite enough of babies, thank you very much).

And on Wednesday night, I grabbed a couple of beers with one of my former hires, Hugh Taggart, who is now based in Sydney with Betfair.

Hugh holds the record for the cockiest approach I've ever had for a job, which I suspect will never be beaten. It remains one of my favourite Betfair stories.

I was sitting minding my own business at my desk in the summer of 2003 when my phone rang. The first words I heard when I picked it up were, "Hi... Mark Davies? My name's Hugh Taggart. I've just arrived from Australia, and I want to work for you."

"I'm sorry?"

"My name's Hugh Taggart. I've just landed from Australia, and I want to work for you. I've been following your story, and I love your business, and I'm hoping you'll give me a job."

You can imagine, I was somewhat taken aback. "What are you going to do if I don't have a job to give you?" I asked.

"Well," he said. "I've got enough money to last me a month. I'll look for another job and if I don't get one, I'll go back home."

It was the July Cup the following day, so I was spending my Saturday heading to Newmarket, by car, and having lunch with a table of interested stakeholders which happened to be a man short. I suggested to Tags that if he could make it to mine by 9am, could manage two hours there and two hours back telling me his story, and hold his own on a table of people he knew nothing about, I'd think about it.

He turned up at 8.55.

I offered him a job on the Monday!

Another gambling initiative with sport

2010-04-16T03:38:00.000-07:00

Good to see another section of the gambling industry forming a voluntary agreement with sport - this time in Europe.

It looks like it's modelled broadly on the agreement that we put together as a consortium with the PPF, which I blogged about in February.

Proves that voluntary agreements do work. Not that that will stop SROC continuing to lobby for their levy, I shouldn't think.