Grand National

I landed in Sydney this morning, where I am attending the Asian Racing Conference, to the largest flurry of e-mails I have had for some time. Most of them revolved around the Grand National.

In any circumstances other than that I would have been roughly over Darwin at the time the race went off, I'd have been very sorry to miss it. The Grand National holds a huge number of special memories for me.

One of the first things I remember in my life was watching Red Rum win his third National, at my grandparents' small terraced house in Kensal Rise. It made an agreeable change to the usual Saturday afternoon fare, which involved my grandfather watching the wrestling on World of Sport.

Four years later, I persuaded the nanny, with both my parents away, to let me raid the house-keeping jar for a couple of quid, which she then obligingly put on Aldaniti for me at Datchet's tiny Turf Accountant - her first-ever visit to such an establishment. I put the stake back in the jar later, and the winnings kept me in Cola Bottles for some time to come.

In 1992, my first year as part of Cambridge University Boat Club's squad, the Grand National and the Boat Race took place on the same day (April 4th). I delayed our crew's departure from our base at the Bank of England Sports Club in Roehampton because of my insistence that I wanted to see the titles of Grandstand, complete with the music from Champions. Now, just a bar of the theme tune is enough to transport me back to that emotional day, which saw Cambridge beaten in a spookily identical fashion to that by which they triumphantly won last week. (Goldie won by three and a half lengths, and I almost took the bows off Isis in my eagerness to get their water along Crabtree Reach, more or less opposite where Betfair's offices are today.)

The memories of this year's race will sadly be limited to the various pieces of commentary that appeared in my inbox, although they give what seems a complete picture. From comments about McCoy's emotional interview, through reports about Ladbrokes' site going down (sorry - couldn't resist!), to a gleeful missive from my parents telling me that they had backed the winner; it was all there.

The bulk of the mails I got, though, involved discussion about what the result means for racing, given two things: first, that it couldn't really have been a worse result for the bookmakers; and second, whether it is right or wrong that the over-round should have got progressively worse as the race approached, to finish at 155%.

To deal with each in turn...

One of my colleagues who is most knowledgeable on the subject suggested to me that, "I'm not sure that any of the other thousands of 'first four' permutations could have been worse for them". Brace yourself for plenty of 'it cost us millions' stories in the press tomorrow, but the reality is that those millions will be back. But I won't be bracing myself for anyone (in racing) recognising the sense (for racing) in managing risk perfectly like we do at Betfair, which delivers levy returns whatever the result.

As regards the SP, it's worth having a look at what SP has been at the National over the last 10 years. Courtesy of the same colleague, here are the numbers:

2000 - 138%

2001 - 142%

2002 - 143%

2003 - 143%

2004 - 133%

2005 - 139%

2006 - 147%

2007 - 152%

2008 - 146%

2009 - 146%

2010 - 155%

To put that into perspective, the winner returned 10/1 at SP today; and 18/1 at Betfair SP.

Now, there's an argument that says that Grand National Day is the one day that the bookies should have an over-round that represents daylight robbery to any value-seeking punter. The vast majority of their customers today are not just not value-seekers, but are not betting with any knowledge whatsoever of whether a horse should be 10/1 or 33/1. Equally, many of them are not likely to come back again until the Grand National is run next year. On that basis, you could argue that it makes sense to charge as much money as possible, safe in the knowledge that they're going to buy the product just this once.

The counter, though, was put succinctly in an e-mail by one of Betfair's very early customers, who suggested that maybe an idea for Racing for Change would be to look at how the biggest betting day in the calendar could become an opportunity to welcome new people into the sport, rather than "treating them as people who have strayed into the wrong part of town and deserve to be mugged".

I think it's a powerful argument.

There's no question - and this year proves it - that there is a trend for false gambles which ignores the broader market as captured by Betfair. Horses are shortened in price late in the day, and nothing is lengthened to compensate. The pricing experience is one which I don't think any other industry would get away with.

Does it matter? I think it does. You might argue that adding 55% to fair value would have gone some way to mitigate the disastrous result; but it seems more likely that someone who picked up £180 for a tenner will return and have another go, than someone who picked up £100.

Certainly, any customer who learns that he'd have got twice the price half an hour earlier, or in the morning, or on Betfair, or even on the Tote (which was paying £15) will feel short-changed, and a 'good customer experience' will become a mediocre one at best. So, given that we know that more regular punters tend to return to the bookies what they win, I would have thought that giving new customers a fair go in the hope (or expectation based on experience) that they can then be retained for lifetime value would be a more sensible business model.

But I suspect I'm in a minority confined to Betfair.