Online bookie is a safe bet for success

Andrew Black’s Betfair.com has been a huge hit in Ireland, says David Clerkin.

Betfair.com’s Andrew Black: The company has signed up more than 300,000 users worldwide since it opened for business in 2000 - and 15,000 of them are in Ireland.

MOST bookmakers live life in the black - and punters hate them for it. But Andrew Black didn't get mad; he got even. And now his creation has our beloved bookies on the run.

Betfair.com, the internet-based betting exchange that matches punters looking to place a bet with those willing to take them, will process bets worth more than €3 million on the Cheltenham Gold Cup alone later this week. The company has signed up more than 300,000 users worldwide since it opened for business in 2000 - and 15,000 of them are in Ireland.

“We picked up Irish business right from the start,” says Mr Black. “We didn't specifically target the market here but we picked up customers anyway.” He says the level of Irish interest in English horseracing, especially the National Hunt variety that’s just about to have its busiest week of the year, and Premiership soccer was a pleasant surprise.

But Ireland’s enthusiasm for the betting exchange has now reached the stage where the company has set up markets especially for Ireland, such as GAA and even last week’s You're a Star Eurovision showdown.

Like many other internet ventures, Betfair's attraction is its ability to cut out the middleman. Just as Ryanair offered cheaper flights because it could sell tickets directly, Betfair offers tighter odds to punters. Traditional bookies make their money from the black art of maintaining a margin - they usually aim to set odds so that, whatever the outcome of a given race or event, they’ll keep around €15 of every €100 gambled. And they’re usually successful.

Betfair does away with this. A customer who fancies Cork to beat Kilkenny, for example, might get odds of even money with a bookie. But using Betfair, he might find a Kilkenny fan who’s so confident about the Cats that he’s willing to offer his new Cork friend more generous odds of 2 to 1. To his cost. Betfair takes the money from one and passes it on to the other.

Although it has a bookmaking licence, Betfair is closer to a dating agency for gamblers. Unlike bookies, it doesn’t care about the outcome of a game or race, because it gets paid its commission once it matches a backer with a layer. It’s up to the gamblers to worry about the merits of Cork or Kilkenny once the bet has been struck.

A financial whizz and former trader in the City of London, Mr Black began the punters’ revolution in 1998 by developing computer software that would eventually become Betfair, the company he co-founded with fellow Englishman and ex-banker Edward Wray. It made stg£13 million (€19 million) last year.

Its business employs almost 500 people and spans Britain, Ireland, Australia, Canada and continental Europe, but the surface has just been scratched, says Mr Black. Ireland is “better than most countries” and the only market outside Britain where Betfair has a permanent office.

The success of GAA markets was “a real surprise”, but even All-Ireland finals fail to match the activity seen on an average midweek race day.

But this year will see interest pick up further, with the opportunity to bet on GAA even while matches are in progress. So-called “betting in running” has been common in horseracing for years.

The company plans to bump up its Irish business by getting its name on everyone’s lips. It's quickly becoming one of the premier sponsors of Irish horseracing and has paid almost e1 million to attach its name to around 25 big races in the Irish calendar.

It plans to go onwards and upwards. Mr Black says it will be a big beneficiary of the rollout of broadband high-speed internet access, which makes betting easier and faster, although he stresses punters can still bet with ease using older dial-up connections, or even the phone if they’re not wired to the web.

It has also diversified into the potentially enormous online poker market. Mr Black says Betfair’s offering will appeal to customers because it's seen more as an online community that links like-minded sports fans for a fee, rather than a heartless plc that’s out to empty punters’ pockets for profit. The poker site has been “an unqualified success,” he says.

And it’s unlikely that Betfair will be cashing in its chips anytime soon.