Magazine article Management Today

Company Vitae: Betfair

Magazine article Management Today

Company Vitae: Betfair

Article excerpt

Founded a little over a decade ago, Betfair is now the largest online gambling exchange in the world. What are the odds against that happening?

- Formative years

In 1998, software developer and sometime professional gambler Andrew Black had an idea: why not create an online gambling exchange, an electronic platform to bring punters together to bet against one another, in much the same way as stock exchanges bring investors together to buy and sell stocks. Pooling resources with a friend, JP Morgan trader Ed Wray, the pair came up with pounds 60,000 and launched Betfair in June 2000.

- Recent history

A proposed float in 2005 never materialised, but by 2006 Betfair was romping away, making a pounds 23m profit on revenues of pounds 107m. The winning combination of a peerless technology platform and brand-new business model put Betfair streets ahead of the competition. It also cannily avoided getting caught out by the US clampdown on online gambling.

But in the past few years the firm has hit a rough patch, with its much anticipated financial trading arm LMAX struggling to take off and growing concerns over a regulatory backlash in key markets. It's also recently emerged that hackers have stolen the details of 2.3 million credit cards from Betfair. This year's Q2 revenues fell 7% to around pounds 80m, and in March it moved some of its operations offshore to Gibraltar, saving an estimated pounds 20m.

- Who's the boss?

Bit of a sore point at present. Betfair veteran David Yu, CTO from 2001 and CEO since 2006, has put the cat among jittery City pigeons by announcing that he will leave the firm next year. …

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