Wednesday, 11 April 2012

Is Betfair's time up in Australia?

Breaking news from Racing Victoria Limited (RVL), the premier racing body in Australia.

In light of the recent Federal Court ruling in favour of Racing NSW and the right to charge a turnover fee for offering wagering on their racing, RVL has swiftly elected to switch from their fee model based on gross profits (possibly from the start of the new racing season on August 1). This is in stark contrast to their previous statements saying that the difference in figures wasn't a great deal, it was far better to have the corporate betting houses on side to encourage innovation and sponsorship investment etc. As mentioned in the previous post re Racing NSW - the model doesn't make that much difference to corporate bookmakers, it's a bit more than the current system but they can live with it. However, it does completely screw Betfair and the exchange model. Recently appointed Betfair Australia CEO Giles Thompson was quoted as saying the 1.5% fee in NSW made racing in that state six times more expensive than racing in Victoria, to an extent where it was worth considering dropping NSW racing completely. Soon it will mean all Australian racing unless they switch to being just another corporate bookmaker - margins which can afford the fees model but they would lose all their unique selling points and send out mixed messages to customers who would want to do the same thing on racing as they could on footy. And with the majority of Australian sports betting based on two-way markets, exchange betting offers little more than what bookies can offer, so long as there is a little competition around.

At the same time, the restrictions on betting in-running in Australia have severely hampered their inroads into sports betting. Betfair is an online business, trading over the phone on in-play events as required by the stupid Federal Interactive Gaming Act is difficult for punters (placing a bet is easy if the liquidity is there, but few want to post offers without being able to control them) and a heavy burden on operating costs, having to provide telephone operators.

It's a crucial time for Betfair in Australia, and for that matter around the world. If racing authorities manage to kick Betfair out of Australia, then the rest of the world will do their best to follow suit. The legal challenges coming up may be at least as big (and expensive) as those involved in establishing the business so far.

Curiously, the share market has reacted positively to the announcement in Australia, perhaps believing that this allows Betfair the perfect opportunity to cut their losses and abandon a portion of the company which has been very expensive to operate. However, this cuts a lot deeper than that. Authorities (sporting and government) around the globe may believe they can stick the knife even deeper into Betfair - let's face it, almost without exception, they have all despised Betfair and how it disrupts their cosy little regimes.

This story has a lot of legs yet....

2 comments:

  1. Great Article and i follow with interest...

    ReplyDelete
  2. People think that Racing NSW or other parties do not understand how Betfair work and that this is not fair. Trust me, they understand completely how they work and why they are so good for the punter.

    That is why they spend so much time and money protecting the TAB and have driven bookmakers out of NSW in the past. The bottom line is very simple.

    Racing NSW, all corporate bookmakers and the TAB have ALL wanted Betfair gone since the day they opened.

    They believe, foolishly, that if they can get Betfair out of Australia that racing will still flourish and all will be well. They are kidding themselves.

    I think you will find as soon as Betfair pull out of racing here, Betdaq will come flying in from Ireland and accommodate all the punters that want to bet on NSW racing.

    You can be assured they will not be paying 1.5% from Ireland either.

    Betfair could of course just choose to offer Australian racing from the UK but at this point they choose not to.

    Betfair have not helped themselves out here. The marketing department is a joke and virtually non existent.

    They sponsor a race track (or used to) and they have the boundary sponsorship at the cricket but most people out here have no clue what Betfair is or how they work.

    They spend next to nothing educating people yet Sportsbet and Centrebet have ads on TV every 10 minutes. Never see a Betfair ad.

    The education department run some very low quality education in major cities that show people what Betfair is and how the website works. But they don't show them anything about software or how to get the most out of their Betfair experience.

    If people knew about Betfair and how it works, any smart punter would never bet in the TAB again ( I will never place a bet in the TAB in my life again) as the TAB just rort you as much as a poker machine. You can't win. They take 14% from every dollar you bet.

    The corporates are totally spineless. I opened an account with Sportsbet two weeks ago and placed $100 in my account and wanted to back Melbourne Storm at the line @ 1.90. They refused the bet. I had NEVER had an account with them before under mine or any other name and they just refused my business. So they won't take a $100 bet off me yet spend $100,000 on a television ad.

    So the decision is very simple for me. If Betfair pack their bags and leave Australia, I will be on the plane with them. There is NO future in betting in Australia if Betfair is not here because quite simply, the margins that the bookies and TAB take make it impossible to win.

    ReplyDelete

Thanks for your comments, but if you're a spammer, you've just wasted your time - it won't get posted.