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Betdaq.... sold...... FOR HOW MUCH???

So as rumoured for a while, Ladbrokes have finally acquired the lemon, sorry, purple-coloured betting exchange, Betdaq. For a mind-boggling €30m as 'initial consideration'. That's an even more ridiculous price than Fernando Torres for £50m, or any English player Liverpool have purchased in recent seasons!

As I've written previously there are no logical business reasons for this acquisition.

from Nov 29, 2012

The Racing Post reported this week that Ladbrokes are nearing a decision to acquire Betdaq. This baffles me, it really does. Betdaq are a complete and utter lemon. Their only rival in the market has kicked so many own goals over the years with the premium charge, followed by an increase in the premium charge, cost of API and data use, customer service standards which have fallen faster than Facebook share value, site crashes and various other faults. So many pissed off Betfair customers, yet Betdaq are still tailed off with a lap to go. Around the world, Betfair is losing favour. Across Europe, they are being kicked out of countries on a regular basis. Growth for the exchange just isn't there, hence they've had to push hard into other products - casino, arcade, sportsbook etc. Ladbrokes online division continues to spend vast sums of money for poor return on investment. So now they want to purchase Betdaq to fix that, when the exchange honeymoon period is well and truly over? You couldn't give the purple mob away. As I said to a mate on Twitter the other day - if you offered them a carton of Foster's for the business, you'd expect change. So many poor decisions made there over the years, they've blown their chance to be a real player in the market.

ADDENDUM - 30/11/12 - Betdaq have started contacting Australian clients to notify them their accounts will be closed. This either means Betdaq are intending to gain an Australian licence and wish to obey local laws, or, more likely, Ladbrokes, as a PLC, do not wish to break any local Australian laws - they have already closed all their Australian-registered accounts. Sources tell me Danish clients of Betdaq have received a similar email recently.

There can only be one real reason for this - a favour to their biggest individual shareholder Dermot Desmond, who owned Betdaq as well. €30m is massive overs for Betdaq, but keeping Dermot happy in the long run might be the better long-term strategy.

To those in high places with the 'Magic Sign', feel free to prove me wrong over the next couple of years ...


From the Racing Post:

The acquisition is expected to be completed late next month, and Glynn said: "The Betdaq exchange is a well-regarded and well invested business and a close strategic fit for Ladbrokes.

"Whilst the main focus of our digital growth strategy continues to progress well, this bolt on acquisition provides us with an exciting opportunity to grow our share of wallet through the creation of a differentiated and comprehensive sports betting proposition for customers and also supports our drive for improved liability management."

Well-regarded? By whom? They've been around for several years and have trod water for the majority of that. If their ambition has been to see off WBX and iBetX, then fair enough.

Well invested? By that does he mean it had been flush with cash or carefully managed not to wilfully waste it chasing Betfair when they weren't able to keep up? Or is it just Richard Glynn trying to claim victory in finally landing an acquisition after mainly aborted/failed attempts?


  1. Hiya,

    I disagree - a lot.

    I think £25m is a very good deal for Ladbrokes, and one Dermot Desmond can obviously live with, having pumped .. I would guess, at least £100m, into the project.

    By purchasing Betdaq, hedging will now be much more efficient (as long as they can grow Bots/Markets .. and the data costs, of viewing the betfair xchange .. will now fall away .. plus, they could licence the data, to other bookies, for much less.

    Looking at last nites footy, liquidity .. seeded or not, was greatly up.

    I am v hopeful, a v strong conmpetitor can emerge.

    lets see .. I am sure its what we all want.

  2. Thanks for the comment Bossman. Obviously I disagree, but constructive debate is good. Let me start by saying this is not a rant to protect my Betfair shares value, as I was accused of by one person on Twitter. I don't have any, and I'm not averse to slagging off my former employer, just look through my old articles. Everyone I joined the business to work with (Ed, Bert, Mark Davies etc) are long gone, they're just another company trying to squeeze as much out of punters as they can now.

    My reasoning is that to get where Betfair is today costs a hell of a lot of money. I have seen this in action. It's easy to sit on the outside and think it's just a website. Increased liquidity is great, but then you need the resources to manage it. Betfair at one stage (may still be true) had one of the top 3 Oracle transactional databases in the world - up there with Amazon and eBay. That requires a huge infrastructure to support it.

    Betdaq have had so many chances to steal BF's client base, but they have gained virtually nothing out of each of those. BF has taken a huge lead abroad - nobody's heard of Betdaq overseas, so to catch up there will take millions. And then you have the ever-rising cost of operating. Ladbrokes as a plc won't play in risky markets, so it's licensed business or not at all. And European govts have cottoned onto how they can regulate online betting in their country and either a - outlaw exchange betting or b - tax it so highly it's uneconomic. Greater costs, lower upside.

    They missed the start big time - it's like Amstrad coming back to take on Apple. Now the horse has bolted, and the pot of gold at the end of the tunnel is far smaller. Betfair got the jump, took the cream and have now decided it's hard work (i.e. margin too low for a business which has to answer to shareholders) so they are moving more towards the higher margin products - sportsbook and mark my words, retail. The fish have tried it and been chewed up & spat out by the pros, so BF had to start charging the pros premium charge. Lads/Daq will eventually suffer the same fate.

    BF also got so much free publicity out of Ralph Topping and Chris Bell constantly slagging them off - 'bookies don't like it, there must be something in it for punters'. That era has gone.

    Re liquidity - seeding is one thing, but that becomes very obvious quickly. It's not about having offers to win £1000 all the time for 105%. It's about the volatility and mix of £5, £50, £500 and even £5000 bets on offer as an event evolves. That is incredibly hard to replicate without doing your brains as a layer. It's about having that liquidity across the majority of events, not just the ones which are on Sky in the UK.

    Lads have made a hash of online for several years, repeating the same costly mistakes. I don't see how acquiring a low-margin business requiring tons of investment is the solution. UK firms don't hedge that often, with the strength of their retail business, they don't need to.

    Data costs etc - fair call, but small in the overall scheme of things.

    I would love to see a strong rival to Betfair, they deserve to be taken on in response to their arrogance towards customers over recent years, but like the tote operators, since they rely heavily on public liquidity, there can only ever be one dominant one when in direct competition.

  3. Fair points.

    Maybe the whole exchange arena, is in a 're-think' phase. I am sure u noticed, Andrew Black reduced his holdings, yesterday, by about 1%, to 8%.

    Despite this, I think an on-line retail business, could do a lot with an exchange.

    Betfair is tolerated at best, hated by most professionals.

    There is a huge opportunity, for a new broom to sweep in, and cultivate the 1000 top profesionals, who really control the mkts.

    I am sure, Betfair will push more and more punters, to the Sportsbook .. maybe the site cannot handle, the 20k+ mkts .. or whatever it is .. anyway - but, by focussing on say .. 100 key markets a day, the professionals will have choices, and Ladbroes could easily re-route traffic from their own sportsbook, to the exchange.

    I see lotsa opportunites .. I just hope management at ladbrokes, also do.

  4. 2 Weeks have gone by, and I must say, I am v dissappointed by the lack of .. anything really, on the Betdaq/lads platform.

    I just dont understand.

    Many, many side mkts are now just Botted .. 2 ticks under Betfair price, and, u send a bet, and the Bot normally moves the money. Its the most frustrating platform, and its such a waste.

    The superbowl mkts were v decent, at times, but the football mkts are much as they were, with racing also the same .. in-running racing, is a bad joke. Crkt is just a Bot ..

    Maybe 2 weeks, is just too short a period of time .. but, they could be pro-active, and actually communicate with mkt-makers - but, it seems, this is not in their plans .. or, the bureaucracy, is holding things up.

    So far, am v under-whelmed, by what has, or more pointedly, hasnt happened.

    You appear to have been right .. but, then, why pay the money ?

    Confused .. but, prepared for action.

  5. early doors to be honest, and it may still be in a stage where Lads have yet to take control due to paperwork/legal crap etc. So much of the stuff they need to do is behind the scenes, so, like a duck, they might be paddling mighty hard under the surface, while looking perfectly calm on top.

  6. plus Ladbrokes is a business with a huge hierarchy/number of layers. Things don't happen quickly - meetings ,committees, project managers, compliance etc, the perils of modern business, but essential when you're a firm of 15,000+ people.


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