Most Web sites started in the late 1990s have either gone public, been acquired or are defunct. Wired has a rather harsh cover story on one of the most famous ones that isn’t, Craigslist. But there’s another one that could rile up even more attorneys generals and socially conservative figureheads: Betfair.
The London-based online gambling company is seldom written about or mentioned in the U.S. despite its gargantuan size. It employs 1,800 people around the world, generates more than $500 million in annual revenues and is profitable. Oh, and those revenues have grown nearly 30% in the last year. What world-wide recession?
Of course, there’s a reason we rarely hear about Betfair: Its core betting exchange is illegal in the United States. In fact, Betfair has gotten to this size despite being locked out of the three of the largest gambling markets in the world: the U.S., China and Japan. That first one is slowly changing.
In January Betfair paid $50 million for U.S.-based TV Games Network. TVG produces 17-24 hours of programming per day all about betting on horse racing. On the weekends, that programming reaches into 72 million homes. TVG’s site also takes bets. A lot of bets. It racked up more than $500 million in wagers last year.
Wait, what? That’s right, apparently betting on the ponies is one of the only legal forms of online gambling in the United States, although TVG only operates in 16 states. Since the acquisition, Betfair has moved fast to capitalize on this legal niche, already adding 30% more races and tracks around the United States. Last Friday, it offered $400,000 to sponsor a New York race between the two of the most successful female runners in horse racing history, Rachel Alexandra and Zenyatta.
While the TV studio is based in Southern California, Betfair’s U.S. operations are now headquartered out of San Francisco, and the CEO David Yu—who holds degrees from Stanford and University of California at Berkeley— is looking to capitalize on Silicon Valley’s tech talent. He’s looking to hire at least 30-50 people in the next year, not only to support TVG’s operations, but to help develop the entire company’s betting platform. Betfair is already a remarkably technology-centric company, handling the scale of loading billions of pages a day and matching and processing bets within seconds. It employs 70 people who watch for fraud and money laundering and takes payments via 20 different payment systems. It employs more than 400 engineers.
To be sure, horse racing is just a toe into the lucrative $100 billion-plus U.S. sports betting market, and Betfair isn’t going to push it. The company is well aware that legislation is making the rounds that could legalize online poker, and while it doesn’t want to be one of those lobbying for changes, be sure the company will be ready to throw a ton of money at the U.S. should the laws change.
Betfair is also thinking about going public for $2.5b, it will be the first big FTSE IPO since the downturn if it goes ahead
Do you know that Betfair put a financial penalty on anyone who wins more than £10,000 on their site.
After £10,000 they deduct 20% of any future winnings. Betfair should change their name to Betunfair.
That’s rubbish – there’s a charge if you’re winning all the time, but that mainly impacts those who trade or those who are banned by any other bookmaker.
I – and a large number of my friends – are net winners (some very significant), and have never been impacted
“To be sure, horse racing is just a toe into the lucrative $100 billion-plus U.S. sports betting market, and Betfair isn’t going to push it.”
Sarah –
I’d be interested to hear where you acquired this $100bn figure. Does it reference both online and offline sports betting?
This is the kind of content I love reading on TechCrunch. A story about a new company that’s successful and doing it through different means.
Thanks Sarah for the post
Betfair is not new. It was launched back in the late 90’s and been profitable from the off. They have not listed basically because they make too much maoney they dont need a stock exchange quote. Its also the best betting platform out there. I spend way too much time on it. What the tech crunch noob fails to point out is whether the yanks will be allowed to lay the nags instead of just back them. That is afterall the whole point of the exchange. I presume exchanges are still illegal in the US even if betting on nags to win isnt…
Just imagine if sports wagering were legal in the US with exception of Nevada. Tax revenue’s would go through the roof. Oh wait, the NFL is against this in other states with exception of Nevada. If other countries including the UK are ok with it, just allow it here in the US. Legalize poker + Sports betting and the possibility of increased tax revenues are exponential. Great article Sarah.
Some people were trying to make it legal in Delaware…
http://tinyurl.com/na34ap
Betfair is a great site. You guys over the pond are sadly missing out with your draconian legislation.
OT: That wired story so misses the point on Craigslist that it completely backfires imo.
I’m not surprised to see that the Craigslist has joined the Wegmans of the world in providing quality service by quietly kicking ass and not bowing to the larger pressure to join the industry in its churning fickle frothiness.
The re-designs were icing on the cake (especially the retarded one with the icons) – way to miss the point COMPLETELY.
that’s actually a really cool article. not a big gambler myself, but it’s nice seeing a web company that’s a real business.
http://www.traderbots.com
Sarah, we get it you’re a liberal. Must all of your stories start with bashing conservatives.
400 Engineers yet their website isn’t compatible with Chrome.
You should use the URL http://www.betf...ir.com/Index.do with Google Chrome
I think BetFair is a great site, and to be honest a money making machine.
I have recently started using BetFair for my horse racing system as per website above.
Would thoroughly recommend, and I use it ironically to bet on US Racing from here in the UK.
Good commentary and update.
This might not be as well known, but Betfair is one of the more opened and forward thinking firm within gaming and gambling sector.
That is why in 2007, I put Betfair on one of the special panel I produced for my non profit Gambit special interest group promoting ‘innovation’, the public forum report hightlighted report is freely avaiable here: http://www.theg...novation07.html
Furthermore, since last year, based on Betfair’s technology director’s request, we have also co-founded the private Gaming Technology Forum (invitation only private gatherings of industry top CTOs/CIOs) of the gaming and related sector. More innovation and collaborations can be expected, I hope.
@GarethWong