Aaaah, Betfair. They are the betting equivalent of Marmite - you either love them or hate them. Actually, I don't know anyone who currently loves them, so that analogy probably doesn't work. But at some point, every person who discovers the world's first ever betting exchange, does fall in love with the concept. We've all loved Betfair and most of us want to fall back in love with Betfair again. So why are they now reviled by so many? I thought who better to ask than someone who has actually worked for them - journalist, author of the blog 'Sport is Made for Betting' and ex-Betfair employee Scott Ferguson.
You were the Head of Education at Betfair. What exactly did that job entail and what was your background before that?
Great job, working with all levels of punters and teaching them more about Betfair. From complete novices (who needed to start from the very basics) to some of the biggest accounts (who would be most interested in things like keyboard shortcuts), from non-punting staff (teaching techies and the HR girls was always a fun challenge) to business partners etc. My team ran seminars up and down the country, even abroad. Punters loved them because no bookie would ever want them to win, or even just lose less. I also ran the Betfair trailer at sporting venues all over the UK & Ireland (even the day the first one burned down at Uttoxeter!). Great job, totally unique in the trade. But times changed, Betfair are now hell-bent on screwing customers for every penny they can get and I'm glad I'm not there anymore.
My background was unique - I had been a bookmaker, a teacher, a professional punter and a journalist before joining Betfair. The perfect mix! I knew both sides of the betting counter and love explaining difficult concepts to laymen, breaking it down to what they can relate to. The movie 'Road Trip' has a great quote "I can teach Japanese to a monkey in 46 hours. The key is just finding a way to relate to the material." Best example of that was teaching a bunch of our promo girls how Betfair worked by relating it to buying shoes cheap on holiday in Thailand and then selling them on eBay when they got home.
Can you give us an insight into what working at Betfair was like? How was the general day to day atmosphere and did you enjoy your time there?
I joined quite early, back in 2004. Those were fun times, the punters loved Betfair because they were sick of being screwed by bookies and in-play betting with bookies had barely started. I was initially hired to get Australia on-board and spent two years at home spreading the word, before it was left to the lawyers and lobbyists to secure the licence. Then I moved to the UK and eventually created the Education department from scratch. Being on the road a lot was draining, but also rewarding - seeing a frustrated punter who just didn't 'get' Betfair open his mind and start picking up the concepts always brought a smile to the dial.
But as Betfair got bigger and bigger, the fun environment had to change. It got more serious, full of non-punting bean-counters (classic example of one senior manager who wanted to back the tie in every cricket match to ensure no loss of commission - clueless!). Once crap like the casino came in, the company ethos had changed and it went downhill internally from there. Not many of the 'good guys' left...
What have you been up to since leaving Betfair? Are you now trading professionally?
The problem with the role at Betfair was that I'd painted myself into a corner. As it was a unique position, there was really nowhere to go from there, unless I changed tack completely. So I started an MBA before I left to keep my mind active and challenged. I consulted for a few smaller betting firms but they are finding it very tough - the big firms have the deep budgets to chase customers, develop software etc. The small books just can't compete - they don't have the cash or reputation, so they're stuck dealing with a never-ending cycle of bonus ****s and arbers. Got bored of giving advice to owners of small books which they would ignore because 'they knew best', despite them never having placed a bet in their lives! Now out of the industry, doing something better for the world.....
Not trading as much, very difficult with two young kids in the house. Now picking my moments to get involved, rather than trying to make an earn out of everything.
Can you tell us about 'Sport is Made for Betting' and why you started it?
I love writing and wanted an outlet to vent my opinions. I wrote most of the Betfair Education site, I write betting previews regularly for various sites but on the blog, I can unleash on Sepp Blatter, Paul Roy, the ICC and any other muppets I disagree with
And it also gives me a chance to share a few trading theories - namely lay the field, next manager and on low-volume markets such as Nascar and women's golf. And my posts about match-fixing have led to several interviews with international press.
Why do you think the flotation of Betfair has gone so disastrously?
Variety of reasons. Floated at a bad time, but let's face it, with the economy so cactus at the moment, the next 'good' time could be 2025. It's a tech/gaming stock which are traditionally over-valued. They have pissed off many of their most valuable customers (see next question). Poor leadership from a bunch of non-punters who put the shareholders over the customer and then screw up on both fronts. Limited growth prospects - market saturation in the UK, regulatory problems abroad and poker is a dying fad which they never got right anyway.
Why do you think Betfair has become so disliked by its own customers?
Unadulterated greed. They were the punters' best friend when they first came out and revolutionised the betting industry, making bookies tighten their margins, and introduce a stack of new markets & products to attract more customers. But they, or more correctly those who harboured ambitions of a huge flotation, weren't happy with the small profit margins from the exchange and wanted to screw punters for more and more. So along came exchange games, poker, casino, mini-games, virtual racing... all with marketing campaigns which screamed 'We used to think you were smart betting on the exchange, now we think you're a mug who should piss all your money away on these stupid other products'. But the poker site was always crap and they wasted squillions on it. Casino sites are a dime a dozen and the other stuff is the domain of the cash punter who hangs around betting shops.
Customer service changed from admitting their mistakes and "The customer always comes first", to "Screw you, we're a billion-dollar firm and we don't give a **** that the site went down in the middle of a game", or "We think you've been betting on a suspicious match and will lock your account for a month without giving any details at all".
And then there's the premium charge - absolute PR disaster. Sure it only affects a small percentage but everyone likes to dream, and now that they are stuck for revenue streams, they've dived in again to attack their biggest advocates.
Many Betfair users feel that they are being taken advantage of because Betfair virtually have a monopoly on the betting exchange market. They feel as though Betfair employees really don't care about them and are just out to squeeze them for as much as possible, regardless of fairness. In your opinion, how close to the truth is this?
Hits the nail on the head really. In the early days, everyone they hired had a betting background, or at least an interest, so they understood the markets, issues, customer concerns etc. Now they just hire standard call-centre workers, as cheap as they can, who could be stuffing you around for Vodafone or a bank or an insurance company. Makes little difference to them, they just look up the answers to standard questions in the manual and copy & paste it onto your reply. And then there are the bean-counters/analysts who need to find a way to make more money, so the best way to do that is screw winning customers for more money via the premium charge and/or API fees.
Have you noticed a change in the ethos of Betfair and the way it has been run down the years?
Chalk and cheese. It was great fun in the early days, truly blazing a trail, changing the betting industry for the good of the punter. Then they started hiring 'experts' from other fields, because they 'obviously' knew how to run a highly successful betting company. Some real bone-headed decisions were made, very damaging to internal morale and when stuff like that happens and said experts aren't held accountable for them, the fun starts to disappear. Once they forced Andrew 'Bert' Black out of a day-to-day role (because he understood the industry and felt for the punter), it went downhill fairly quickly.
I joined the company to work for Ed Wray & Bert (and to a lesser extent, Mark Davies), following their dreams of an exciting concept taking over the world of betting. It was a great journey. But once it was obvious they were being forced out/their roles diminished to bring in the new breed of dull, passion-less business 'experts' who essentially saw customers as the enemy who must be exploited, it was time to move on and I don't regret leaving when I did.
Many people in high management positions have left Betfair in recent times. Why do you think this is?
99% of people in business will struggle when a company goes from 10-20 guys in a small office to over 1000. The business simply has to change, become hard-nosed over costs, stop treating PR as a laugh and really focus on a consistent core message etc. Senior execs in business these days change jobs all the time - clash of personalities, they screw up, they've done what they set out to accomplish etc. Many of the original staff left after the float - and several of those guys, even the ones way down the food chain don't have to work again for a long, long time. Others saw that as the right time to move on, having to answer to shareholders who don't understand the impact of bad weather on football & racing or the negative impact of raising commission rates etc. Pressure on the top guys is severe and now they are public, blood must be shed regularly if results aren't up to scratch...
Betfair have recently installed a new Chief Executive, Paddy Power's Breon Corcoran. What do you think he has to do to restore Betfair's reputation?
Stop focusing on the City and get back to looking after customers. Stop deluding themselves in thinking it's a technology company - if it was, it would be listed next to Dell and Microsoft in the Yellow Pages. It ain't. Hire people who actually go to the races or sporting events for reasons other than to get plastered in the hospitality suites.
The Premium Charge and Super-Premium Charge; in your opinion, why were they really brought in?
Greed and desperation at limited other options to increase revenue. It is true that the 'sharks' at one end do scare away the little fish, and those little fish are expensive to acquire. But without the big players providing liquidity, you don't have a business, so it's a dangerous game. The best way to hang onto those little fish was to educate them and make them aspire to climb higher on the food chain, but they effectively killed off the Education dept.
Where do you think Betfair is headed in 2012 and beyond?
Bound to tread water for a long time. I really hope this new bloke proves me wrong, but I doubt it.
How far behind Betfair are **** and do you think it's possible for them to become a realistic competitor?
Ever heard of Alpha Centauri, the nearest star outside our solar system? That's how far behind they are. Betfair have kicked so many own goals in recent years and they still are a million miles away. They'd need the Chelsea/Man City style investment to have any chance of competing properly.
What do you believe are the chances of the American betting market opening up? What do you think would happen if it did?
News this week suggests California and New Jersey are closer than ever. But the American scene is so political, and it's all divided by state. Australia was very hard to crack a licence, but there was never an outright ban to overcome. America is a farce of a place regarding betting. I think it's in Arizona, you can't even bet on horse-racing online. Sports-betting is the big one, but outside of Nevada, it's all done illegally. Racing is where they'll start as that industry is dying a slow, painful death. Every local deal will have to provide a share of the profits to local racing, namely the 'horsemen's groups' who are the original 'Flat Earth' society in many states. Understanding the concept of lower margins = higher turnover is beyond them, yet you'd think with stores like WalMart everywhere it wouldn't be rocket science.
I'll go on record as saying the USA will never be completely open to Betfair, there will always be states who still think it's 1953 and that mythical being called God said gambling is evil (they should try asking their Irish ancestors!). And until there is a Federal Government with a proper majority and mandate for change, they won't be able to force the issue either. Australia has been a slow graft for Betfair, but it will be like an Olympic 100m final compared to the never-ending saga in the States.
If they were prepared to open the chequebook and effectively bribe the first few states into jumping on-board with huge sign-on fees, that would give them a kick-start. But a simple, seemingly no-brainer, issue such as being able to combine customer bets across state borders will hold them back. I would bet against them being able to link up with bets from the UK & the rest of the customer base in the short term - I hope I'm wrong. Without liquidity from a big audience of legal players, they will find it very tough to gain any traction. And until you have an attractive product with plenty of choice and liquidity, it's a lame duck....