The sports betting business in the U.K. for years has been dominated by three prominent bookmakers: Ladbrokes, William Hill and Coral. The advent of the Internet, however, has caused the pot of gold to spill over into the hands of smaller players. Reaping the rewards made possible by new technology is Sportingbook.com Managing Director Mark Blandford, a U.K. bookmaker who crafted, with his marketing background and bookmaking experience, a successful business model for operating an online sportsbook.
Whether it was vision, simply being in the right place at the right time or a combination of both, Blandford's Internet business is thriving and expanding, and he no longer has to settle for being a small fish. He's thinking big, and big things are happening.
In July 1984, Blanford combined an ambition to have his own business with the love of sport and bought a retail betting shop in the U.K. Over the next five years, he built the business to five shops, and sold four of them to Arthur Prince Ltd., a national operator that was subsequently bought by Coral Bookmakers.
He reinvested the money made from the sale into the business by purchasing five more units, plus a self-contained telephone betting operation. The new operation, called Blandford Betting, also ran a couple of racecourse betting tracks at a couple of the major U.K. horseracing tracks. Then in 1996, Blandford discovered the Internet, instantly recognizing a tremendous potential for operating an online sports betting service. "I think it was my training in marketing that enabled me to realize at a fairly early stage, that here was a distribution channel-a new distribution channel-that would work for bookmaking, and huge implications to me as a retail-based bookmaker-a local bookmaker-because suddenly now I could market internationally," Blandford explained.
Blandford spent the next year researching the possibilities before selling Blandford Betting in December of '97 to the Tote (the U.K.'s government-run pari-mutuel betting agency). He then switched gears to concentrate fulltime on NetBet, his new Internet sports betting business. The company eventually evolved to become Sportingbet.com U.K. plc., a public company on the OFEX market.
IGN: Is Sportbet.com taking bets exclusively over the Internet now?
Mark Blandford: We do some telephone betting as well, but the telephone betting facilities we offer are for those customers who've opened accounts on the Internet. We are located in an island called Alderney in the British Channel Islands. It's a small island. The total population here is only two-and-a-half thousand. And if we were to concentrate on tele-betting as well, I'm quite certain, given the demand that we've experienced, that we'd basically create a monster that we couldn't control, in the sense that we wouldn't get sufficient labor to answer the phones. ... There is strong demand for our product. By working primarily online, we do have a situation where we're able to deal with quite high volume on a fairly low labor force in terms of the numbers employed. And tele-betting is a labor intensive business. I have to say that we are looking at branching into that in a more serious way, but that will involve the use of a call center elsewhere. That's one of the products we're working on at the moment.
IGN: And can you talk a little bit about the Internet service?
MB: We're found at www.sportingbet.com. There's quite a substantial website there which contains a lot of information both about the company, the products that we offer, as well as the live odds on a variety of sports. It's pretty much an international offering of sports. We cater to the North American market, we cater to the various European markets and a strong interest in certain southeast Asian markets as well on some of the European products, particularly soccer.
IGN:What does it take to operate an Internet business from the standpoint of the facility itself, the number of employees, the number of computers and so forth?
MB: As I said before, the call center is really sort of backup to the Internet operations, so we'd normally only have 10 or 12 operators at a time on a particular shift, although at peak times we can go up to a maximum of 30. There's a total number of people in the operation currently running around 50. That includes risk managers, accounting and staff and other functions, obviously, for the smooth operation of the company.
IGN: Do you maintain offices exclusively in Alderney or do you have offices in London as well?
MB: All operations are in Alderney. We are just about to set up, actually, a separate services company in London, which would be involved more with the running of the technical side. And by that I mean the software development. We have written our own software. We own our own source code to our software, and we have further development projects in hand at the moment. It would also enable us to continue to develop our marketing and public relations operations, which have been outsourced and will be brought within house, within that London office as well.
IGN: And when you say further developments, are you going to do some sort of revamp or are you talking about improvements here and there?
MB: Revamps will be going on on an ongoing basis. Currently, the team are working on two separate projects. They're working on an international horseracing site, which would run under a slightly, sort of, separate brand. Instead of Sportingbet.com, that'll run under sportinbetracing.com. And they're also working on a project for the Japanese market. We've announced a deal where we're working with a Japanese partner, and Sportingbet Japan is in creation as well. Both of those sites are expected to launch early next year.
IGN: So you'll have new sites operating within the next couple of months then?
MB: Within the next couple of months would be about right. We always hesitate to give an exact date, because as anyone who's been involved in software development will know, until you actually get well down the road, as for the testing, it's only then you could start to think about specific dates. But there are some ballpark dates out there, which are early February.
IGN: Is the horseracing site going to offer pari-mutuel betting?
MB: The site would be an international horseracing site. And therefore we're looking at offering horseracing from several different jurisdictions. In a couple of instances, we are involved in talks where we could be simulcasting the money back into the track pools, but in other instances we will be acting as the bookmaker and we'll be paying off at our own odds and managing the risk in a conventional bookmaking sense.
IGN:Will it be difficult integrating multiple pools into your software system?
MB: Yes, the situation, jurisdiction to jurisdiction, does vary enormously. The challenge is that we've got to meet the needs of each of the jurisdiction that we're interested in. And to ensure that the operation, both in terms of how its offered to the consumer, is offered correctly. We're offering, for instance, racing from Hong Kong as a Chinese punter would expect to see it; that in itself brings challenges to us in terms of copyright, etc. and legal issues as well.
IGN: What jurisdictions are you considering for pari-mutuel wagering?
MB: The main jurisdictions that we're looking at are places such as Australia, Hong Kong, certain European markets and North America.
IGN: Do you find there's a difference between the betting shop clientele and the Internet bettors?
MB: Yes, there's a difference in the clientele. Our clientele online is slightly younger and slightly a higher social economic demographic breakdown. They bet slightly different online. For instance, we're seeing a little bit of the situation where, for instance, to give an English example, the English Premiership soccer matches tend to kick off around 3 p.m. on a Saturday afternoon, The betting shop and tele-betting market would see its peak demand the hour before kickoff time. We're seeing another peek of demand, and that's on a Friday afternoon, the last hour before people leave work, four to five o'clock. I think it's interesting because it's telling us that there are people who are betting with us who are accessing the Net at work. We're also then seeing a second peek, obviously, based close to game time, which is the highest turnover period. So, the little nuances like that in working online which are different to conventional. The average stake per bet. There are risk management issues into what that average could be, but it's certainly higher online than it would be in a conventional U.K. retail betting shop.
IGN: What are the biggest sports for your clientele?
MB: The big product areas for us at the moment: We're organized internally into what we call European and American sports and two separate desks of risk managers. On the European side, horseracing and soccer are the two biggest sports. On the American side, the biggest sport is currently NFL, but hoops is not too far behind.
IGN: Are the majority of your bettors in the U.S?
MB: Within our own company, we have more customers based out of the U.K. than we have American. But bare in mind, we only launched our North American Sports on the third of August of this year. The North American numbers are catching up very quickly. It's our fastest growing sector, quite frankly.
IGN: Not a surprise though...
MB: MB: Not a surprise. Look at the number of the total online universe, and something like 50 percent of them are North American based. It's a country which has not traditionally been well severed in terms of good, credible bookmaking products and suppliers. There's certainly a very strong demand for the product, but there's also a demand for it to be supplied by credible operators.
IGN: Have you perceived, though, that the European market is catching up?
MB: The North American Market has gotten further ahead on Internet penetration, then as that starts to get toward maturity, there's more capacity for the European markets to catch up. And the issue then becomes one of telecoms costs in individual countries. In certain countries--I think perhaps Italy and Spain, because of telecom costs--Internet penetration levels are not increasing fast, whereas in countries such as the U.K., Germany and much of Scandinavia have relatively modest telecoms costs and much higher penetration levels and faster rate of increase Internet penetration in this market. Maybe when their telecom position alters, in terms of the cost of local calls etc., I suspect a market like that will see quite an increase in demand in due course.