Betting Exchanges: A UK Perspective

18 September 2002

Following the posting of a spirited article by Tim Ryan on the effects of betting exchanges on the racing and sports betting industries, IGN invited various individuals close to the situation to respond. Following is a perspective from Warwick Bartlett, chairman of the Confederation of British Bookmakers.

Here we have the bet exchanges basically driving a coach and horses through the Betting Gaming & Lotteries Act

Tim Ryan's article on betting exchanges has certainly helped the debate along and we are grateful for it. There are a couple of issues, however, that I think are equally important as the points he makes. First, of all U.K. bookmakers have not underestimated the sports funding problems that low margins offered by Bet Exchanges create. Only last week I wrote to the chairman of the Horserace Betting Levy Board outlining a shortfall of £6 million for the current year, which is entirely due to the betting exchanges. The figures were confirmed at a meeting with the BHB.

I think Tim's assertion that the problem is one of atomic bomb-type detonation is perhaps an exaggeration. All of the market research conducted by U.K. bookmakers reveals that convenience is still the biggest factor in attracting business to their services. So, the location of betting shops is paramount as is an Internet service that is fast. Price is important, but not to as many people as you would think.

The comparisons with online travel are useful, but if anything they confirm that while they serve a segment in the market, traditional shops continue to take the lion's share of the market and will continue to do so. eBay is the most successful online auction company, yet Sotheby's and Christies continue to do well.

The same I think is true of the U.K. bookmaking industry. Shops will continue to do well; indeed, their market value has just reached an all time high. They will continue to do so, as punters like to socialize with their friends and exchange views.

The shortfall in funding is an issue--one that the BHB must address in the future if U.K. horse racing is to maintain itself as a major player.

What concerns me most is the threat to the integrity of the sport. It is easier and more profitable (and without risk) to lay a horse that you know is not going to win than to back it to win when you think it might. Some of the betting patterns have recently suggested that those connected to certain stables are laying their horses when they are either not fit or not trying.

Well known TV pundit and Channel 4 presenter Simon Holt in Raceform picked up the point recently.

He said, "Unfortunately, it does not take the wildest imagination to consider that there might be more money to be made by a horse losing than by winning." He then went on to point out something of greater concern. He said, "One professional player I spoke to this week is becoming increasingly disenchanted to the point that he is now steering clear of moderate races with small fields and a strong favourite because he doesn't trust them. In my opinion he is one of the brightest judges in the game”

That is the view of professional punters. How long will it be before the wider public gets the same message?

The customer has more choice than ever before on where he can spend his leisure dollars. He does not have to bet, but when he does, it is becoming noticeable that soccer and sports betting in general is becoming more popular with the perception that the integrity of the game is sound.

Tim Ryan is right to draw attention to the antiquated way in which off-course betting shops use prices from the racecourse to settle their bets. While he says we are either lazy or inefficient, I am afraid to disappoint you, we are neither! A better system of collating the SP's, following research by Arthur Anderson, is currently under review, but I have to say bookmakers are approaching the project with fear and trepidation. Every time they consider modernizing the system, the racing press go ballistic. The last time questions were asked in the House of Commons; you would think members of Parliament would have better things to talk about.

I note from Tim's article that Australian regulators have not allowed bet exchanges, but I question how realistic such a banning is. If I were Betfair, I would open an Australian site either in the U.K. or off-shore straight away. All regulators should now know that the world has become borderless because of the Net. Prohibition is not the answer.

U.K. bookmakers acknowledge that bet exchanges are here to stay. We have never suggested that they should be banned nor never will. They should be regulated in the same way as bookmakers. It is quite wrong for a person who may have a criminal record to go onto the exchanges and lay horses that he knows are not going to win through foul means. I for one am not at all relaxed about the so-called audit trail that throws up irregularity of this kind. The U.K .Jockey Club has not brought about one successful prosecution for wrongdoing. Are we saying that because of the exchanges they will now have more success? I don't think so!

Sir Allen Budd, in his review of the racing industry, was concerned by what he termed "insider trading." He was obviously making comparison with traders on the stock market. Yet, here we have the bet exchanges basically driving a coach and horses through the Betting Gaming & Lotteries Act. In the meantime my members can't bet on the lottery, have to open and close at certain hours and have to stand in a court and be investigated by the police before being given a permit to bet. By comparison, virtually anyone can take bets on the exchanges. If it weren't serious it would be laughable.