Exchanges Unite to Form Assocation

9 September 2004

In the wake of one of the biggest scandals to ever hit the betting exchange industry, the three leading P2P sites joined forces in the creation of a new self-regulating trade association.

Betfair, the industry's leader with nearly 90 percent market share, was joined by Betdaq and Sporting Options in London on Thursday to announce the formation of the Betting Exchange Trade Association.

The group's main focus will be to curb criticism that exchanges are a safe haven for race fixers. Those critics were handed more ammunition last week after London police made 16 arrests as part of an investigation into race fixing.

To help kickoff the launch of BETA the exchanges joined forces in signing a voluntary code of conduct designed to boost confidence in their operations.

Under the new code exchanges pledged to make available to the Jockey Club, Football Association and other regulators full details about who is placing what bets. They must also alert regulators to any suspicious betting patterns.

As they require members to give full personal and banking details, the exchanges claim to have a much more transparent system than traditional bookmakers, who take most of their bets in cash.

Exchanges appeal to punters because they typically offer more competitive odds and since users are wagering with each other, they are betting on horses or teams to lose. By laying a horse or team punters with inside information – trainers, jockeys, owners, ect. – could ensure their "losing" bet becomes a winner, the opponents argue.

Lord Andrew McIntosh, Minister for Media and Heritage at the Department for Culture, Media and Sport was on hand Thursday to help launch BETA and Betfair's Andrew Silverman said BETA is looking forward to working with the government in the coming years as it modifies UK gambling law.

"BETA supports the government's plans for the modernization of our gambling laws," he said. "We believe that the Gambling Bill will deliver reforms that underpin growth, while ensuring that the betting and gaming industry is accountable to a new regulatory authority."

Representatives from the three exchanges said BETA would have a four-prong approach.

BETA will:

* Provide a forum for communication between the exchanges and help to drive best practice in the fastest growing sector of the UK's gambling industry

* Represent the betting exchanges in their discussions with Government and regulatory authorities

* Brief Members of Parliament and peers throughout the course of the Gambling Bill

* Work in partnership with the Gaming Board and the new Gambling Commission

Silverman said the formation of BETA was a sign of how united the three companies are towards the cause.

"The fact that the three exchanges have agreed on a voluntary code of practice with the DCMS, in advance of legislation, illustrates BETA's commitment to integrity, fairness to the consumer and protection for the vulnerable – the three pillars of the Gambling Bill," he said.

Rob Hartnett of BETDAQ said the scandal last week, which included the arrest of leading trainers and jockeys, was proof that BETA needed to be established.

"The exchange sector has grown very big in a short space of time," he said "Events in the last week have shown that the debate on our growth and popularity is still being colored by misconception and at times deliberate misrepresentation."

Despite the enormous growth that exchanges have experienced over the last three years, Hartnett said there are still many outside of the betting industry that don't understand the exchange concept.

"We recognize that as a newcomer we have a duty to explain our model, and to inform the public, the legislature and the many bodies with whom we have a relationship, that we are an evolution of the old bookmaking model, born out of, and with our success determined by a fair, responsible, regulated, free market," he said. "The creation of BETA to represent our interests is a sign of our maturity and determination to be pro-active in the debate that will continue to rage as the industry changes over the next few years."

Click here to read the full copy of BETA's Code of Practice for Exchange Operators.

Betfair Under Fire Down Under

The launch of BETA came the same week that Betfair's Australian manager was involved in a heated debate on Melbourne's Sport 927 radio station. Mark Davies came under fire Wednesday from Racing Victoria's chief executive Robert Nason.

The heated debate came after Australian Racing Board (ARB) chairman Andrew Ramsden also criticized Betfair for some of its business practices.

Betfair asked the ARB to sign a Memorandum of Understanding after Victorian and NSW authorities wrote to Betfair requesting the presentation of transaction records involving locally-licensed trainers, jockeys, bookmakers, riders' agents and stable hands.

Davies said his firm couldn't give "name information" under Australian privacy laws. The same laws that prevented TAB Limited from providing the same information, if it was requested of them, Davies said.

The refusal, along with the request to sign the Memorandum of Understanding combined to infuriate Ramsden.

"Betfair's refusal shows us their true colors," he said. "Despite what they tell the media, it is clear Betfair is not prepared to operate within the boundaries of Australian racing authorities."

He went on to say the Memorandum of Understanding was "complete nonsense."

"This is either a device tricked up to give them some semblance of legitimacy, or worse, it is a means of watering down access to information by our professional investigators," he said. "Either way it is completely unnecessary under Australian law. This is Betfair's own requirement, not Australian privacy law. Betfair's so-called offers of assistance are next to useless. If Betfair is this uncooperative when they are on their best behavior trying to get a license, how much worse would their attitude be if we allowed them to become established here."

Betfair has been taking bets from Australian users for nearly two years now, but does so through its hub in London. The company is negotiating with jurisdictions in hopes of getting a license.

Davies disputed Ramsden claims saying that Australian privacy law forbid them from giving out the names of their clients to third parties.

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