Yahoo and the 'New Era' of P2P

The significance of the recently announced partnership between Yahoo and Betfair is beginning to come to light.

"We are going after the bloke who bets once a year on the Grand National, not the guy who is betting every day or every week." - Mark Davies Betfair

The deal, announced yesterday, calls for Betfair to create a co-branded Internet betting exchange for Yahoo's British and Irish portal sites.

The initial exchange will go live at the end of January, while a specially designed site, "Yahoo Betting," is scheduled for launch in March.

Betfair's Mark Davies said the exchange to launch next week will be a Yahoo-branded white-label version of the Betfair system. The site will gain instant liquidity by tapping into Betfair's backend system.

The "Yahoo Betting" site will be much different, and Davies believes it could mark the beginning of a new era for exchange betting. The new site will also be tied into Betfair's backend system, but the front end will be unlike any other exchange Betfair has created.

In addition to offering punters on the Yahoo Betting site the decimal odds that have made Betfair famous, the site will also offer the fractional equivalent, creating a user-friendly exchange with the looks of a traditional sports book.

Davies said the concept of having a "traditional bookmaking offering using a betting exchange engine," has never been done, and he expects demand to be high.

"A traditional betting exchange can be intimidating at times. The platform attracts a lot of sophisticated punters," Davies said. "[The Yahoo] system will still give the value that punters are looking for, but it will be simple enough to attract the casual bettor."

To that end, Davies isn't worried about Betfair losing its established clientele to Yahoo Betting, and he pointed to what he considers Betfair's two main draws: First and foremost, he said, is the value the exchange offers bettors on their money. The second draw is the ability to back and lay your own odds on various events, along with the robustness of the system.

Most sophisticated punters are drawn to Betfair for the second reason, according to Davies, and are unlikely to go to a site that has been "stripped" down to appeal to the casual bettor.

"We are going after the bloke who bets once a year on the Grand National," he explained, "not the guy who is betting every day or every week."

Teaming up with Yahoo should "broaden the attraction" of exchange betting, Davies said, and expose the concept to a whole new audience of potential punters who otherwise wouldn't give it a second thought.

He also said that Betfair will focus on white-labeling and co-branding sites as it continues to look for new ways to expand its business.

Landing a partner like Yahoo, which operates some of the largest online sites in the world, will enable Betfair to get a good feel for whether the new system will be successful.

Neither company is commenting on the particulars of their agreement or how the new site will be controlled, but Davies acknowledged that Yahoo will carry out Betfair's policy of blocking U.S. bettors.

If the Yahoo Betting site is successful, Betfair will likely seek additional partnerships to create similar sites in new markets.