HANA Betfair Interview re Breeders Cup

[DeanT]

We have read quite a bit from racing itself on betfair and the BC. But very little from betfair, and from players who use betfair. What do they think? We asked and wrote about it. We hope you enjoy it.


Full interview link here. http://blog.horseplayersassociation.org/2009/10/betfair-breeders-cup-interview-with.html

Wednesday, October 28, 2009

Betfair & the Breeders Cup - Interview with Betfair's US Head, and UK Horseplayers (http://blog.horseplayersassociation.org/2009/10/betfair-breeders-cup-interview-with.html)

We recently contacted Betfair, and a couple of their customers about the concluded deal between the Breeders Cup and the UK betting giant. We wanted some perspective and details about the deal from them as well from their players.

[Horseplayersbet.com]

We have read quite a bit from racing itself on betfair and the BC. But very little from betfair, and from players who use betfair. What do they think? We asked and wrote about it. We hope you enjoy it.


Full interview link here. http://blog.horseplayersassociation.org/2009/10/betfair-breeders-cup-interview-with.html

Wednesday, October 28, 2009

Betfair & the Breeders Cup - Interview with Betfair's US Head, and UK Horseplayers (http://blog.horseplayersassociation.org/2009/10/betfair-breeders-cup-interview-with.html)

We recently contacted Betfair, and a couple of their customers about the concluded deal between the Breeders Cup and the UK betting giant. We wanted some perspective and details about the deal from them as well from their players.
What I'm curious about is if they find that having access to tote cannibalizes their own exchange.

Lets face it, if their customers start betting into the North American pools, they might start getting disillusioned with betting on horses eventually. They obviously won't last as long.

Betfair is pretty smart, and I guess this hasn't happened with the Australia tote to date, or is it too early to figure things out?

[CBedo]

Great article!

I know absolutely zilch about the UK horse racing industry. Have there been any objective metrics of pool and purse growth (absolutely and relative to the UK economy) since Betfair entered the UK market? If it's true that it has been adding to, as opposed to cannibalizing, the racing industry, that should be evidence to use with owners, breeders, and track operators here.

I'd also be interested to know what has happened to the "effective" takeout rate in the UK since Betfair has been a competitor.

[DeanT]

Hi Chris,

When tote was added in Tasmania so they could access pools handle went up 30%. I highly doubt that would happen for the BC, but who knows.

[CBedo]

Hi Chris,

When tote was added in Tasmania so they could access pools handle went up 30%. I highly doubt that would happen for the BC, but who knows.Thanks Dean.

I was actually thinking longer term than BC. I was thinking empirical evidence that if pool handle & monies available to tracks would actually increase, not decrease, it would be good hard evidence to use going forward to show owners, breeders, and tracks that exchange betting could help their business, not hurt.

That is also why I'm interested in what happens to pool takeout rates when Betfair enters a market. Does pool handle go up at the existing pricing structure, or does it go up as tracks lower takeouts to make their product more competitive? The analogy would be what has happened when Southwest Air has entered new markets in the U.S in the past. Pricing for other airlines goes down to as to compete with Southwest, but overall passenger counts have gone up somewhat.

[DeanT]

Hey Chris,

I dont know for sure. Cunnigham in the article said that handles were up a lot since Betfair started. As well in Australia, I think for harness racing, before they entered the market around $10M was sent in by players for purse money (eg the money bettors generated for racing) but the first year they were in there the number was $12M. Takeouts in parimutuel held steady... however as you know Aussie takeouts are capped at 16% by gvt decree.

I think it is going to take awhile to know for sure, but I think a lot of people (like some in the article) are giving racing a look whereas before they would not touch it with a ten foot pole betting into killer 22% takes. Sooner or later the cupboard runs dry.

D

[Seabiscuit@AR]

When Betfair first looked at covering Australian racing there was a huge campaign by TABs (tote betting operators) and others in the breeding/racing business against Betfair. Amongst the claims made was that Betfair operating on Aussie racing would wipe out most of the money from TAB turnover that gets handed to racing clubs for prizemoney etc

Betfair has been fully legal in Australia now for a few years (although Peter V'Landys of Racing NSW is still trying his best to get rid of them). The state of Western Australia did ban Betfair for awhile but luckily the smarties who drew up the Aussie constitution back in 1901 had the foresight to put in a provision that made this WA law unconstitutional and invalid

What effect has Betfair had on TAB tote turnover? I don't know exactly but the TABs are still doing business as usual. The world has not ended as the Betfair opponents claimed it would. The TABs have now taken to offering Fixed odds in competition with Betfair and the bookies (this is in addition to their tote operations)

Bottom line is that the increased competition has been good for the punter with better odds on offer from all outfits including the TABs

I imagine in the coming years the race clubs will get less money for prizemoney but this was going to happen anyway as it is happening in the USA who are running a tote only setup. Things would be worse for everyone in Australian racing if the off course betting landscape was still dominated by a TAB monopoly as it was back 10 years ago

[andymays]

It was reported on the Roger Stein show that Santa Anita only received 100k from the 25 million or so that was added to the pools from Betfair.

[DeanT]

It was reported on the Roger Stein show that Santa Anita only received 100k from the 25 million or so that was added to the pools from Betfair.
That sounds about right for exchange betting. That does not include any pool betting and it was $100,000 more revenue than they would have received without it. Getting 100k instead of $0K seems preferred.

We are used to taking a big number of a small pie here in North America and it is generally a crux. Worldwide betting which has been growing in many instances has an opposite view. They believe to grow the sport and increase wagering we need to act more like slots funding and less like a monopoly.

Handle(M)
Purses (M)
% to Purses
.

USA ---- $14,785.223 ---- $937M ----- 6.34%

Australia ---- $9,213.175 ---- $290M ---- 3.16%

Japan ---- $26,791.901 $719M 2.68%

GB ---- $20,395.572 ---- $202.2M ---- 0.99%

In the UK, betting is $6B more there and they have a fairly vibrant sport (with a small GDP compared to NA) because they give back to customers and charge them a fair fee. Here we take 600% more from bettors and we generate less and less handle, and it has become a cottage industry to go to gvt for handouts to support the sport. Those are 2007 numbers, so the US numbers are even more anemic this year.

High prices are a barrier to growth and it is something we fail to address. Soon we will have to realize that growing handle to $20B and taking 3% is preferred to the inevitable $9B handles that are coming, and taking 6%.

[andymays]

Is it the HANA position that we should get rid of the current system and embrace the Betfair model? If so how?

[DeanT]

Is it the HANA position that we should get rid of the current system and embrace the Betfair model? If so how?
We have not spoken too much about it, nor asked via the member survey as it is a long way away and will probably never happen.

But, offering players more choice and more competition it is a good thing for everyone, imo. In the UK I can bet the fave in a 15 horse field at 5-1 at William Hill, or 9-2 at another - both around 7% takeout. Or I can lay the chalk at betfair in the same race at 7-5 and try betting that way. Maybe I bet that horse at 9-2 at Wm Hill and now the horse is 3-1, so I lay him on betfair and lock in a profit? Or I can bet a tri in the pools, or a scoop 6 (both at over 20% take, but I think I have an edge), if I like some horizontal and verticals.

Choice - low prices for those who want it; exchanges for those who like trading, or laying horses or locking in profits, or hedging losses; and a secure parimutuel pool to attract that base of player, too. I think that would be a great goal.

[andymays]

We have not spoken too much about it, nor asked via the member survey as it is a long way away and will probably never happen.

But, offering players more choice and more competition it is a good thing for everyone, imo. In the UK I can bet the fave in a 15 horse field at 5-1 at William Hill, or 9-2 at another - both around 7% takeout. Or I can lay the chalk at betfair in the same race at 7-5 and try betting that way. Maybe I bet that horse at 9-2 at Wm Hill and now the horse is 3-1, so I lay him on betfair and lock in a profit? Or I can bet a tri in the pools, or a scoop 6 (both at over 20% take, but I think I have an edge), if I like some horizontal and verticals.

Choice - low prices for those who want it; exchanges for those who like trading, or laying horses or locking in profits, or hedging losses; and a secure parimutuel pool to attract that base of player, too. I think that would be a great goal.


The lower the price the better but it's not reality in the United States. Although it wasn't really that many years ago (about 30) I was in the basement at Agua Caliente in their 3rd world book waiting for 45 minutes for a result to come in. They wrote the betting slips and the copies of the slip by hand back then. Good thing they had a taco stand within walking distance. :)

I guess anything is possible.