When it comes to things that have changed betting, there are few companies that can boast the same impact that Betfair can. By putting the power of betting into the hands of the punter, Andrew Black and Edward Wray did something that forced bookies to react if they wanted to keep their customers.
That alone was revolutionary, with Betfair also being one of the first major companies to allow customers to bet on the likes of entertainment shows and political outcomes. The peer-to-peer betting technique was something that had never been seen before and was ground-breaking because of that.
The different way of working helped the company to stand out from the crowd, though it wasn’t the only exchange site at the time and isn’t the only exchange site now. It isn’t the easiest thing to get your head around, working out how to back something or lay something else, which made it somewhat impenetrable to some. As a result, the company as the decision to launch a traditional sportsbook in 2012, allowing Betfair to cash in not just on its exchange but also as a bookmaker, helping it to become one of the biggest betting site in the world.
Betfair merged with Paddy Power in 2016 and rebranded as Flutter Entertainment before taking over the Stars Group that included brands like Sky Bet and Poker Stars. They are now the part of one of the biggest betting companies in the world but Betfair remains unique thanks to its exchange product, which is the biggest sports betting exchange in the world matching billions of bets each year. Here we look at how it all started for Betfair.
Born in the Carshalton area of London on the 13th of May in 1963, Black was the son of a property developer. His grandfather was Sir Cyril Black, the Tory MP for Wimbledon who, somewhat ironically, once campaigned against gambling. Despite being from a relatively well-off family, Black’s story isn’t one of getting money from his parents and immediately being successful. He had numerous different jobs when he was younger, stocking shelves at one point and working in other entry level positions at other times. He also looked after his brother, who had a brain tumour, for two years.
At the age of 26, after his brother had died, Black began working as a software engineer. Having already enjoyed gambling whilst a student, working in software furthered his interest in both the world of gambling and the stock market. He was able to develop a computer program for betting on horse racing and other sports, which provided him with a regular income. Having experienced life as a trader and in the world of IT, Black came up with an idea for a sports betting platform that would essentially look to combine those two things.
In the wake of the passing of his father, Black took his burgeoning idea to several big betting companies, being ignored by William Hill but getting a meeting with Ladbrokes and the Racing Post. In his time with the Racing Post, Black declared, “Exchange betting! One day someone is going to do this.” No further progress was made, however, and it seemed as if the idea was dead in the water. It was when attending a party of his friend Jeremy Wray, though, that things began to shift. Wray’s younger brother Edward was there, keen to hear all about Black’s plan.
Wray was at JP Morgan at the time, meaning that he was used to hearing pitches and was sceptical about Black’s idea. As he heard more, however, he began to come around to the idea and was fully on board by the end of Black’s pitch. The pair spent the next few months shoring up their ideas, then began to seek the capital that would be needed in order to get the new form of betting off the ground. A company called Flutter had come up with the same business model and secured funding to help them launch, meaning that getting others on board wasn’t easy.
At this point, it is worth taking a moment to talk about Edward Wray. Unlike Black, there isn’t a huge amount known about Wray, who is much more reclusive and private. Whilst Black was kicked off his degree at Exeter University after spending much of his time in the bookmakers, Wray was a successful student and graduated the University of Oxford with a degree in Engineering, Economics and Management. He began work with JP Morgan not long after graduating, working his way up to become a Vice President with the company.
After speaking with Black at his brother’s party, Wray was fully on board with the new idea for gambling. Because the entire purpose, at least in the mind of Andrew Black, was to make things fairer for bettors, the name Betfair came quite easily to the pair.
Though they initially struggled to raise the capital, they eventually raised around £1 million, which was enough to give them the opportunity to launch in a small way. The problem was, they had competition in the form of companies such as Betswap, Betmart and the aforementioned Flutter, so they needed to make sure that they were the best.
Clever Marketing Helps The Launch
Andrew Black’s initial desire to get his company off the ground meant that he would speak to anyone and everyone about his idea. This gave other companies a bit of a head-start, costing some of the venture capital that would have helped with the launch. Rather than rush the launch of Betfair when they saw other companies getting their product on the market, Black and Wray turned to JoJo Primrose, a former Bloomsburg and News International employee, to help them get their marketing right for the eventual launch.
The plan was for Betfair to go live in June of 2000, so Primrose had about 12 weeks to put her plan into action. Initially pitching the company as the New York Stock Exchange of betting and the eBay of betting, Primrose needed to think outside the box in order to make a splash. She went to the marketing firm Circus with a budget of £120,000, working when they to come up with an idea that would make people sit up and take notice. So it was that the ‘Death Of The Bookmaker’ campaign was created, with Black and Wray appearing as gangsters with a New Orleans style funeral taking a coffin through London.
It immediately caught the attention of the newspapers, who gave the new company big write-ups. This included one in the Sunday Times, whilst Black was contacted by a company that he’d dealt with right at the launch of Betfair: the Racing Post. The industry paper wanted to work with Betfair, having turned the idea down years before and typically being very picky about who it worked with. It was a boon for the newly launched company, helping launch Black and Wray into a new position in the world of online betting.
It wasn’t just the clever marketing that helped Betfair in its early years. Bookmakers made the crucial mistake of constantly targeting the newly formed company, putting forward suggestions that it would be at risk of money laundering and match-fixing. The more that they talked about it publicly, the more that punters began to realise that Betfair was a thing and therefore went to see what all the fuss was about.
The media spoke more and more of betting exchanges and the pros and cons of their existence, which went into overdrive when Betfair bought out Flutter in 2002. That original Flutter name was reborn following the merger 20 years later with Paddy Power.
When Black and Wray were announced as the Ernst and Young Entrepreneurs of the Year in October, any doubts over the success of the company were over. They were established as one of the most successful companies in the world of sports betting. The fact that they refused to accept customers in the United States of America, putting a geoblock in place in 2004, meant that the Unlawful Internet Gambling Enforcement Act of 2006 didn’t affect their business in the same way that it caused trouble for other gambling companies around the world.
Launching New Products
Whilst the exchange will always be the core of Betfair’s business model, the company has dipped its toes other gambling markets over the years. In May of 2004, for example, poker was added to the list of gaming options on the site.
It joined the Cryptologic Network, which already boasted big names like Ritz Club London, Interpoker and William Hill, then in 2005 Betfair bought Pokerchamps, giving it a standalone poker room. Changes came in the years that followed, with Betfair struggling to find a way of offering poker that pleased all customers at the same time.
One of the most successful things launched by Betfair was the Zero Lounge, which allowed customers to play each other with zero commission being taken on them. Nowadays, the site promises live casino play, poker, bingo, virtual sports and even a traditional sportsbook, alongside the exchange that remains its biggest business.
Though some customers continue to struggle with the idea of laying a bet and backing a bet, bookmakers themselves turn to Betfair’s exchange in order to get a sense of what the real odds are in any given market, given that it is people betting against one another to win.