Letter to Joint Scrutiny Committee, 2nd April 2004
BHB fully supports the concerns expressed by the Jockey Club regarding the full-page advertisement placed by Betfair in the national press on 31st March and 1st April 2004.
This advertisement gave the wrong and damaging impression to millions of readers, that horseracing was corrupt.
The purpose of the advertisement was to demonstrate that an individual who was certain that a horse was going to lose had exactly the same ability to make money from this information by betting with a conventional bookmaker on all the other runners in the race than if simply laying that one horse to lose on a betting exchange.
To compare laying on a betting exchange with the technical possibility which existed in theory before the advent of betting exchanges is disingenuous and reveals Betfair’s true intent: to maintain their current business model, untouched in any way, no matter the cost to horseracing’s reputation.
Most obviously, there is a straight contradiction between Betfair now claiming that the service that it offers is no different to that available elsewhere with the fact that its spectacular business growth has been based on a promotional campaign that exchanges offer a new dimension to betting. The ability of punters to lay horses to lose on an exchange has contributed to the substantial growth of Betfair. It has been reported that £250m per week, equivalent to a staggering £13bn per year, is matched on Betfair.
Betfair stated in evidence to the Joint Scrutiny Committee published on 24th March, a theme replicated in the recent advertisement, that “it is clear that it is a trivial exercise to “lay” a horse by backing others in the same race.” In practice, it is anything but.
While the incentive may be there, the ease with which this is possible is infinitely greater via betting exchanges. In reality it is anything but a trivial exercise to back every other horse to lose.
In the race which Betfair cited in its advertisement, it is fanciful to claim that any betting office operator would simply have accepted cash bets of £2,538.50, £2,432.70 and £1,326.90 on three of the four runners in the same race without those bets requiring prior authorisation from the bookmaker’s head office. Even if somehow these three bets had been taken, there would be little prospect of the bookmaker continuing to take bets of this type from the same individual. Conversely, no such authorisation or constraint is required or exists before a bet on a horse to lose is laid on an exchange.
In any event Betfair, in choosing a four-horse race takes no account of the actual average number of runners per race in British Racing of 11. To try to balance a book by betting on ten other horses in a race with the intention that a profit would be made whichever runner was successful is not only practically difficult to achieve for the reasons stated above but mathematically risky, because the odds of each horse fluctuate over time.
BHB has never stated, as Betfair implied in its 24th March evidence, that it was “only possible on a betting exchange” to benefit from a horse losing. What BHB has contended is that it is significantly easier to do so not only on a one-off occasion, but repeatedly by many more individuals over a longer period. Racing’s integrity is quite clearly much more likely to be at risk if a limitless number of people worldwide have the capacity to lay a horse to lose with ease on an exchange than if an individual has to attend a betting office and place cash bets on all the other runners in a race.
If Betfair is as concerned about Racing’s integrity as it claims and if it is merely concerned with running a business which thousands of recreational punters can enjoy without fear that they are being disadvantaged, then the company should have no difficulty in supporting, at least in principle, the proposals put forward by BHB and others.
BHB urges the Joint Scrutiny Committee to ensure that every possible step is taken to ensure that Racing’s integrity is not further undermined by the absence of legislation which betting exchanges themselves should support.