Andrew Black Betfair | Britain
In 1999, Briton Andrew Black was making a decent enough living as a professional gambler, concentrating mainly on playing bridge and betting on horses. But he was dissatisfied with traditional bookmakers. By the time they build in their margins, says Black, 41, "you've got to be 20% smarter to make money. And if [you] make a mistake, [you] can't trade out of it. I thought, There's got to be a better way."
So he made a better way by co-founding London-based Betfair, the peer-to-peer cybercasino that's done for gambling what eBay did for garage sales. On Betfair, there's no "house": the site's 250,000 registered customers simply post their bets and wait for someone to take them on. Betfair charges a commission on each winning bet; the more you bet, the lower the commission. When the site launched in 2000 with $1.8 million raised from Black's and co-founder Ed Wray's network of contacts, it was taking less than $90,000 a week in bets; now that figure stands in excess of $90 million a week in matched bets, about 13% of the estimated $35 billion global annual online sports-betting industry. From April 2002 to April 2003, Betfair's pretax profits rose from $1.9 million to $15.5 million. The site has registered users in 85 countries: 70% of their bets are placed on horse races. And if a company can judge its success by the number of people it's upsetting, then Betfair is thriving. The U.K.'s traditional bookmakers are still hugely profitable, but they're grumbling because Betfair permits users to "lay" bets (to back a horse, competitor or team to lose rather than win). Some charge the practice encourages corruption. Says Graham Sharpe, spokesman for old-style bookies William Hill, "If you have a bet on an exchange, you don't know who it's with; if [the person] is offering extravagant odds, you don't know why."
Black counters that his site actually makes strange betting patterns easier to identify. He points out that Betfair has signed agreements with, among others, the Jockey Club in Britain and the English Football Association, promising to inform them of any suspicious wagers. And last month the British government said it didn't think it was necessary to license or regulate those who lay bets to the chagrin of traditional bookmakers, which had been pushing for such a move.
A big man, Black ambles around Betfair's offices in shorts and a fleece. In his spare time, Black still likes to gamble and the next wager he'll need to make is when to take Betfair public, something Black insists won't happen for at least 18 months. "We've got to knock the company into shape," he says. "We want to get the timing right." It's the biggest bet of all, and not something even a seasoned gambler would take lightly. — By Jennie James/London
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