Andrew Black: Everyone appreciates a tale of Man Perseveres to Triumph in the End.
Punters who follow racing closely all enjoy accounts of the homely colt Tulloch that went on to great heights on the turf, along with stories about jockeys, trainers and punters who overcame seemingly insurmountable obstacles to achieve the pinnacles of their professions.
The story of Betfair co-founder Andrew Black does not precisely fit this mold, but it does contain at least some of the elements. Black did not come from impoverished beginnings and most of his obstacles were of his own creation, but he eventually found his way after a period of wandering and arrived at the point of being able to claim the pinnacle of the online bookmaking peak.
Born 13 May 1963 in London, his early life would at least hint at some degree of comfort and status, if having a grandfather who was a Minister of the British Parliament could be said to convey certain privileges of status.
Young Andrew certainly showed a considerable degree of intelligence, especially in mathematics, but he lacked a firm vision of his future, a mild affliction that was not by any means unique to him.
He left Exeter University prior to graduating and embarked on a journey of self-discovery that included something of a jack-of-all-trades existence where he, in his words, “Earned enough money for beer.” It was encouraging that he had well-ordered priorities, at least.
He showed great moral fibre, however, by dedicating himself to his brother when that brother became terminally ill as the result of a brain infection.
Andrew cared for his brother for close to two years, later relating that, “I couldn’t really conceive of working then. He was my only brother and I just wanted to spend all the time I could with him.”
These and other experiences were to contribute to the complex equation that led to the concept for Betfair, even though to many, himself included, Black’s career choices were more similar to a grasshopper than to an ant.
To completely chronicle the path Black took would be more apt for a biography than a short essay, so suffice it to say that he had what could be described as eclectic work experiences. By way of summary, it would seem that his first serious job as a software coder exposed him to the stock market, which in turn led him to try his hand as a stock trader, a decidedly underfunded one.
He was to characterise that experience by saying, “When you’re at the sharp end of trading you’re trading very much short term and it is very, very similar to gambling. When I left (software writing) I didn’t have enough money to go trading. If you’re trading stocks and shares you need quite a bit of cash and I hadn’t got it.”
A foray into the realm of the professional gambler, along with his mathematics skills permitted him to taste prosperity, but he couldn’t rid himself of the notion of the potential of trading stocks. This led to a brief period where he used his software and math skills in the service of Her Majesty’s government, working in a clandestine function.
It was soon thereafter that he made the connection betwixt broker and bookmaker: the broker keeps a fee no matter if the traders’ trades are profitable or not, and the bookmaker knows that any punters he has to pay will be outweighed by the losing punts.
This concept was the seed of the germ of the idea that eventually resulted in the creation of one of the first online Internet based bookmakers, Betfair, that today lists revenue in excess of $700 million, and has received numerous awards for entrepreneurship and innovation.
To be sure, there was a period of time between concept and the realisation of that concept, and Black found it necessary to enlist the aid of Andrew Wray in bringing the idea of Betfair to fruition, but the two persevered and launched their web site in mid-2000. It showed initial promise, but it was not until a merger with competitor Flutter that all the elements were in place to produce the online bookmaking behemoth that exists today.
Betfair and Black have not enjoyed a particularly carefree path to this point, either. There have been allegations of usury where punters were being charged what some considered exorbitant fees for the privilege of wagering with Betfair. Many feel that the company has moved well away from its initial concept as a betting exchange and can no longer make the claim of being a neutral participant.
There have been the usual regulatory snafus to which all businesses, especially those that have proved successful at generating large amounts of revenue are subject, and disputes with advertising claims and licensing were sufficient to prompt Betfair to abandon England and set up headquarters in Gibraltar in 2011.
Major competitors such as the Gala Coral Group, Ladbrokes and William Hill, seeing their clients being cannibalised by Betfair, banded together to protest Betfair’s offering to let punters lay as well as back their punts.
Betfair has been vehement in its own defense, countering that unlike the high street brokers, Betfair will not accept anonymous cash bets.
There has also been more than one instance involving Betfair that seem to indicate some suspicious betting patterns.
These have involved horse racing, where Betfair refused to honour a huge liability that resulted from accepting a lay bet on a race at Leopardstown in December of 2011, claiming that the liability was the fault of a “technical glitch.” On an earlier occasion, in 2007, tennis bets were voided for suspicious betting patterns.
At least to this point in time, however, Betfair has not been caught at anything of the nature of dressing a man as a woman and backing him to beat one of the Williams sisters in a tennis match, but whenever large sums of money are involved there will always be those who seek an unfair advantage by any means available.