Monday, 22 April 2013

Betfair Stuff ,,

BF apparently tuned down a bid, of £8.80 a share, valuing it at £900m .. (it listed at £13)

Maybe, ongoing discussions will increase price.

This is a post, from the Betfair forum, re Betfair revenues : (frog2)

The Premium Charge is a legacy of Betfair's former management team and hopefully the new CEO has an open mind to it.

Following the 1st charge UK pre-play racing volume, which has been growing nicely, started to fall. This is a key market in terms of real commission. Even now racing makes up over 40% of exchange revenues.

Following the 2nd premium charge both revenues and amounts matched on everything bar in play sports (where millions are traded for very little revenue) have gone from growing year on year to flat lining. At the same time group revenue growth has stopped. This is after growth in the sportsbook and mobile channels.

Its not difficult to see why this is happening. Betfair has a monopoly in some markets. Where people have to use them e.g. to trade on a test match cricket or a tennis match inplay they over no other option. They either play here or stop totally. Where people can go elsewhere e.g. pre-race horses or football they will go elsewhere. The charge is simply too high.

The problem is where Betfair has a monopoly it is making a low margin (trading) and where it does not (when people want an actual bet) BF makes a higher margin. Betfair is losing its higher margin business.

An outright punter winning just over 2.5% on stakes will pay the 40% premium charge if he stakes enough. This is a very marginal system yet he still falls into the threshold.

Even if Betfair acted now they have lost so much good will. I used to do 100% of my betting on here. I have never even paid the charge but slowly I am moving my betting elsewhere. I need to keep my generate commission rate high so I avoid high margin bets on here. I use it for lower margin bets and trading that I could not do elsewhere.

I hope Betfair see sense. In 2008 the exchange was not broken. It was still growing both in revenues and amounts matched across all markets. They refused to settle for this growth and are now paying the price and must scrap the charge before its too late and the decline becomes terminal. Otherwise they will just be left with a second rate sportsbook and casino.

average daily matched all horseracing and non inplay sports year to date    

Apr-07    £33,345,799
Apr-08    £45,879,142
Apr-09    £51,573,807 (1st PC 11/08)
Apr-10    £55,740,339
Apr-11    £61,204,673 
Apr-12    £60,555,818 (2nd PC 06/11)
Oct-12    £61,014,819*

average daily group revenue year to date

Apr-03    £87,671

Apr-04    £186,301
Apr-05    £293,151
Apr-06    £400,000
Apr-07    £509,589
Apr-08    £668,493
Apr-09    £824,658  (1st PC 11/08)
Apr-10    £934,247
Apr-11    £1,076,712
Apr-12    £1,065,753  (2nd PC 06/11)
Oct-12    £1,090,217*

*averages half year


Revenue is basically flat, which, can easily be associated with a number of factors, including recession/PC/loss of markets in restricted counties.

Betfair is now, simply, a mid-tier betting company, drifting .. maybe they are happy.

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