Online betting exchange Betfair to launch as a bookmaker

Online betting exchange Betfair is to launch itself as a bookmaker in a move designed to prevent customers deserting to rivals such as William Hill and Ladbrokes.

Interim chief executive Stephen Morana said the company would shortly be introducing its own fixed-odds sports book, which means it will start taking bets of its own rather than just acting as a marketplace where customers offer bets to each other.

‘Our sports exchange always has been – and always will be – Betfair’s core product,’ said Morana. ‘It has revolutionised the industry and we have a loyal customer base, but we also recognise that there are certain bets at certain times that the exchange, by its nature, cannot offer.

‘Some of our customers are going to traditional bookies for a portion of their betting and we hope to address this with the introduction of an integrated risk product that will complement the exchange, not compete with it.’

Betting exchanges work by having customers offering odds to each other and accepting each other’s bets. But customers who want to get early prices on a race or bet while a match or race is under way might find it hard to find someone to take their bet.

Now Betfair will be taking on the risk itself. Betfair has yet to decide on a name for the bookmaking business.

The company will be hoping that the move changes its fortunes as it has been going through tough times. It was seen as one of the worst flotations in recent years, listing at £13 a share in October 2010, but falling steadily ever since to close at 871p on Friday.

Chief executive David Yu and chairman Ed Wray have both since left the company, which earlier this year was forced to cancel millions of pounds in bets due to a ‘technical failure’.

Some analysts are positive about Betfair’s move into bookmaking. Ivor Jones of investment bankers Numis said that while the result of putting a betting exchange and a fixed-odds sports book together was ‘uncertain’, he believed it had ‘the potential to increase profits by over 50 per cent’.

Betfair currently has four million registered users, of whom 900,000 gamble regularly. In the year to last April, it made pre-tax profits of £26.6million on turnover of £368.6million.