The End of Betfair?

shaggykev

Betfair has seen it's share price plummet since it was floated and I never thought the business model was sustainable in a deep recession and their failure to break into new juristicions has seen liquity ebb away to the stage where punters can no longer do all their business on betfair for all markets anymore.

Then the backlash because of premium charges and even last weeks jackpot failure to process all bets but now the news that they had 3.1 million customers details hacked and hide it from customers for 19 months will probably be the final straw:

From racing post:

Betfair customers not told about cyber-attack


By Graham Green 7:53PM 30 SEP 2011
BETFAIR was on Friday forced to admit it had not informed its customers after the details of millions of credit cards were stolen in a major cyber-attack 19 months ago.

The lack of disclosure was condemned as "a scandal" by the civil liberties and privacy campaign group Big Brother Watch, which called for those responsible to resign.

According to the Daily Telegraph, criminals, possibly originating in Cambodia, gained access to more than 3.1 million account names with encrypted security questions, 2.9 million usernames, and nearly 90,000 account usernames with bank account data in March last year.

A report commissioned into the crime, seen by the Telegraph, was published on September 27 last year, but no details of the theft were contained in the prospectus ahead of Betfair's £13-a-share listing on the London Stock Exchange the followingmonth.

Instead Betfair, says the paper, mentioned only "a limited number of security breaches in the past", adding they had "not had a significant effect on Betfair's reputation, operations, financial performance and prospects".

The revelations are the latest damaging publicity for the betting exchange following the ongoing investigation into why a number of successful Jackpot bets were not placed in the pool last Friday, and the decision to bar journalists from the company's inaugural shareholders' meeting in London a fortnight ago.

Betfair says it did not notify its customers of the theft as its security measures made the data unusable for fraudulent activity, and it recovered the data intact.

The Telegraph reported that the first Betfair knew of the theft was when a "production log server" crashed at its Malta data centre last May, more than two months after the initial breach.

This led to the discovery that "at least nine servers [had] been compromised in the UK and two in Malta".

Betfair was forced to inform the UK's Serious Organised Crime Agency, the Australian Federal Police, and German law enforcement agencies. It also notified the Gambling Commission and the Maltese Lotteries and Gaming Authority, along with the Royal Bank of Scotland, the lender responsible for accepting credit and debit card payments made via Betfair.

A Betfair spokesman said on Friday: "Eighteen months ago we were subjected to an attempted data theft. Because of our security measures the data was unusable for fraudulent activity and we were able to recover the data intact.

"At the time, we contacted all the relevant authorities and worked closely with them regarding this matter and it was established that there was no risk to customers.

"We have subsequently implemented all of the recommendations from the independent reports we commissioned, and have done everything we can to minimise the risk of this happening again."

Nick Pickles, director of Big Brother Watch, said yesterday: "The news that Betfair lost millions of customers' credit card details in a cyber-attack - and then did not notify customers - is nothing short of a scandal.

"For the personal details of millions of customers to be lost is one thing - but then to fail to inform those affected is outrageous.

"Whoever made the decision to sacrifice the financial security of millions of people forthe sake of Betfair's reputation should resign immediately."

Colonel Sanders

http://www.casinomeister.com/forums/casino-complaints-bonus-issues/41102-betfair-bonus-fiasco.html

http://www.betangel.com/blog_wp/2011/08/15/lmax-loses-13-2m-in-first-year/

http://www.guardian.co.uk/business/2011/sep/22/bounced-from-betfairs-annual-meeting

http://www.youtube.com/watch?feature=player_embedded&v=lIFThu-kX5c&noredirect=1

http://m.guardian.co.uk/business/2011/jul/25/betfair-bosses-huge-pay-increases?cat=business&type=article

AstonMartin

Betfair will be around for a long time. When we start to come out of the recession liquidity will jump greatly and people this will be a distant memory. Lots of scandals with online gambling companies and almost all are still in business.

J-Fit

I can't see Betfair ever disappearing but I do see their monopoly being challenged by rival exchanges due to all the bad publicity and premium charge commission rates. Betdaq look best placed to push them but are very much dragging their heals in doing so.

AstonMartin

Premium charges apply to a tiny portion of customers and they are the ones who make a withdraw profits so betfair wont miss them. Only realastic alternative is betdaq

beeintheknow

AstonMartin wrote: »

Premium charges apply to a tiny portion of customers and they are the ones who make a withdraw profits so betfair wont miss them. Only realastic alternative is betdaq

What?

shaggykev

AstonMartin wrote: »

Premium charges apply to a tiny portion of customers and they are the ones who make a withdraw profits so betfair wont miss them. Only realastic alternative is betdaq

You're right but the introduction if premium charges was a PR own goal from the start as it implied if you were successful enough to make it pay, Betfair would charge 20-60% of your winnings, it's all about perceptions and to the average punter, all they hear is "once I start winning, Betfair are going to want even more money from me"

beeintheknow

shaggykev wrote: »

You're right but the introduction if premium charges was a PR own goal from the start as it implied if you were successful enough to make it pay, Betfair would charge 20-60% of your winnings, it's all about perceptions and to the average punter, all they hear is "once I start winning, Betfair are going to want even more money from me"

How is he right? From my reading of his post he is implying that Betfair would not miss those customers who pay the premium charge if they stopped playing.

You are both as clueless as each other.

Get back to work shaggykev. The tea won't make itself.

shaggykev

beeintheknow wrote: »

shaggykev wrote: »

Get back to work shaggykev. The tea won't make itself.

Any luck pawning your wedding ring?

kippy

AstonMartin wrote: »

Premium charges apply to a tiny portion of customers and they are the ones who make a withdraw profits so betfair wont miss them. Only realastic alternative is betdaq

Why wont betfair miss them? Betfair are not like a traditional "bookies" so whether a person makes a profit or not doesnt hit betfairs bottom line.
Betfair will be around for a long time, scandals or not.

CiaranC

kippy wrote: »

Why wont betfair miss them? Betfair are not like a traditional "bookies" so whether a person makes a profit or not doesnt hit betfairs bottom line.
Betfair will be around for a long time, scandals or not.

They provide serious liquidity in the market, no?

premierstone

CiaranC wrote: »

They provide serious liquidity in the market, no?

Exactly, there would be nobody to match anything if all the bighitters/pros jumped ship, someone doesnt fully grasp how exactly a betting exchange works.

J-Fit

AstonMartin wrote: »

Premium charges apply to a tiny portion of customers and they are the ones who make a withdraw profits so betfair wont miss them. Only realastic alternative is betdaq

I'd have to respectfully disagree with you. Their profits = Betfair's daily liquidity. That has clearly been hit and Betdaq's has increased hugely on tennis and racing, so it's not the economy affecting liquidity (even though it is to an extent). I just need soccer to bloody well follow on Daq!

AstonMartin

Ok, bit of a lesson.

someone who pays the premium charge makes a good profit. They withdraw some or all of this profit and it is no longer used to bet and generate commission.

the people who dont pay the premium charge by and large are breakeven or slightly losing punters. They continue to use their balance to place bets and all these bets incur commission charges each time. Put on enough bets and pay 5% of your winnings each time and you help to funnel the money to betfair. They dont withdraw so eventually the majority of the money ends up in betfairs account through lots of small commission payments. They also keep lodging new money to keep the cycle going.

clear enough?

beeintheknow

AstonMartin wrote: »

Ok, bit of a lesson.

someone who pays the premium charge makes a good profit. They withdraw some or all of this profit and it is no longer used to bet and generate commission.

the people who dont pay the premium charge by and large are breakeven or slightly losing punters. They continue to use their balance to place bets and all these bets incur commission charges each time. Put on enough bets and pay 5% of your winnings each time and you help to funnel the money to betfair. They dont withdraw so eventually the majority of the money ends up in betfairs account through lots of small commission payments. They also keep lodging new money to keep the cycle going.

clear enough?

You're a genius.

AstonMartin

Thanks, I try not to wander through life being ignorant.

CiaranC

AstonMartin wrote: »

Thanks, I try not to wander through life being ignorant.

So what you are saying is that itsactually punters like me who deposit and lose 20 quid every three months which are providing liquidity in the exchange, and that punters who match tens of thousands in bets monthly wont be missed. Hah.

kippy

Betfair turns over 50+ million a week. Gonna take a LOT of people to leave them before they start feeling the pinch.
This premium charge has been in place for a number of years from what I can see, and betfair have been buying smaller companies all around them.
They are healthy.

J-Fit

kippy wrote: »

Betfair turns over 50+ million a week. Gonna take a LOT of people to leave them before they start feeling the pinch.
This premium charge has been in place for a number of years from what I can see, and betfair have been buying smaller companies all around them.
They are healthy.

The 20% charge is old and people could swallow that. The 60% charge is only three months in. Betfair are far from healthy at this point. Their share value has halved since the flotation and they are losing top execs, including their confounder, at an alarming rate.

AstonMartin

Do you think that the reduction in liquidity is more likely down to professional punters leaving or that its a huge percentage of the regular depositors have lost their job and cant afford to keep depositing their weekly twenty or fifty euro? Without constant fresh deposits commission charges will greatly impact liquidity and yet the pro punters are still there, just matching smaller amounts.

what is the point any of you are trying to make?

we are in a worldwide recession, disposable income is scarse.

J-Fit

AstonMartin wrote: »

Do you think that the reduction in liquidity is more likely down to professional punters leaving or that its a huge percentage of the regular depositors have lost their job and cant afford to keep depositing their weekly twenty or fifty euro? Without constant fresh deposits commission charges will greatly impact liquidity and yet the pro punters are still there, just matching smaller amounts.

what is the point any of you are trying to make?

we are in a worldwide recession, disposable income is scarse.

It's a combo of both. What's your point?

AstonMartin

A dip in the share price these days does not indicate the end of a business.

a charge that affects less than 0.1% of accounts would not by itself severly reduce liquidity to the extent we are seeing.

the recession is the reason for both events.

stop making a mountain out of a molehill.

J-Fit

AstonMartin wrote: »

A dip in the share price these days does not indicate the end of a business.

A dip? It HALVED! And I don't think it's the end of business, Betfair have their customers controlled like puppets on strings, even those who pay the charge.

AstonMartin wrote: »

a charge that affects less than 0.1% of accounts would not by itself severly reduce liquidity to the extent we are seeing.

I think it affects more than 0.1%. I think Betfair have put forward these figures to create the impression that it impacts F all people. Truth is, they base these figures on all the accounts ever opened. How many people opened a Betfair account, had a fun bet on the X-Factor or their favourite team and never came back again? How many people have multiple accounts? I know I have two for a start.

EDIT: It affects not too many people but how many dreams did they stamp on by introducing the charge? That's the take home point of the PC.

AstonMartin wrote: »

the recession is the reason for both events.

Correct.

AstonMartin wrote: »

stop making a mountain out of a molehill.

I'm not.

AstonMartin

It halved because it was floated at £1.4bn when comparable companies were trading at a p/e of half that and only 10% of shares are publicy traded leading to the violatility.

there is a reason for everything that has happened and none of them point to the end of betfair so you are exaggerating the situation.

J-Fit

AstonMartin wrote: »

It halved because it was floated at £1.4bn when comparable companies were trading at a p/e of half that and only 10% of shares are publicy traded leading to the violatility.

there is a reason for everything that has happened and none of them point to the end of betfair so you are exaggerating the situation.

I'd agree with you if I had actually said this was the end of Betfair. It isn't. The new PC will go to a 100k limit within 2 years, the old PC may go to 30% and the standard commission rate will also go up to maybe 10%. After that, watch Betfair continue to generate enormous profits and punters continue to ignore those eejits at Betdaq.

Why? It's kind of like that forlorn wife who keeps going back to the abusive husband who continues to treat her like sh1t. How else do you explain people sticking with an exchange that charges its best customers 60% commission whilst the closest competition charges just 2.5%????!!!!

Have a read of this, it'll give you a good laugh:

http://www.geekstoy.com/forum/showthread.php?t=5666

JONJO THE MISER

Just looking at a few races today and betfair and betdaq have nearly as much matched in the vast majority of races, whereas before betdaq would only have around 10% of what betfair had matched, now its 40%-50%.
This is great news, the sooner betdaq get ahead the better and get that shower over in Betfair with the p.c charges and treating there customers like crap.

AstonMartin

I was talking to someone in the know and they said betdaq (irish owned) is still a loss making company.

They must be working at a loss to gain market share... They will increase their commission rates to something in line with betfair and it could be sooner than we think if we keep seeing people defect.

UrbanSea

I love Betdaq,it's just a pity the liquidity is so poor

AstonMartin

UrbanSea wrote: »

I love Betdaq,it's just a pity the liquidity is so poor

are you finding it hard to get your bets matched?

UrbanSea

I did,I haven't used it in ages to be honest

Shelflife

The problem with the latest charges is that Betfair are biting the hand that feeds it.

there are a small number of big players who feed the markets, make early books and basically grease the wheel. without them the liquidity drops significantly.

without liquidity you have no market and no betfair, they are playing a dangerous game by penalising those that make big money but seed the markets.

betfair have lost their way, in that they are moving away from the original idea and trying to find new markets.

maybe they need to get back to basics and please their customers instead of pandering to the stock market.

finbarrk

Must have a look at betdaq, never have done yet.

AstonMartin

Once a company goes public its all about the shareholders.

betdaq need to do more to attract casual punters.