Chapter 3 - Illusions of Control (cont'd)
Mark Griffiths’ view of betting exchanges and Betfair is that they have revolutionised betting. ‘Phenomenally successful, with people having thirty to forty bets a day,’ he maintains. ‘Why? There are three reasons why people are drawn to them. First and foremost, they represent tremendous value. Compared with betting shops and casinos, where the house has an in-built edge, Betfair takes 3 per cent to 5 per cent of your winnings, which means that if you are in the know, or you have skill, you can actually win.’
He continues: ‘Betfair is also betting with real people. The site makes money by charging commission but what it does essentially is introduce gambler to gambler. Furthermore, trade on Betfair is also based on skill. Gamblers like that idea [the illusion of control, perhaps?]. If money is a way of keeping score, Betfair – and other Internet gambling outlets – offers you a pure way to assess your success.’ Those who gamble on Betfair are probably gamblers to begin with who have telephone accounts, then, via the Internet, gravitate to Betfair, he adds.
Gamblers like Harry Findlay and Dave Nevison are clearly taken by the first of Griffiths’ reasons for Betfair’s success. Findlay is the owner of Denman, winner of the 2008 Cheltenham Gold Cup. If you don’t know that already it is not for want of him trying to tell you. Like- wise, the success he has had gambling on Denman. Findlay is open, up-front, and relatively candid (which is not always the case with gamblers). Nevison is a self-styled professional punter who wrote his autobiography, A Bloody Good Winner, in 2007, following up with the diary, No Easy Money, in 2008. His other claim to fame is a high-fives session with Michael Atherton, the former England cricket captain, who happened to be round his house when Nevison landed a £4,000 bet from a stake of £22. The odds ranged from 180– 1 to 80–1.
Nevison and Findlay – universally known as Harry the Dog for his love of greyhound racing – display a devotion to Betfair that verges on religious. Nevison believes, ‘Betfair has changed everything’, while Findlay maintains that there is a ‘moral’ justification for favouring Betfair. His argument is that you can check at all times what you are losing – and winning. It stops the lies, Findlay argues.
Press Cawkwell hard on why he has converted to Betfair, and he recalls a feast – ‘gargantuan; on and on’. Shortly into the millennium and not that long after the launch of the exchange, he noted discrepancies in the odds between the low-margin odds shown on Betfair and high mark-up prices offered by traditional bookmakers. Accordingly, he accepted the arbitrage, gladly. Like Findlay, Evil Knievel cannot today resist the value Betfair offers comparatively. Placing the highest premium on this may be the first lesson for anyone planning to teach themselves the dark arts.
"Betfair takes 3 per cent to 5 per cent of your winnings, which means that if you are in the know, or you have skill, you can actually win."
Cawkwell, himself, claims to be self-taught. ‘I am’, he insists. He has little time for those who will not, similarly, put in the hours or adapt to embrace new concepts that bring an advantage. ‘It is sick and thick to say you don’t like the technology you need to use to bet with them,’ Cawkwell insists. ‘My father learnt when he was nearly 90. To him [it is relevant to note, here, a university don], it was simple enough. I have a friend from my days at Rugby, a punter, who doesn’t use Betfair. Doesn’t like betting with a computer. How stupid. All it is, is an attitude of mind.’
By talking about his betting in general Cawkwell does begin to offer up reasons why punters were drawn, and continue to be drawn, to Betfair from elsewhere. Arguably, leaving to one side that simply the odds are better, the most fundamental aspect of all emerges (what’s more, this takesus back into Griffiths’ world). Cawkwell’s biggest issue with traditional bookmakers is that he is unable to place bets that represent the full extent of his belief in an outcome.
In other words, if he wants to wager £25,000 that a horse will win at Royal Ascot – incidentally, where he pulled off his greatest coup, once leaving the racecourse £135,000 to the good – he can on Betfair which, with liquidity, simply matches him with those who oppose his view. Fixed-odds bookmakers would not take the bet, he argues. Most would be alerted by a well-known name seeking a wager. Consequently, only a portion of the bet would be accommodated, if any, before the odds started to tumble. In other words, their card marked, they would not allow him to express fully his view of the certainty of an outcome and for the stakes to reflect that.
Maybe here we are back to the illusion of control that drives some gamblers. Perhaps, more important, with present-day society in mind Betfair’s success is because it is a market for betting and also an outlet for expressions – usually strongly held – of opinions in tune with a modern age that encourages all to have views and to hold – and air – them stridently? Despite the perceived erosions to personal liberty that there have been – often through necessity – during the Internet age, freedom of expression is in fact one tenet that the World Wide Web has helped promote and spread. Just think of the number of blogs currently in circulation. It follows, certainly, that in the modern age service industries such as bookmaking have to be accommodating in this respect.
At the same time, bookmakers haggle over how much a serious punter can wager and at what odds when the prices are there for everyone to see. By kicking back bets, bookmakers are hardly entering into a partnership. ‘Is it too much to be able to enjoy expressing fully your opinion,’ Cawkwell asks? ‘With Betfair you can do that. Not with the bookmakers.’ Simon Champ, like Cawkwell, is both a speculator and a gambler. It is hard to be sure at which he is best. His career in the City of London has generated wealth enough for him to own property in some of the capital’s most sought after real estate pockets.
There was also enough for him to bankroll a sausage and mash outlet – Banger Brothers (Bros) – fulfilling a commonly held fantasy among men in abstract trades, many of whom dream of owning, if not working in, their own restaurant. Today, after success with the stockbrokers, Cazenove, he runs his own brokerage.
Even in a downturn, he has prospects. ‘We won’t make serious money for now, but we will soon enough,’ he insists. Betfair has worked both ways for him. As a gambler, he made, reputedly – he won’t say, exactly – more than £100,000 trading the exchange on Greece winning the 2004 European Championships. At the start of the tournament, Champ spotted that Betfair odds on Greece to win were, at around 120/1, nearly double traditional bookmakers’ best odds of 66/1. By the final, which Greece won 1–0, beating Portugal, the odds had tumbled.
At the quarter final stage, Champ, who rejected hedging on the basis that this sort of story needs a decent punch line, win or lose, committed to taking a group of fellow gambling friends to Paris for the weekend if Greece held their form and won the tournament. He estimates that Greece’s ultimate success cost him £25,000 in the French capital while there is some suggestion that the rest went on a weekend in Las Vegas. Again, he is a little coy. ‘I have been a few times,’ Champ admits.
"Nevison believes ‘Betfair has changed everything’, while Findlay maintains that there is a ‘moral’ justification for favouring Betfair."
A generous client did pay for Champ’s trip to Portugal and a match ticket to watch the final there. Generosity on an altogether different level will be possible if Champ ever sells his personal holding in Betfair. In March of 2000, he invested £25,000 in the company. Based on conservative valuations, that is now worth north of £3 million.
‘I was living with two mates in Kensington,’ Champ recalls without, it should be noted, too broad a grin. ‘I went to a presentation about the company. There were about twenty-five people in the bar, and three screens. I cannot remember the name of the place. Mark Davies did a lot of the talking, and was good. Plus there was Ed Wray. We knew that he had had proper jobs in the City. That did help give the project credibility. Bert was there, too. Not much else you would say. On the way home, I do recall thinking that the whole evening hadn’t been terribly impressive. I had my doubts about the concept. I was also aware of Flutter. At the time, I had no kids, no wife, the two guys who lived with me paid rent, which covered the mortgage. I’d been approached between learning what my bonus was going to be and the cheque arriving. I wasn’t completely convinced. But I got home and thought, why not? Then I ran it past my flatmates and we decided between us to put up £50,000. I was single, no dependents, and could easily manage £17,500.’
Ultimately, his stake rose as one of the two flatmates pulled out on the day the trio were due to deposit their cheques. ‘An expensive decision,’ Champ reflects. Some compensation was that the person who had cold feet at the last minute was subsequently best man at Champ’s wedding. The speech was at least a chance to erode some of the groom’s capital gains.
Champ has no inhibitions talking generally about his betting. ‘I’ve always been a punter, intrigued from an early age by what was behind the windows of the old, seedy, sweaty betting shop,’ he admits. ‘My mother bet on the Grand National every year which was my first exposure. I backed West Tip to win that race in 1986. Then there was a £1 six-horse accumulator at the Cheltenham Festival which would have cleared £23,000 if Raise An Argument hadn’t been pulled up.’
"There was also enough for him to bankroll a sausage and mash outlet, fulfilling a commonly held fantasy among men who dream of owning their own restaurant."
He pauses briefly to ponder the inevitable mixed fortunes that all gamblers must endure, then continues, recalling darker times than even Raise An Argument’s Cheltenham. ‘I had a William Hill account and did some spread betting, until I lost nine grand on a game of football betting on the number of corners that there would be between Leeds and Roma.’ The switch to Betfair, save for reasons of boosting his own stock holding, concur with the reasons for Nevison and Findlay choosing the exchange over traditional fixedodds betting. The prices had an edge, Champ confides.
Go a bit deeper with Champ and there is a more substantial reason. Like Cawkwell, the basis for preferring Betfair is that he has the chance to pit his wits against other people to the full extent of his beliefs. ‘I like to bet on lower league and conference football,’ Champ confesses. ‘I am a fanatical Mansfield Town supporter. I can get odds and a bet on Betfair, which I would never manage with fixed-odds bookmakers.’
In 2003, the American sports weekly magazine, Sports Illustrated highlighted gamblers’ general dislike for being kicked back about a bet. Noted was the preference in Las Vegas, Nevada, where betting on sport is legal in the US, for ‘dumb money, the kind that comes in small increments from yahoos tipping Coors beer for breakfast.’ An investigation in the Racing Post newspaper in September 2008 highlighted the gripes of gamblers – including Findlay, who maintained: ‘No one is allowed to win.’ Champ concurs. ‘Bookmakers don’t take a bet like my money on Mansfield Town which they would not be able to hedge [lay off with other bookmakers by striking bets, themselves]. The market with Betfair has liquidity of over £500,000. That means I can have my bets – £100, £200 staked. I am pitting myself against other people. We are able to oppose each other to the full. Then the game decides who is right.’
The ability to have the bet you actually want to have certainly gives the impression of at least a level playing field to begin with. Furthermore, it helps maintain the illusion of control and self-determination. For some, this illusion may be at the heart of their subconscious preference for Betfair, or indeed why they belatedly began to gamble through Betfair when previously unmoved by what fixed odds bookmakers offered. For others, it may just be a simple desire to gamble unencumbered and to voice opinions through the process of having a bet and then see them tested. In other words, to have an answer to the question, are you really better than everyone else?
To these reasons for betting with Betfair, we should add a degree of camaraderie that an involvement provides. Professor Mark Griffiths could be guilty of overstating that Internet betting largely eliminates social aspects of gambling on which casinos stand to profit handsomely (be warned, casinos strive to make things feel friendly and welcoming as the longer you are there, the more the house will make from you).
Understandably, the Internet largely by its nature is an invention of solitude. Betfair confounds that. The company’s Internet Forum serves as a network that transcends betting shop culture where, over and above between regulars, and no matter bookmakers’ claims about the fraternal nature of their premises, few words are exchanged in the spirit of togetherness. The Betfair Forum is complementary to the betting markets themselves, in providing an outlet for opinions, aggregating those who take a special interest in areas otherwise of no interest to the wider population in general. Indeed, in August 2008, the Guardian newspaper described Betfair’s Forum as ‘surely the largest aggregation of punters anywhere on the web’.
Head back to Sabotage Times tomorrow for the next part of this chapter, or buy You Bet: The Betfair Story - How Two Men Changed the World of Gambling from www.colincameron.co.uk or Amazon. If you missed it, read Part One of this chapter here.