Complete Power Point Presentation
Betfair – John Bowman
BETFAIR
PEST Analysis / Market Analysis
By John Bowman
Betfair - Snapshot
World’s Largest Internet
Betting Exchange
Revenue
51% U.K.
Launched in
49% Outside U.K.
June, 2000
Mostly Europe
Steady rise in Revenues
Up 27% from 2008 to
2009
HQ: West London,
England
Over 2,000 Employees
World-Wide
Betfair - snapshot
Services Offered in
17 Different
Languages
Process over 5
Million
Transactions Daily
Betting Offered in
Over 50 Different
Sports
Over 3 Million
Registered
Customers
Revenues
Generated from 2
– 5% of Winner’s
Payout
Betfair – snapshot
Core Betfair
• All sports
betting
• Betfair offers a
portfolio of
casino,
exchange
games, arcade
and poker.
TVG
U.S. TVG
customers
can bet
through an
interactive
horseracing
network
Timeform
provides
horseracing
punters with
unique and
trusted ratings
LMAX
the market
for online
Retail
financial
trading
Betfair
Australia
50-50 joint
venture
between
Crown Limited
PEST ANALYSIS
Factor
Trend
Evaluation
Impact
1 = low / 5 high
Rank in terms of
importance
Political
Government
Regulation – To
ban online
gambling
Threat
5
1
Economical
Economical
Recession in U.K.
and most of
Europe
Opportunity /
Threat
2
4
Social
Responsible
Gambling Society Views of
Addictions /
Integrity of the
Game
Threat
1
3
Threat
2
Hackers
Greater Use of
Applications iPad
/ iPhone
Threat
4
Opportunity
3
Technological
2
PEST Analysis - political
Date / Country
Action taken by Country
Action taken by Betfair
2006 /Russia
Prohibits Online Gambling
Completely
None
2007 / India
Bombay Wager Act – Bans
Online Gambling in
Maharashtra
None
2009 / French Government
Outlaws Online betting
exchange Betfair
Betfair takes legal action
2009 / Dutch Government
Dutch Gov. bans Dutch banks Betfair takes legal action
from processing payments
by Dutch customers to
online gaming
2010 / Australia
Court rules against Betfair
having RNSW and HRNSW
race fields
Betfair takes legal action
1961 / U.S.A.
Wire Act – Prohibits Sports
online betting
None
Pest analysis - economical
Cause
Effect
European Rescission
95% of Sports Betting in
Europe
Total Gambling $330 Billion
World-wide
Online Gambling - $25 Billion Need to get more of the
Gambling dollars
Larger number of New
Customers to offset
TOTAL REVENUE - betfair
Revenue in millions
350
300
250
200
150
100
50
0
2005
2006
2007
2008
2009
Pest analysis - social
Responsible Gambling - Threat
Betfair
Customers lose too much money
Betfair establishes - Player Protection
Customer driven deposit and loss limits
Customers online too long
Game Session Timers
Customers have no self control
Self-exclusion tools
Customers have a Gambling Problem
Betfair establishes Education and Information
Links to GamCare and other help
organizations
Customers have a Gambling Problem
Offers self help and awareness information
Betfair est. - Responsible Gambling Policy
Society views online gambling as one of the
biggest at-home problems
Betfair offers money and time limits, help for
problem gamblers, ensures no underage
gamblers
Pest analysis - social
Integrity of the Game
Betfair
Too much money bet on sports – concerns Betfair ensures integrity in all Sports
about integrity of Athletics
where betting is allowed
Corruption in sports
Betfair signs over 40 MoUs –
Memorandums of Understanding with
Sporting Venues
Betfair monitors possible last minute bets
or unusual bets to check for possible
problems in “real time”
Pest analysis - technological
External Problem
Betfair
Customers
Hackers
Betfair shuts down
operation
15 Aug. 2006 – 16;20 –
1700
And 17:50 – 18.20
Customer information at
risk – credit card, bank and
personal information at risk
Not able to bet during
Down Time – lose revenue,
loss confidence in company
New Technology
iPad / iPhone
Increase of70% in usage
over 1 year period
Accounts for 4% of Total
Revenue
Industry Analysis – Total gambling
$350
$300
$250
$200
$150
$100
$50
$0
•
•
•
•
Online gambling
$25 billion annually
8% of total gambling
Betfair accounts for 2%
of total market share of
Online betting
A healthy industry
Online gambling Revenue
1996 - $17 million
2010 - $29.4 billion
2015 – Projected Estimates
$41 - $177 billion
Make-up of Betting
41% Sports Betting
(illegal to bet on Sports in
US)
46% Online Casinos and
Poker Rooms
13% Other – Mostly Horse
Racing
Europe – 43% of Entire
Market
What will happen if US
Market opens for Sports
Betting
What will happen if China,
Japan and India open for
Online Betting
Fastest Growing industry
2010 Online Revenue
How it is broken down
Sports
Gaming
Other
Year
Online Sites Yearly
Revenue
1996
30
$17 million
2000
19,076
$3 billion
2010
44,076
$25 billion
2015
?
Estimated
between
$42 - $177
billion
Industrial analysis
Threat of
New
Entrants
Intensity
of Rivalry
Threat of
Substitutes
Bargaining
Power of
Industry
Bargaining
Power of
Customers
Threat of New Entrants - strong
Results
Effects
Number of competitors
1996 – 30
2003 – 44,000
Harder to Attract and
Maintain Current
Customers
New Entrants
Reduces Profit Potential
Small Capital Requirement
Ease to Enter Market
Tends to Discredit Entire
Online Betting
Customers Concerns and
Ability to Locate Betfair
Online
Bargaining Power of industry - Weak
Results
Effects
Sporting Industry
Has Little Effect on the
Betting Industry
Betting Industry Distributes
Large Amounts of
Resources back into the
Sports Industry
Horse Racing Industry
Has Little Effect on the
Betting Industry
Betting Industry Distributes
Large Amounts of
Resources back into the
Sports Industry
Poker
Has Minor Effect – Ability
to Promote Certain
Companies
Corporate Sponsorship
Bargaining power of customers moderate
Results
Customers Demand
Effects
Best Service / Smallest Fees Smaller Profit Margins
Confidence in Website
Additional Cost
More Betting Opinions
Potential More Revenue
Threat of substitutions - strong
Gambling Industry
Results
Effects
Many Avenues to Wager
Much Harder to Attract and
Maintain Relationship with
Customers Online
Online Betting Makes up
8% of Total Gambling
Lottery
Larger Than Life Payouts
Attracts Customers when
Payouts are Large – Making
the News
Casino
Vacation Destinations
Away form Home
Usually Planned Out
Difficult to Compete
Spendable Cash is often
Saved to Fund Events – less
Bet Online
Intensity of rivalry - strong
Results
Effects
Unlimited Number of Same Must Standout
Industry Businesses
Spend More Money for
Name Recognition
Online vs. Other Gambling
Must compete
Market Internal and
External Competition
Survival
Must Heavy Reinvest into
the Gambling and Sports
Industries
High Cost – Low Bottom
Line Profits
Economical Rivalry
Certain Weak Economies
Complete for a Already
Over Spent Dollar –
Spendable Cash
True Competitive Advantage
BETFAIR offers:
• Company based on
Differentiation
• based on Innovation
• Based on fair bet
• I bet against you, not
the house
conclusion
Effects
Results
Political
Strongest Effect on Industry Has the power to make or
break Online Gambling
Technology
Industry Must Stay Current
High investment cost to
develop and maintain,
required for Online Market
to compete for Gambling $
Industry Growth
No Limits
Very young market
Fastest growing market
Unknown Future – very
much Government
Regulated
Online Betting
Must Maintain Customer
Loyalty and Confidence
Must offer services that
can compete with real life
experiences and continue
to ensure Customers of
Security and Comfort
BETFAIR
Competitor and Market Analysis
By John Bowman
HOW IT ALL WORKS
http://www.youtube.com/watch?v=d05joU_FSYo
Company
Betting License
Countries Excluded
Betfair
United Kingdom
USA
Ladbrokes
United Kingdom
USA
Bet365
United Kingdom
USA and Turkey
Betsson
Malta
USA, Malta and Hong
Kong
Paddy Power
Isle of Man
USA
Bodog
Antigua
None
Countries where betting licenses are located
Countries that service is not offered
Companies that are listed on the stock exchange
Company
Actives
(customers)
350
300
Betfair
Ladbrokes
3 Million
799 Thousand
250
Betfair
200
Ladbrokes
150
Betsson
2 Million
Bet365
unavailable
Betsson
100
Paddy Power
50
0
Paddy Power
unavailable
Bodog
unavailable
2008 2009
2010
Revenue in millions
Bet365 & Bodog - unavailable
How to compete
Impact on customers
End Results
Money Returned to Betters
Medium – High
Most betters do not know the
rate of return
To maintain long term
customers
New Customer Sign up Bonus
High –
At beginning
Has no continued value
To attract new business and
new long term customers
Number of Sports to bet on
LowMost will stay in same betting
area
To offer more selection – more
selection, more opportunity to
wager
Services Offered
Medium – HighMore services = more
customers
Keep more customers
Attract more customers
Wider customer base
Name Recognition
High –
Recognizing name of website
– increases comfort zone and
customers returning to site
Spend money to make money
- name is recognizable, attract
new business and keep
excising customer base
ODDS PAYOUT
Odds Payout is a
Exchange with an
average odds of
payout – based on
100%
This means that for
every EURO bet, that
percent of the EURO is
returned to the
betters.
96.00%
95.00%
94.00%
Betfair
93.00%
Ladbrokes
Bet365
92.00%
Betsson
Paddy Power
91.00%
Bodog
90.00%
89.00%
odds payout
New Customer Sign – Up Bonus
No sign up bonus for Betsson or
Paddy Power
120
100
80
60
40
20
0
Bonus
Bonus is for new membership
• Sign – up bonus is a
return of the amount
the new customer
Betfair
deposits and bets and is
then returned to their
Ladbrookes
account
BET365
• Betfair – 100% of first 29
Betsson
EURO’s bet
Paddy Power
• BET365 100% of the first
Bodog
100 EURO’s bet
• Bodog offers 50% of the
first 29 EUROs bet
35
What to BET
This charts shows the different sports you
can place wagers on.
Sports that bets are placed on:
Here is a partial list – how many do you
know?
30
25
Betfair
Ladbrokes
20
American Football Australian Rules
Baseball Basketball Bowls Boxing Chess
Cricket Cross Sport Accumulators Cycling
Darts Financials - Today's Markets
Financial Bets Floorball Football Football Fixtures Gaelic Games Golf Greyhound
Racing Greyhound - Todays Card Handball
Horse Racing Horse Racing - Todays Card
Horse Racing - Virtual Ice Hockey Motor
Sport Netball Olympics 2012 Politics
Rugby League Rugby Union Snooker
Special Bets Tennis Volleyball
Bet365
15
Betsson
Paddy Power
10
Bodog
5
0
Sports
Company
Ways to Ways to
Deposit Withdraw
Avg. Fees
per bet
Speed per Number of
transaction Languages
in seconds
Currency
accepted
Betfair
12
7
1.78
.438
17
10
Ladbrokes
13
9
0
.276
14
17
Bet365
16
7
1.70
.474
13
29
Betsson
8
6
1.85
.374
17
6
Paddy
Power
8
6
0
1.363
2
2
Bodog
7
6
0
.300
1
3
BRAND RECONITION
BETFAIR
Event
Industry
Country
Grass signage
Super15
Rugby
Australian
Sponsors Manchester
United
Football
UK
TVG sponsors United
Nations Stakes
Horse Racing
New Jersey - USA
OVER ALL RATINGS
9.5
Betfair
9
Ladbrokes
Bet365
8.5
Betsson
Paddy Power
8
Bodog
7.5
7
6.5
WOSB Rating
Based on the
following factors
• Financial
Security
• Odds Payout
• Betting
Selection
• Service Test
• Site Statistics
• Money Trans.
• Bonus
True Competitive Advantage
BETFAIR offers:
•
•
•
•
Company based on Differentiation
based on Innovation
Based on fair bet
I bet against you, not the house
Indirect Competition
Over $330 billion bet each
year
Total Gambling
Online reported gambling is $25 billion –
Betfair has 2% of total
Is the fastest growing gambling industry
Online Gambling
Lottery /
Casino
Online
Total
Betfair
Other
Products Offered
•
•
•
•
•
•
Sport betting – football
Horse Racing
Online Poker rooms
Online gaming – casino
All offer same services
No real difference on
product offered
• Must compete
elsewhere
Year
Online
Gambling
Sites
Revenue
Generated
1996
30
$17 million
2000
19,076
$3 billion
2003
44,076
$6 billion
2010
---
$25 billion
2015
$177 billion
• Growth rate is the fastest
growing industry of any
industry
• Much of revenue is
unaccountable ,
unauthorized betting sites
• How much is really bet
• Illegal to bet in US
Key Trends
Football – cash cow
Sport bets
Horse Racing
Poker
Poker – a thing of yesterday?
• Sport bets up 11.7% same
period last year, mostly due
to world cup
• Horse racing up 1.4% same
period last year, poor
weather cancelled racing
• Poker continues downward,
losing 6.5% of same period
last year.
Trends – How to place a bet
Ease and discretion of use
• Revenue is strong from
mobile channel
• Up 70% over one year
• Accounts for 4% of total
revenue
• Leader is iPad and iPhone
• Android Apps
Market
Actives (ooo)
400
350
300
250
200
2009
150
2010
100
50
0
UK
Europe Rest of
World
A Growing Market
• Actives – a customer who
has a bet or plays real
money during a given
period
• UK is 17% over one year
• Europe up 52%
• Rest of world up 46.3%
• What will happen when US
market opens?
Rest of the World
Company
Business
Direction
TVG
Racing channel largest legal online
wagering in the US 35 million
homes
Have foothold in US
Horizontal – Horse racing
LMAX
Enter the market for online retail
financial trading
Expand Services Offered to all
Customers
Betfair Australia
50-50 joint venture
Have foothold in Australia
Timeform
Horseracing ratings, form guides
Ensure Product and Name
Recognition
Betfair TV
More Avenues to Wager
Keep and Attract New Customers
Product Development
Target Market – Gambling $
New target market
Knows technology
50% of new
actives –football
players
UK and Europe
Well informed
players
Old target market
No technology
Knowledge
Mostly casino and
horse players
Misinformed players
Conclusion
• Gambling has always been among man and will continue.
• Betfair has found a new channel to bet (same as it always has
been – man to man) only now through technology.
• They must keep their name recognition by sponsorship and
advertising.
• They must keep current with technology and even help shape
it to stay ahead.
• They must help regulate legislation and be at the door step
when new and emerging markets are ready for the picking.
• These are the factors that will ensure that they keep their
market share and enhance the market for online gambling.
BETFAIR
Internal Analysis / Overview
By John Bowman
Business Model
Make up of Betfair Group
The Betfair Group
Make-up
Core Betfair Group
Sports
Online Sports Betting
Games
Online Casino
Poker
Online Poker
Management of customer funds
Investing held funds
Other investments
US Funds
TVG Horse Racing
LMAX
Online retail financial trading
Other Investments
Misc. Investments
Timeform
Betfair TV
Horse Racing Information
Betting widget
Business Model
Build on leadership in
sports betting
Develop platform to
address new markets and
new verticals
Continue geographic
expansion
Expand product portfolio
cross-selling to sports
customers
Proliferation and
convergence of new
channels
Betfair – CEO – David Yu
•
•
•
•
Aggressive 3 yr. plan
Heavy re-investment
New software
Buy New Markets – TVG
– USA
• Key Sponsorship in
many different sporting
events
5 Year Performance
350
300
250
Revenue
200
Profit
150
Investments
100
50
0
2006
2007
2008
2009
2010
Betfair Revenue
Last 6 months of 2010
Betfair Group
Dollar Amount
(000,000)
% of Total Betfair
% of change form
prior year
Sports
$124
58.4%
+11.7%
Games
$30.5
14.3%
+17.6%
Poker
$11
5.1%
-6.5%
Management of
customer funds
$1.5
.7%
+32.8%
US Market
$20
9.4%
+16.5%
LMAX
$3
1.4%
+63.2%
Other
Investments
$23
10.7%
+24%
CORE BETFAIR
OTHER
INVESTMENTS
Betfair Revenue 2010
BETFAIR GROUP
Sports
Games
Poker
Management funds
US Market
LMAX
Other Investments
SWOT
• Brand Recognition
• Diverse Portfolio
• Innovation
• Competition
• Government Bans
• Loss of Customers
• Easy to enter market
• Government dependent
• Same type of services
offered
Strengths
Weaknesses
Threats
Opportunities
•
• Emerging markets
• New Technology
• Expand customer base to
other avenues
SWOT - STRENGTHS
Strengths
Effects
Results
Brand Recognition
Brings in New
Customer
Loyalty
New customers converted to
use other services
Customers’ wants and needs
are met
Diverse Portfolio
Able to offer
several services
to customer
base
Able to keep cost low
Maintain all services – even
non-profit entities
Innovative
Offer new
options to
customers
Attract new customers
Stay ahead of competition
SWOT - WEAKNESSES
Weaknesses
Effects
Results
Easy to enter
Market
No limit to
number of
competitors
Must stand out to attract and
maintain customer base
Government
Dependent /
Regulations
Hard to enter
new Markets /
Expand
Markets
Must stay current with laws
Try to influence changes
Offer same
basic services
as competitors
Must be
innovative to
offer and
attract new
and current
customers
Potential customers could join
other online betting sites
SWOT - OPPORTUNITIES
Opportunities
Effects
Results
Emerging
Markets
4 Largest
Gambling
Markets
Betfair only has a small
presence in one of the four US , not in China, India, or
Japan
New
Technology
Draw in new
Customers
Get current
Customers to
use services
more
APPS applications up 70%
makes up 4% of total revenue
Betfair TV – more opportunity
to make wagers
Expand
Customer Base
More customers Stronger customer base will
More
result in more wagers,
opportunity to
generating more revenue
bet with each
other
SWOT - THREATS
Threats
Effects
Results
Competition
Lose current
customers /
potential
customers
Must maintain customer base,
customers are wagering against
each other, requires large base
to meet needs
Government
Bans
Could stop
Could cause large loss of revenue
operations in
and customer base
certain countries
or territories
Loss of
Customers
Less customers
No customers to accept wager –
to wager against no percentage of win for Betfair
each other
– no Revenue
Entering Foreign Markets
• All have
strict legal
The Four Largest Markets of Gambling
• Restrictions
• Betfair in
US with
TVG
US China India Japan
• What will
happen if
Markets
TVG
No Presence
Open
???
Of Betfair
Horse
Racing
- only
Boston Consulting Group Matrix
High
High
Low
Stars
Cash Cows
Sports Betting
Management of
customer funds
(football)
Games
Cash Cows
Low
US Market
LMAX
Other
Investments
Dogs
Poker
Porter’s – Generic Strategy
NARROW
MARKET
SCOPE
BRAND
MARKET
SCOPE
SEGMENTATION
STRATEGY
DIFFERENTIATION
STRATEGY
UNIQUENESS
COMPETENCY
COST
LEADERSHIP
LOW COST
COMPETENCY
Grand Strategy
Innovation
Focus
Strategy
Directions
• Betfair - first successful Betting Exchange
• Betfair TV -betting widget allows live
betting on TV remote
• Increase sports betting customers
• Customers use other services
• Expand Markets
• Expand Products
Grand Strategy
Market
Penetration
• New customers through Sports Betting
• Convert customers to use other services
offered
Horizontal
Integration
• US Market – TVG
• Australia
Product
Development
• Betfair TV
• APPS – iPod / iPhone
Conclusion
Business Model
Situation
Positive Effect
Negative Effect
Strong Brand
Name
Attract and
Maintain Strong
Customer Base
Ensure Name
Recognition–
build Loyalty
High Cost
Name associated
with unfavorable
situation
Cutting Edge
Technology
Attract and
Maintain Strong
Customer Base
More Avenues to
Wager
High cost
Potential
technical issues
Horizontal
Integration
Acquire
Businesses
Poised for
Opening in New
Markets
New Customer
Potential
Larger customer
base
High cost
Sports Betting
Main Revenue
Cash Cow
Lose focus of core
of business model
Conclusion
Business Model
Situation
Positive Effect
Negative Effect
Share Holders
Return on
Investment
Showing a
consistent profit
Not enough
dividends –
difficult to raise
addition capital
On-line Poker
Decline in
Revenue
Options for
customer base
Not profitable
•Betfair is a very young company, in an industry that is still in its infancy
• They need to keep their focus on what is their core business
• Betfair needs to be ready to enter into any new markets
•They need to ensure their presence in the current ones