Betfair’s Free Sport Betting Business Model

I’ve been using Betfair for years now but it’s only recently I’ve wondered how much does this company actually make? This question is what has compelled me to write this article. I will not be getting copies of their accounts from companies house, the content will be all conjecture based on what I’ve picked up from using the site over the years.

What has allowed me to ponder this question is the transparency in the Betfair site. If you consider traditional bookies such as WilliamHill, Ladbrokes or Betfred, what you don’t know on any particular sporting event is what has been bet in total and on what particular outcome these bets were placed.

Take a regular Friday afternoon race meeting at say Ascot. It’s the 2.30 and 5 horses are racing; the punters are logging on to one of the traditional bookmakers websites and backing the various horses. The outcome is say the second favourite winning, we have no idea whether people were backing the outsider or favourite, how much was bet, and what sort of profit the bookmaker made.

Now consider the same race with Betfair. The total amount exchanged for that race is given at the top of the page, this is typically about £200,000 for a standard horse race. Now we know that Betfair take a commission on all winnings, and for every bet exchanged there is a winner, so they’re taking their 5% whatever the result – about £10,000 in this case.

So now for a quick bit of ‘back of fag packet’ maths. Approximately 40 races a day generating £10,000 each is £400,000 a day 7 days a week, that’s 2.8 million pounds a week. Throw in the bigger meetings and that rounds it up to say 3 million, 5% of which is £150,000.

Now consider the Premiership football season. At least 12 games a week generating between £200,000 and a million pounds in exchanged bets, take the average and work out the 5% commission and that’s another £350,000. On top of this there’s the lower league and foreign games that must generate another £100,000 in commission so we’re up to Half a million pounds a week in revenue.

Bear in mind that you can (and people do) bet on everything, golf, cricket, tennis, boxing, champions league football, International soccer, not to mention gaming. I’m starting to come to the conclusion that they must be pulling in weekly revenue in the millions, and if it’s only £3 million a week, that’s over 150 million a year.

I admit to having no idea if my workings are drastically wrong here, and if Betfair actually has annual revenue of £1million or £1billion. Neither do I have a concept of what their legal fees, IT costs etc amount to. What I do see is that unlike traditional bookmakers the outcome of any sporting event has no bearing on their revenue.

To this end their main aim must be to just recruit as many customers as possible, which poses the question; with the numerous online bookies out there offering free introductory bets of up to and in excess of £100, then why do Betfair only offer £30. That is the topic of my next article. 해외스포츠

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