GAMBLING OVERSEAS:The US and France are among a number of countries that have banned online gambling, writes Barry O'Halloran
ONE OF the worst bets of the last decade was the dotcom boom, an investment craze that saw untold millions sunk into internet businesses that never made money.
Betfair, launched at the boom's height, has not only survived but thrived. It is now worth in excess of £1 billion.
At the time of its formation, founders Andrew Black and Edward Wray could not get venture capitalists interested. Instead, they got friends working in the City of London to put up some of their personal cash.
It turned out to be great value. Betfair sparked a revolution in betting and is now as influential a player as big chains such as Paddy Power, Boylesports or Ladbrokes. It has more than one million customers worldwide, and according to its Ireland country manager, Graham Ross, some 45,000 of them are Irish.
Betfair is not a bookmaker in the conventional sense - it is an exchange. Ross explains that customers bet against each other, which means that they can offer odds against, or "lay" something, in the same way as a bookmaker. Or they can back those odds in the usual manner.
Betfair simply matches them up with one another, and takes a commission from the winner. "I think most punters initially take to Betfair because they get better odds than they would with a high-street or traditional bookmaker," says Ross, adding that the ability to play both sides of a proposition is a key attraction.
Betfair punters do not have to limit themselves to simply backing or laying a result. Ross points out that "trading" is becoming increasingly popular. This is where punters back a horse or a result at one price, and then when those odds shorten, lay it, thus locking in a profit.Betfair lends itself well to "in-running" bets: betting on the result of something that is under way. This is an increasingly popular option with bookmakers as well, although they do not stretch to offering this on horseraces, which the exchange does. That is not to say bookies have ignored the web; they were quick to embrace it.
Last year's figures show Paddy Power's online customers bet €630 million with the company, and accounted for €95 million of its €278 million winnings.
As well as helping to cut costs, online gambling helps to build business abroad. Boylesports chief executive Daniel O'Mahony says that the company's online offering now attracts significant turnover from Britain, even though the company has no physical presence there. Its role as sponsor of English premiership side Sunderland has helped this.
However, there are risks to spreading your wings online. In late 2006, US lawmakers banned online betting. The move led to the arrest and detention of betting company executives.
Online betting is also illegal in France. the Netherlands and Germany also continue to ban online gambling. Most of these countries claim they limit gambling for social reasons.