1. Complete Power Point Presentation Betfair – John Bowman

2. PEST Analysis / Market Analysis
BETFAIR
PEST Analysis / Market Analysis
By John Bowman
BETFAIR

4. Betfair - Snapshot World’s Largest Internet Betting Exchange
Launched in
June, 2000
HQ: West London, England
Over 2,000 Employees World-Wide
Steady rise in Revenues
Up 27% from 2008 to 2009
Revenue
51% U.K.
49% Outside U.K.
Mostly Europe

5. Betfair - snapshot Services Offered in 17 Different Languages
Process over 5 Million Transactions Daily
Over 3 Million Registered Customers
Betting Offered in Over 50 Different Sports
Revenues Generated from 2 – 5% of Winner’s Payout

6. Betfair – snapshot Timeform Betfair Australia
Core Betfair
All sports betting
Betfair offers a portfolio of casino, exchange games, arcade and poker.
U.S. TVG customers can bet through an interactive horseracing network
TVG
Timeform
provides horseracing punters with unique and trusted ratings
Betfair Australia
50-50 joint venture between Crown Limited
LMAX
the market
for online
Retail
financial
trading

7. 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 3
Technological
Hackers
Greater Use of Applications iPad / iPhone
Opportunity

8. 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
2009 / French Government
Outlaws Online betting exchange Betfair
Betfair takes legal action
2009 / Dutch Government
Dutch Gov. bans Dutch banks from processing payments by Dutch customers to online gaming
2010 / Australia
Court rules against Betfair having RNSW and HRNSW race fields
1961 / U.S.A.
Wire Act – Prohibits Sports online betting

9. Pest analysis - economical
Cause
Effect
European Rescission
95% of Sports Betting in Europe
Larger number of New Customers to offset
Total Gambling $330 Billion World-wide
Online Gambling - $25 Billion
Need to get more of the Gambling dollars

10. TOTAL REVENUE - betfair

11. 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
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

12. Pest analysis - social Integrity of the Game Betfair
Too much money bet on sports – concerns about integrity of Athletics
Betfair ensures integrity in all Sports 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”

13. Pest analysis - technological
External Problem
Betfair
Customers
Hackers
Betfair shuts down operation
15 Aug – 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

14. Industry Analysis – Total gambling
Online gambling
$25 billion annually
8% of total gambling
Betfair accounts for 2% of total market share of Online betting

15. A healthy industry Online gambling Revenue 1996 - $17 million
$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

16. Fastest Growing industry
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

17. Industrial analysis Threat of New Entrants
Bargaining Power of Industry
Bargaining Power of Customers
Threat of Substitutes
Intensity of Rivalry

18. 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

19. 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
Poker
Has Minor Effect – Ability to Promote Certain Companies
Corporate Sponsorship

20. Bargaining power of customers - moderate
Results
Effects
Customers Demand
Best Service / Smallest Fees
Smaller Profit Margins
Confidence in Website
Additional Cost
More Betting Opinions
Potential More Revenue

21. Threat of substitutions - strong
Results
Effects
Gambling Industry
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

22. Intensity of rivalry - strong
Results
Effects
Unlimited Number of Same Industry Businesses
Must Standout
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

23. True Competitive Advantage BETFAIR offers:
Company based on Differentiation
based on Innovation
Based on fair bet
I bet against you, not the house

24. 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

25. BETFAIR
Competitor and Market Analysis
By John Bowman
BETFAIR

26. HOW IT ALL WORKS

27. Direct Competition Online Gambling
Company
Betting License
Countries Excluded
Betfair
United Kingdom
USA
Ladbrokes
Bet365
USA and Turkey
Betsson
Malta
USA, Malta and Hong Kong
Paddy Power
Isle of Man
Bodog
Antigua
None
Countries where betting licenses are located Countries that service is not offered
Companies that are listed on the stock exchange

28. Competitors Revenue in millions Bet365 & Bodog - unavailable Company
Actives (customers)
Betfair
3 Million
Ladbrokes
799 Thousand
Betsson
2 Million
Bet365
unavailable
Paddy Power
Bodog
Revenue in millions
Bet365 & Bodog - unavailable

29. Compete ? 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
Low-
Most will stay in same betting area
To offer more selection – more selection, more opportunity to wager
Services Offered
Medium – High-
More services = more customers
Keep more customers
Attract more customers
Wider customer base
Name Recognition
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

30. 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.

31. New Customer Sign – Up Bonus
No sign up bonus for Betsson or Paddy Power
Bonus is for new membership
Sign – up bonus is a return of the amount the new customer deposits and bets and is then returned to their account
Betfair – 100% of first 29 EURO’s bet
BET % of the first 100 EURO’s bet
Bodog offers 50% of the first 29 EUROs bet

32. 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?
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

33. What services are offered
Company
Ways to Deposit
Ways to Withdraw
Avg. Fees per bet
Speed per transaction
in seconds
Number of Languages
Currency
accepted
Betfair 12 7
1.78
.438 17 10
Ladbrokes 13 9
.276 14
Bet365 16
1.70
.474 29
Betsson 8 6
1.85
.374
Paddy Power
1.363 2
Bodog
.300 1 3

34. 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

35. OVER ALL RATINGS Financial Security Odds Payout Betting Selection
Based on the following factors
Financial Security
Odds Payout
Betting Selection
Service Test
Site Statistics
Money Trans.
Bonus

36. True Competitive Advantage BETFAIR offers:
Company based on Differentiation
based on Innovation
Based on fair bet
I bet against you, not the house

37. Indirect Competition Over $330 billion bet each year
Online reported gambling is $25 billion –
Betfair has 2% of total
Is the fastest growing gambling industry
Over $330 billion bet each year

38. 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

39. Growth Rate - Unbelievable
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

40. Key Trends Football – cash cow Poker – a thing of yesterday?
Sport bets
Horse Racing
Poker
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.

41. 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

42. Market Actives (ooo) 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?

43. 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

44. 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

45. 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.

46. Internal Analysis / Overview
BETFAIR
Internal Analysis / Overview
By John Bowman
BETFAIR

47. 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

48. Business Model Build on leadership in sports betting
Expand product portfolio cross-selling to sports customers
Proliferation and convergence of new channels
Continue geographic expansion
Develop platform to address new markets and new verticals

49. 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

50. 5 Year Performance

51. Betfair Revenue Last 6 months of 2010
Betfair Group
Dollar Amount (000,000)
% of Total Betfair
% of change form prior year
CORE BETFAIR
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%
OTHER INVESTMENTS
US Market
$20
9.4%
+16.5%
LMAX $3
1.4%
+63.2%
Other Investments
$23
10.7%
+24%

52. Betfair Revenue 2010

53. SWOT Brand Recognition Diverse Portfolio Innovation
Strengths
Brand Recognition
Diverse Portfolio
Innovation
Weaknesses
Easy to enter market
Government dependent
Same type of services offered
Opportunities
Emerging markets
New Technology
Expand customer base to other avenues
Threats
Competition
Government Bans
Loss of Customers

54. 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

55. 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

56. 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 More opportunity to bet with each other
Stronger customer base will result in more wagers, generating more revenue

57. 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 operations in certain countries or territories
Could cause large loss of revenue and customer base
Loss of Customers
Less customers to wager against each other
No customers to accept wager – no percentage of win for Betfair – no Revenue

58. Entering Foreign MarketsUS
China
India
Japan
All have strict legal
Restrictions
Betfair in US with TVG
What will happen if Markets Open ???
The Four Largest Markets of Gambling
TVG
Horse Racing - only
No Presence
Of Betfair

59. Boston Consulting Group Matrix
Sports Betting
(football)
Stars
Games
Management of customer funds
Other Investments
Cash Cows
US Market
LMAX
Poker
Dogs
High
Low
High
Low

60. SEGMENTATION STRATEGY
Porter’s – Generic Strategy
SEGMENTATION STRATEGY
NARROW
MARKET
SCOPE
DIFFERENTIATION STRATEGY
COST LEADERSHIP
BRAND
MARKET
SCOPE
UNIQUENESS
COMPETENCY
LOW COST
COMPETENCY

61. Grand Strategy Increase sports betting customers
Innovation
Betfair - first successful Betting Exchange
Betfair TV -betting widget allows live betting on TV remote
Focus
Increase sports betting customers
Customers use other services
Strategy Directions
Expand Markets
Expand Products

62. Horizontal Integration
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

63. 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
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
Sports Betting
Main Revenue
Cash Cow
Lose focus of core of business model

64. 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