Calvin Ayre has made his feelings known about Betfair’s decision to go public. Now brokers in the UK are piling on, with 80% of them telling anyone who’ll listen why they think the company’s share price is grossly overvalued. Betfair began offering its shares at £13, which climbed to £15.50 in the frenzied hubbub of its first day of trading, but has since fallen back below that £13 point. With baited breath, the investment world waits to see what kind of grades Betfair reveals on Tuesday in its first ever, public company report card.
Of course, analysts are rarely of one mind on any subject. Investec, who are already on record as thinking the entire online gaming sector is overrated, thinks Betfair’s current share price should be as low as £4.45. Numis Securities, on the other hand, think it should be at least twice that, but that would still be well below the £13 mark at which the shares began life. Analysts also believe that regulation and taxation will restrict the company’s potential for growth in markets outside the UK, pointing to the fact that Betfair’s Australian joint venture has yet to turn a profit in the four years since it launched.
Speaking of Betfair Down Under, its chief exec Andrew Twaits recently received a couple angry letters from Racing NSW. The letters were in regards to comments Twaits made after his company lost a Federal Court ruling which compelled Betfair to pay a 1.5% tax on turnover, rather than on gross revenue. Racing NSW thinks the comments, which suggested they were in cahoots with Tabcorp to screw over Betfair, were defamatory, and they want retractions and apologies. In response, Twaits said Racing NSW “can either sue me and have the facts tested under oath and cross-examination or publicly state which of my comments are wrong and why.”
This isn’t the first time Betfair execs have been accused of casting aspersions at their competition. The company prefers to view itself as being a notch above ‘traditional’ bookmakers, a claim it uses to argue against paying the same tax rates as those other companies. Frankly, this is a tough argument to swallow, considering you can visit parts of their site and just have a bet, with no ‘lay’ option in sight. (Certainly sounds like a bookmaker to us.) And despite touting their anti-fraud detection capabilities, as the only place you can go to bet against a team/player/horse, they remain the most viable option for unscrupulous punters looking to attempt fraud. Don’t get us wrong, we think Betfair’s a smart, innovative company – just spare us the ‘white knight whose shite smells like daffodils’ speeches, okay?
