Betfair turning into the Pinocchio of gaming

betfair pinocchioOnline betting exchange Betfair Group Plc is set to increase profits by more than 50% with a new fixed-odds sports betting plan, according to Numis Securities. “If Betfair came to dominate fixed odds sports betting, in the same way it currently dominates overall sports betting, then it has the potential to more than double group profits.”

Indeed, that is certainly the case but that is also like saying “If Wendy’s came to dominate the burger space they’d increase their profits alot.” Or “If Audi didn’t exist BMW would see profits surge.”

There are a few problems Mr Jones has overlooked here not least the fact that as a fixed odds bookmaker, you often have losing weeks, even months – something that Betfair doesn’t have to endure or offset at present. Equally, why would they suddenly dominate the space from a standing start? What can they possibly offer that isn’t out there already? Better concessions than Paddy Power? More in-running markets than Bet365? Unlikely.

However, the biggest problem with Mr Jones’s assessment is this: Betfair’s odds are fixed odds bets – albeit offered by punters rather than by a bookmaker – but fixed odds nevertheless so the statement that they dominate ‘overall sports betting’ is a very strange one. Do they dominate sports spread betting? No. Do they dominate pools betting? No. Do they dominate any part of the sports betting space apart from the exchange model? Er, no.

So this 50% increase, therefore, will have to come from taking punters off existing sites but why will all these people suddenly flock to Betfair rather than the myriad of choice they already enjoy?

To be fair to Jonesy he does admit, “The calculations are highly speculative.” Highly speculative in the same way young Pinocchio was prone to high speculation.