Online betting exchange Betfair posted a pre-tax loss of £49.4m in its fiscal year ending April 30, a significant reversal from the £54.2m profit the company reported the previous year. Revenue was down a more modest £1.5m to £387m, but earnings were off 15% to £73.3m. Betfair CEO Breon Corcoran attributed the red ink to the company’s “year of transition,” in which the company refocused its efforts on strictly regulated markets. Betfair’s withdrawal from ‘grey’ markets like Germany, Greece and Cyprus resulted in £19.4m in restructuring costs that helped drag down the company’s final numbers.
Betfair incurred a further £82.4m impairment charge related in part to its ill-advised foray into financial exchange markets via its former LMAX subsidiary. Betfair also spent £2.7m in advisory fees to fend off a takeover bid by investment group CVC Capital Partners earlier this year. Stateside, Betfair endured the scuttling of its naming rights deal with California’s Hollywood Park racetrack just one year into a five-year deal.
On the plus side, Betfair’s US horseracing division TVG saw revenues rise 6% year-on-year, making its first positive earnings contribution to the parent company’s bottom line. Betfair is also a much leaner operation following significant staff redundancies in February. In other positives, Spain and Italy are in the process of opening up their regulated markets to betting exchanges and Betfair successfully launched its fixed-odds sportsbook, which it burnished with the £5m acquisition of Rank Group’s Blue Square Bet operations in April.
Corcoran’s move to broaden Betfair’s horizons via the addition of a traditional sportsbook offering had been a sore point with the CVC crowd, who planned to refocus Betfair on its core exchange business had their takeover bid been successful. On Thursday, Corcoran said the sportsbook addition meant the company could offer new customers a “simpler, more familiar product.” Corcoran claimed that 24% of Betfair customers made use of both the exchange and fixed-odds betting options.
MATCHBOOK REVAMPS SITE, PLANS MOBILE OFFERING
As Betfair embraces fixed-odds, Matchbook.com is looking to ramp up its own betting exchange offering. The Alderney-licensed company, which changed ownership and withdrew from the US market in 2011 with a renewed focus on Europe and Asia, has spent the past year revamping its site in a bid to provide what COO Francis Osei-Amoaten called a more “credible alternative” for exchange betting fans.
Osei-Amoaten told eGamingReview that since the 2011 acquisition, management had been itching to ditch the “legacy platform that we inherited.” Phase one of the revamp is now being rolled out and a mobile version of the site is due next year. What’s more, with unnamed competitors “seemingly diverting attention away from traditional areas of strength,” Osei-Amoaten believes exchange betting fans “will quickly recognize the value” of Matchbook’s low 1% commission. Also unlike Betfair, which has been shying away from accepting rival bookies’ hedging bets, Matchbook has made a concerted bid for high-volume transactions. Watch out, Matchbook… CVC may target you, next.