There aren’t too many gamblers out there who can claim to have changed an entire industry.
Andrew Black, however, is certainly one that can.
You might not know him by name, but if you have a keen interest in punting, you’d certainly know what he created – the betting exchange Betfair.
Andrew Black was born in England in 1963. Like many of the world’s top gamblers and businessmen, Black excelled at mathematics. Despite this, school didn’t interest him all that much and he was far more focused on betting with his friends.
After high school he went on to attend Exeter University, however his passion for punting grew and his results suffered. He would regularly spend his days placing bets in betting shops rather than attending class and he ultimately failed his exams. With his results continually poor and his focus lacking, Black was expelled.
To make some money, Black started to work odd jobs, however he continued to bet. His main passion was horse racing and he had a keen eye for it. Of course, he needed to get some money behind him to keep his habit up, so he took a real job at a US derivative trading firm. He managed to climb the ranks within the company, but just like with school and university, he lost interest and simply wanted to continue to gamble.
At the time he was successfully betting on horse racing and had managed to build a decent sized bank. Here he decided to take his biggest risk to date, and left his job to bet full-time.
Unfortunately, his luck came to an abrupt end and he was forced to go back into the workforce. This time though, he wanted to stay involved with his passion for punting so he started to develop gambling software. It’s around that time that he came up with the idea for Betfair.
The Betting Exchange
In 1998 Black had a vision, where people who wanted to bet could simply bet against one another and cut out the middleman – which in most cases was the bookmaker.
While the concept is quite simple, at the time the idea was revolutionary.
Black realised that he needed help to get the idea off the ground. So he approached his best friend’s brother, Edward Wray, who was working at JP Morgan at the time. Wray loved the idea of a betting exchange and the two set about raising the funds to get it started.
Black used the term, ‘open market betting’ to describe his idea, and in 1998 he and Wray created the company. The pair named it ‘The Sporting Exchange Limited’ in its early days. The company built the software that would run the betting exchange and after two years of development, they were ready to launch. However, it was the media that began to use the words ‘betting exchange’ to describe this new way of betting.
Betfair Is Born
In 2000, Betfair was launched and the first betting market was on the Epsom Oaks. It was won by a horse called Love Divine.
The first battle for Black and Wray was how to start promoting the site. In the early days, they actually organised a parade through the streets of London claiming “the death of the bookmaker.”
They were also struggling against other betting exchanges with slightly different models. One of their main competitors was a company known as Flutter. They used an eBay style structure to match bets. However, Betfair was more sophisticated and ultimately won the battle. They acquired Flutter in 2001.
They also made some changes that had a huge impact on the betting industry, including in-play betting which still causes controversy to this day.
Betfair also had its share of detractors. The fact that you can lay, or bet against horses or teams, is said to promote corruption within sports and racing. It’s something traditional bookmakers have always been concerned about.
Despite the early ups and downs, Black’s vision ultimately won out and Betfair grew into the major international powerhouse that it is today. These days they turn over more than $100 million per week and have millions of users all around the globe. In 2010 they officially listed on the London Stock Exchange.
Andrew Black has stepped down from operations but still holds an 11% stake in Betfair. It’s not a bad journey for a kid who loved a punt and got kicked out of University because of it.