There aren’t many gamblers out there who can claim to have changed the 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: 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. He was far more focused on betting with his friends.
After high school he went on to attend Exeter University, where his passion for punting grew and his academic results suffered. He would regularly spend his days 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.
Black started to work odd jobs to make money and 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 job at a US derivative trading firm. He managed to climb the ranks within the company but just like at school and university, he lost interest and wanted to gamble.
Unfortunately his luck came to an abrupt end and he was forced back into the regular workforce. This time he wanted to stay involved with punting, so he started to develop gambling software.
It’s around that time that he came up with the idea for Betfair.
Black had a vision that involved punters simply betting against each other and cutting out the middleman – which in most cases was the bookmaker. While the concept is quite simple, the idea was revolutionary at the time.
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 pair 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, initially named The Sporting Exchange Limited. The company built the software that would run the betting exchange and after two years of development, they were ready to launch. The media began to use the term ‘betting exchange’ to describe this new way of betting.
Betfair was launched in 2000, with the Epsom Oaks serving as the first market. It was won by a horse called Love Divine.
The first task for Black and Wray was promotion. In the early days, they organised a parade through the streets of London to mark “the death of the bookmaker”.
They was also competition – 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. Betfair was more sophisticated and ultimately won the battle, acquiring Flutter in 2001.
They also made some changes that had a huge impact on the racing industry, including in-play betting.
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.
These days Betfair turns over more than $100 million per week and has millions of users all around the globe. Not bad from for a kid who got kicked out of university because he loved a punt!