Odds-on favourite to win
Like pigs finding an acorn, we all occasionally beat the bookies. But Ed Wray? He nearly broke them, and revolutionised the betting industry. Colin Cameron meets the man who changed the face of betting
April 8 2020
BY COLIN CAMERON
Along with Andrew ‘Bert’ Black, Wray is the founder of Betfair, the person-to-person betting site launched in 2000 that enables punters to wager directly with each other. They began in 1998 from one airless room in a South London business park. By 2010 they floated Betfair, then valued at £1.4 billion, after taking the heartlands of fixed betting giants such as Ladbrokes. “They were not best pleased,” Wray chuckles. Understandably so, as Betfair essentially cuts out any significant middlemen – such as bookmakers – by taking a relatively modest percentage of turnover in return for providing the scope for a market. Moreover, person-to-person betting markets don’t have to cover the cost of high-street betting-shop rents, so after adjusting the odds in the favour of punters, what profits the betting industry might expect are slim. “They were an established business, so they tried to shut us down on regulatory grounds,” Wray recalls. “We used that to our advantage. ‘The bookmakers don’t like us; they are used to winning.’ An effective marketing message. They weren’t exactly going to look kindly on something that was going to eat their lunch, were they?”
As he sits comfortably in Boisdale’s Belgravia flagship with a plate of venison, he tells me how, six years after standing down as Betfair’s chair, he now divides his time between investments and philanthropy. The former, which he steers with a light touch, include Funding Circle, LMAX, Prodigy Finance, Property Partners, and NESTA. The charities that he supports with his time include projects backed by Princes William and Harry (as well as Kate and Meghan), such as Mental Health Innovation; Coach Core, which teaches the underprivileged how to coach sport while building their confidence; and The Mix, which provides a range of support to under-25s. These are causes close to his heart and, to some colleagues’ surprise, often move him to tears.
Wray still has the original Betfair business plan on an old laptop. He would reference it had he not lost the password. “I can imagine that it would be almost entirely wrong,” he laughs. “You learn more in a year running a business than you can from anything on paper.”
At Betfair, things moved quickly. “After six months, we knew we were on to something, without ever thinking that we had made it. You keep resetting goals. Our question was, could we scale it?”
Potential rivals were a consideration. “Within two years of our launch there was Betdaq, an exchange supported by Dermot Desmond [the deep-pocketed Celtic Tiger]. When I advise start-ups, I always stress the importance of market share relative to your competitors. At Betfair we always maintained a decent advantage over any rivals. In hindsight, we also benefited from there being no opportunities in America at the time.”
At first, Wray says, Betfair was only going to focus on Group 1 flat races such as the Epsom Derby and Grade 1 contests over jumps, such as the Cheltenham Gold Cup. “We soon realised this was a mistake.”
Today, anything other than a Betfair awash with runners and riders is hard to imagine. “We have been 100 per cent good for racing,” he insists. As to his own betting, he rates himself “enthusiastic rather than avid”, and has the odd leg or share in something with prospects, such as his share in Winker Watson, winner of the Norfolk Stakes at Royal Ascot in 2007. On the day, Wray was at a wedding in France, but followed it on the Betfair website. “I had to keep refreshing the screen,” he recalls. “The odds kept going down. Later, I thought I should make sure I was at Ascot for the next time we have a Royal winner. I’m still waiting.”
He does like a punt, though. Rather than rely on the lucky Boisdale betting hat – a Churchillian Homburg from Bates of Jermyn Street, which certainly does suit him – Wray studies the odds. “I was at the Australian Open watching one of the Williams sisters lose the first set against an opponent ranked more than 100 places below her. Once she started to find her range, there was only one outcome.”
Wray’s business tips can also apply to betting. Be honest with yourself, he says. “It’s often too early to say whether there is a market and the best ideas take time to blossom.” He then warns that, however much you might kid yourself, numbers and markets don’t lie, and adds, “Listen to customers.” Also, try things quickly to see if they might work rather than perfect one idea. “It’s probably better to get five ideas to the point where they are 80 per cent ready rather than strive for one to be 100 per cent.” The initial idea represents as little as five per cent of any success, he says. “You actually invest in people.”
So in Betfair’s infancy, why didn’t the bookies buy him out and shut him down? Is the rumour true that Ladbrokes could have bought Betfair for just £20 million? “Nonsense,” Wray says. But if he was offered that? He considers a while. “Good question,” is his answer. He then recalls that Ladbrokes was worth £4 billion in 2000. “Now it’s worth a fraction of that.” A good lunch, you could say.
Colin Cameron is a BBC broadcaster and contributes to the Financial Times