Wednesday, 17 August 2011

Betfair Analysis

Bit of a low day at work so thought I'd do a bit of number crunching..........

Firstly the bulk of this Data is taken from a thread on General Betting written by The Magician (101) but being unable to post there due to a ban I thought I'd do the analysis on here instead. I hope Mr Magician doesn't mind and if anyone wants to post on there to ask him that is fine? (Of course if he does I will take this down)

First up, the figures:

Apologies they are small, but clicking on the picture should enlarge them for you.

What we essentially have here are the matched volumes by Sport on Betfair for the last 4 Financial Years. We also have the betfair slice of the pie (i.e commission generated from the Matched figure) as taken from the last couple of Financial Results. Lastly and perhaps the most meaningful figure, the percentage they actually make from the Total Matched figure. Make sense so far - I hope so.

Anyone see a pattern emerging with the Growth rates? In fact one could argue that with both the Football and Cricket World Cups falling within the last Financial Year why did the growth dip at all?

Perhaps the most alarming thing for me in these figures is what percentage of these matched figures Betfair actually get a cut on - 0.595% in FY09 falling to 0.539% in FY11. That's a near 10% drop in 2 Years. Anyone surprised with the Introduction of latest Premium Charges now?

Look at the end of the day Betfair can massage the Total Matched Figures very easily (In House Traders, Seeding) and with the level of 'Ping Pong' money it's not hard to understand the Matched Figure growth. What they have to address is the cut they are getting.

If this latest round of increases don't get their 'Cut %' moving in the right direction, their Share Price is only going one way and it isn't up (Buy Back notwithstanding, though it can't go on forever)

Of course I haven't mentioned Poker (falling of a cliff), LMAX (£13M Loss last Year) or any other of the non core stuff they do here, but you can certainly see why they want to transition to becoming more of a Bookmaker because their Core Exchange offering as far as I see is ex-growth (Or very close to it, profit wise). They need a new Geographic Market and they need it soon.

I hope whoever takes over from the hapless Mr Yu has got a Hat with a couple of Rabbits in it.....

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