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Power Point Presentation. Betfair – John Bowman. BETFAIR. BETFAIR. PEST Analysis / Market Analysis. By John Bowman. Betfair - Snapshot. Betfair - snapshot. Betfair – snapshot . LMAX. the market. ID: 146800

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Presentations text content in Complete

Slide1

Complete

Power Point Presentation

Betfair – John Bowman

Slide2

BETFAIR

BETFAIR

PEST Analysis / Market Analysis By John Bowman

Slide3

Slide4

Betfair - Snapshot

Slide5

Betfair - snapshot

Slide6

Betfair – snapshot

LMAX

the market

for online

Retail

financial

trading

Slide7

PEST ANALYSIS

Factor

Trend

Evaluation

Impact

1 =

low / 5 high

Rank in terms

of importance

Political

Government Regulation – To ban online gambling

Threat

5

1

Economical

Economical Recession in U.K. and most of Europe

Opportunity /

Threat

2

4

Social

Responsible Gambling - Society Views of Addictions

/

Integrity

of the Game

Threat

Threat

1

2

3

Technological

Hackers

Greater Use of Applications iPad / iPhone

Threat

Opportunity

4

3

2

Slide8

PEST Analysis - political

Date / Country

Action taken by Country

Action taken by Betfair

2006 /Russia

Prohibits

Online Gambling Completely

None

2007 / India

Bombay Wager Act – Bans Online Gambling in Maharashtra

None

2009 / French Government

Outlaws

Online betting exchange Betfair

Betfair takes legal

action

2009 / Dutch Government

Dutch Gov. bans Dutch

banks from processing payments by Dutch customers to online gaming

Betfair takes legal action

2010 / Australia

Court rules against Betfair

h

aving RNSW and HRNSW

race fields

Betfair takes legal action

1961 / U.S.A.

Wire Act –

Prohibits Sports online betting

None

Slide9

Pest analysis - economical

Cause

Effect

European Rescission

95%

of Sports Betting in Europe

Larger number of New Customers to offset

Total

Gambling $330 Billion World-wide

Online Gambling - $25 Billion

Need

to get more of the Gambling dollars

Slide10

TOTAL REVENUE - betfair

Slide11

Pest analysis - social

Responsible Gambling - Threat

Betfair

Customers

lose too much money

Betfair establishes

-

Player Protection

Customer driven deposit and loss limits

Customers online

too long

Game Session Timers

Customers have no self control

Self-exclusion tools

Customers have a Gambling Problem

Betfair establishes

Education and Information

Links to GamCare and other help organizations

Customers have a Gambling Problem

Offers self help and

awareness information

Betfair est. -

Responsible Gambling Policy

Society views online gambling as one of the biggest at-home problems

Betfair offers money and time limits, help for problem gamblers, ensures no underage gamblers

Slide12

Pest analysis - social

Integrity of the Game

Betfair

Too much

money bet on sports – concerns about integrity of Athletics

Betfair ensures integrity in all Sports

where betting is allowed

Corruption in sports

Betfair signs over 40 MoUs – Memorandums of Understanding with Sporting Venues

Betfair monitors

possible last minute bets or unusual bets to check for possible problems in “real time”

Slide13

Pest analysis - technological

External Problem

Betfair

Customers

Hackers

Betfair shuts down operation

15 Aug.

2006 – 16;20 – 1700

And 17:50 – 18.20

Customer information at

risk – credit card, bank and personal information at risk

Not able to bet during Down Time – lose revenue, loss confidence in company

New Technology

iPad / iPhone

Increase

of70% in usage over 1 year period

Accounts for 4% of Total Revenue

Slide14

Industry Analysis – Total gambling

Online gambling

$25 billion annually

8% of total gambling

Betfair accounts for 2% of total market share of Online betting

Slide15

A healthy industry

Online

gambling Revenue 1996 - $17 million

2010 - $29.4 billion

2015 – Projected Estimates

$41 - $177

billion

Make-up of Betting

41% Sports Betting

(illegal to bet on Sports in US)

46% Online Casinos and Poker Rooms

13% Other – Mostly Horse Racing

Europe – 43% of Entire Market

What will happen if US Market opens for Sports Betting

What will happen if China, Japan and India open for Online Betting

Slide16

Fastest Growing industry

Year

Online Sites

Yearly Revenue

1996

30

$17 million

2000

19,076

$3 billion

2010

44,076

$25 billion

2015

?

Estimated between $42 - $177 billion

Slide17

Industrial analysis

Slide18

Threat of New Entrants - strong

Results

Effects

Number

of competitors

1996 – 30

2003 – 44,000

Harder

to Attract and Maintain Current Customers

New Entrants

Reduces Profit Potential

Small Capital Requirement

Ease to Enter Market

Tends to Discredit Entire Online Betting

Customers Concerns and Ability to Locate Betfair Online

Slide19

Bargaining Power of industry - Weak

Results

Effects

Sporting Industry

Has Little Effect on

the Betting Industry

Betting Industry

Distributes Large Amounts of Resources back into the Sports Industry

Horse Racing Industry

Has Little

Effect on the Betting Industry

Betting Industry

Distributes Large Amounts of Resources back into the Sports Industry

Poker

Has Minor Effect – Ability to Promote Certain

Companies

Corporate

Sponsorship

Slide20

Bargaining power of customers - moderate

Results

Effects

Customers Demand

Best Service / Smallest Fees

Smaller

Profit Margins

Confidence in Website

Additional

Cost

More

Betting Opinions

Potential More Revenue

Slide21

Threat of substitutions - strong

Results

Effects

Gambling Industry

Many Avenues to Wager

Much Harder to Attract and Maintain Relationship with Customers Online

Online Betting Makes

up 8% of Total Gambling

Lottery

Larger

Than Life Payouts

Attracts Customers when Payouts are Large – Making the News

Casino

Vacation Destinations

Away form Home

Usually Planned

Out

Difficult to

Compete

Spendable Cash is often Saved to Fund Events – less Bet Online

Slide22

Intensity of rivalry - strong

Results

Effects

Unlimited Number of Same Industry Businesses

Must Standout

Spend More Money for Name Recognition

Online vs. Other Gambling

Must compete

Market Internal and External

Competition

Survival

Must Heavy Reinvest into the Gambling

and Sports

Industries

High

Cost – Low Bottom Line Profits

Economical Rivalry

Certain

Weak Economies

Complete for a Already Over Spent

Dollar – Spendable Cash

Slide23

True Competitive AdvantageBETFAIR offers:

Company based on Differentiation based on InnovationBased on fair betI bet against you, not the house

Slide24

conclusion

Effects

Results

Political

Strongest Effect on Industry

Has the power to make or break

Online Gambling

Technology

Industry Must Stay Current

High investment cost to develop and maintain, required for Online Market

to compete for Gambling $

Industry Growth

No Limits

Very young market

Fastest

growing market

Unknown Future – very much Government Regulated

Online Betting

Must Maintain

Customer Loyalty and Confidence

Must

offer services that can compete with real life experiences and continue to ensure Customers of Security and Comfort

Slide25

BETFAIR

BETFAIR

Competitor and Market Analysis By John Bowman

Slide26

HOW IT ALL WORKS

http://www.youtube.com/watch?v=d05joU_FSYo

Slide27

Direct CompetitionOnline Gambling

CompanyBetting LicenseCountries ExcludedBetfairUnited KingdomUSALadbrokesUnited KingdomUSABet365United KingdomUSA and TurkeyBetssonMaltaUSA, Malta and Hong KongPaddy PowerIsle of ManUSABodogAntiguaNone

Countries where betting licenses are located

Countries that service is not offered

Companies that are listed on the stock exchange

Slide28

Competitors

Company

Actives (customers)Betfair3 Million Ladbrokes799 ThousandBetsson2 MillionBet365 unavailablePaddy PowerunavailableBodogunavailable

Revenue in millionsBet365 & Bodog - unavailable

Slide29

Compete ?

How to compete

Impact on customers

End Results

Money Returned to Betters

Medium – High

Most betters do not know the

rate of return

To maintain

long term customers

New Customer Sign up Bonus

High –

At beginning

Has no continued value

To attract new business

and new long term customers

Number of Sports to bet on

Low-

Most will stay in same betting area

To offer more selection – more selection, more opportunity to wager

Services Offered

Medium – High-

More services = more customers

Keep more customers

Attract more customers

Wider customer base

Name Recognition

High –

Recognizing

name of website – increases comfort zone and customers returning to site

Spend money to

make money - name is recognizable, attract new business and keep excising customer base

Slide30

ODDS -PAYOUT

Odds Payout

is a Exchange with an average odds of payout – based on 100%

This means that for every EURO bet, that percent of the EURO is returned to the betters.

Slide31

New Customer Sign – Up Bonus

No sign up bonus for Betsson or Paddy Power

Bonus is for new membership

Sign – up bonus is a return of the amount the new customer deposits and bets and is then returned to their account

Betfair – 100% of first 29 EURO’s bet

BET365 100% of the first 100 EURO’s bet

Bodog offers 50% of the first 29 EUROs bet

Slide32

What to BET

This charts shows the different sports you can place wagers on.

Sports that bets are placed on:

Here is a partial list – how many do you know?

 

American Football Australian Rules Baseball Basketball Bowls Boxing Chess Cricket Cross Sport Accumulators Cycling Darts Financials - Today's Markets Financial Bets Floorball Football Football - Fixtures Gaelic Games Golf Greyhound Racing Greyhound - Todays Card Handball Horse Racing Horse Racing - Todays Card Horse Racing - Virtual Ice Hockey Motor Sport Netball Olympics 2012 Politics Rugby League Rugby Union Snooker Special Bets Tennis Volleyball

Slide33

What services are offered

Company

Ways to Deposit

Ways to Withdraw

Avg.

Fees per bet

Speed per transaction

in seconds

Number of Languages

Currency

accepted

Betfair

12

7

1.78

.438

17

10

Ladbrokes

13

9

0

.276

14

17

Bet365

16

7

1.70

.474

13

29

Betsson

8

6

1.85

.374

17

6

Paddy Power

8

6

0

1.363

2

2

Bodog

7

6

0

.300

1

3

Slide34

BRAND RECONITION

BETFAIR

EventIndustryCountryGrass signage Super15RugbyAustralianSponsors Manchester UnitedFootballUKTVG sponsors United Nations StakesHorse RacingNew Jersey - USA

Slide35

OVER ALL RATINGS

Based on the following factors

Financial Security

Odds Payout

Betting Selection

Service Test

Site Statistics

Money Trans.

Bonus

Slide36

True Competitive Advantage

BETFAIR offers:

Company based on Differentiation

based on Innovation

Based on fair bet

I bet against you, not the house

Slide37

Indirect Competition

Over $330 billion bet each year

Online reported gambling is $25 billion –

Betfair has 2% of totalIs the fastest growing gambling industry

Slide38

Products Offered

Sport betting – footballHorse RacingOnline Poker roomsOnline gaming – casinoAll offer same services No real difference on product offeredMust compete elsewhere

Slide39

Growth Rate - Unbelievable

YearOnline GamblingSitesRevenueGenerated199630$17 million200019,076$3 billion200344,076$6 billion2010---$25 billion2015$177 billion

Growth rate is the fastest growing industry of any industry

Much of revenue is unaccountable , unauthorized betting sites

How much is really bet

Illegal to bet in US

Slide40

Key Trends

Football – cash cow

Sport bets Horse Racing Poker

Poker – a thing of yesterday?

Sport bets up 11.7% same period last year, mostly due to world cupHorse racing up 1.4% same period last year, poor weather cancelled racingPoker continues downward, losing 6.5% of same period last year.

Slide41

Trends – How to place a bet

Revenue is strong from mobile channelUp 70% over one year Accounts for 4% of total revenueLeader is iPad and iPhoneAndroid Apps

Ease and discretion of use

Slide42

Market

Actives (ooo)

A Growing Market

Actives – a customer who has a bet or plays real money during a given period

UK is 17% over one year

Europe up 52%

Rest of world up 46.3%

What will happen when US market opens?

Slide43

Rest of the World

Company

Business

Direction

TVG

Racing channel largest legal online wagering in the US 35 million homes

Have foothold in

US

Horizontal – Horse racing

LMAX

Enter the market for online retail financial trading

Expand Services Offered to all Customers

Betfair Australia

50-50 joint venture

Have foothold in Australia

 

Timeform

Horseracing ratings, form guides

Ensure Product and Name Recognition

Betfair TV

More Avenues to Wager

Keep and Attract New Customers

Product Development

Slide44

Target Market – Gambling $

Old target market

No technologyKnowledgeMostly casino and horse playersMisinformed players

New target market

Knows technology 50% of new actives –football players

UK and Europe

Well informed players

Slide45

Conclusion

Gambling has always been among man and will continue.

Betfair has found a new channel to bet (same as it always has been – man to man) only now through technology.

They must keep their name recognition by sponsorship and advertising.

They must keep current with technology and even help shape it to stay ahead.

They must help regulate legislation and be at the door step when new and emerging markets are ready for the picking.

These are the factors that will ensure that they keep their market share and enhance the market for online gambling.

Slide46

BETFAIR

BETFAIR

Internal Analysis / Overview By John Bowman

Slide47

Business ModelMake up of Betfair Group

The

Betfair Group

Make-up

Core

Betfair Group

Sports

Online Sports

Betting

Games

Online Casino

Poker

Online Poker

Management of customer

funds

Investing held funds

Other investments

US Funds

TVG Horse Racing

LMAX

Online retail financial trading

Other

Investments

Misc.

Investments

Timeform

Betfair TV

Horse Racing Information

Betting widget

Slide48

Business Model

Slide49

Betfair – CEO – David Yu

Aggressive 3 yr. planHeavy re-investmentNew softwareBuy New Markets – TVG – USAKey Sponsorship in many different sporting events

Slide50

5 Year Performance

Slide51

Betfair RevenueLast 6 months of 2010

Betfair Group

Dollar Amount (000,000)

% of Total Betfair

% of change form

prior year

CORE BETFAIR

Sports

$124

58.4%

+11.7%

Games

$30.5

14.3%

+17.6%

Poker

$11

5.1%

-6.5%

Management

of customer funds

$1.5

.7%

+32.8%

OTHER INVESTMENTS

US Market

$20

9.4%

+16.5%

LMAX

$3

1.4%

+63.2%

Other Investments

$23

10.7%

+24%

Slide52

Betfair Revenue 2010

Slide53

SWOT

Slide54

SWOT - STRENGTHS

StrengthsEffectsResultsBrand RecognitionBrings in New CustomerLoyaltyNew customers converted to use other servicesCustomers’ wants and needs are metDiverse PortfolioAble to offer several services to customer base Able to keep cost lowMaintain all services – even non-profit entitiesInnovativeOffer new options to customers Attract new customersStay ahead of competition

Slide55

SWOT - WEAKNESSES

Weaknesses

Effects

Results

Easy to enter Market

No limit

to number of competitors

Must stand out to attract and maintain customer base

Government

Dependent

/ Regulations

Hard to enter new Markets / Expand Markets

Must stay current with laws

Try to

influence changes

Offer same basic services

as competitors

Must be innovative to offer and attract new and current customers

Potential

customers could join other online betting sites

Slide56

SWOT - OPPORTUNITIES

Opportunities

Effects

Results

Emerging Markets

4 Largest Gambling Markets

Betfair only has a small presence in one of the four - US , not in China, India, or Japan

New

Technology

Draw in new Customers

Get

current Customers to use services more

APPS applications

up 70% makes up 4% of total revenue

Betfair TV – more opportunity to make wagers

Expand Customer Base

More customers More opportunity to bet

with each other

Stronger customer base will result in more wagers,

generating more revenue

Slide57

SWOT - THREATS

ThreatsEffectsResultsCompetitionLose current customers / potential customersMust maintain customer base, customers are wagering against each other, requires large base to meet needsGovernment BansCould stop operations in certain countries or territoriesCould cause large loss of revenue and customer baseLoss of CustomersLess customers to wager against each otherNo customers to accept wager – no percentage of win for Betfair – no Revenue

Slide58

Entering Foreign Markets

All have strict legal

RestrictionsBetfair in US with TVGWhat will happen if Markets Open ???

The Four Largest Markets of Gambling

TVGHorse Racing - only

No Presence

Of Betfair

Slide59

Boston Consulting Group Matrix

High

Low

High

Low

Slide60

SEGMENTATIONSTRATEGY

DIFFERENTIATIONSTRATEGY

COST LEADERSHIP

NARROWMARKETSCOPE

BRANDMARKETSCOPE

UNIQUENESSCOMPETENCY

LOW COSTCOMPETENCY

Porter’s – Generic Strategy

Slide61

Grand Strategy

Slide62

Grand Strategy

Slide63

Conclusion

Business Model

Situation

Positive Effect

Negative Effect

Strong Brand Name

Attract and Maintain Strong Customer Base

Ensure Name

R

ecognition

– build Loyalty

High Cost

Name associated with

u

nfavorable

situation

Cutting Edge Technology

Attract and Maintain Strong Customer Base

More Avenues to Wager

High cost

Potential

technical issues

Horizontal Integration

Acquire Businesses

Poised

for Opening in New Markets

New Customer

Potential

Larger customer base

High cost

Sports Betting

Main Revenue

Cash Cow

Lose focus of core of business model

Slide64

Conclusion

Business ModelSituationPositive EffectNegative EffectShare HoldersReturn on InvestmentShowing a consistent profitNot enough dividends – difficult to raise addition capitalOn-line PokerDecline in RevenueOptions for customer baseNot profitable

Betfair is a very young company, in an industry that is still in its infancy

They need to keep their focus on what is their core business

Betfair needs to be ready to enter into any new markets

They need to ensure their presence in the current ones


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