Betfair Case

I. Betfair’s Strategy

1. Who, What, How Analysis

• Customers (Who): Majority of Betfair’s customers are punters who mostly bet on major sporting events such as horse races or football matches. Though the services are offered remotely online, the users are not much different from traditional punters who are willing to place money to predict a specific outcome. However, 67% of remote bettors are under the age of 44 whereas 51% of all bettors are in the same age group. This difference shows majority of Betfair’s customers are younger generation who are savvy with technology.

• Values offered (What): Betfair offers its betting service through online. Unlike traditional betting, Betfair system does not need bookmakers to provide the lay-side of the market. Punters are able to either back or lay bets with one another by posting their bids on the website, creating their own betting exchange market. The system simplifies betting by eliminating bookmakers and gives punters more control. The biggest value of Betfair is created by punters themselves because they are the ones providing liquidity and keep the market more dynamic; therefore, the value of Betfair multiplies as more and more punters join.

• The way the service is provided (How): Betfair has internally developed its trading platform and constantly updates the website to keep the betting market fluid and up-to-date to the point punters can bet on the event real-time. Betfair’s algorithm is also another way how the firm has survived through competition.

2. Strength and Weakness

Strength:

• Internally developed technology infrastructure

• Betting exchange system that gives punters freedom to choose either sides of a bet and allows Betfair to collect commission from them without taking lay-side risk

• Remoteness that enables punters to bet without being present in the event

• Relatively clean reputation as a gambling company

Weakness:

• Most of regular punters are not still familiar with the new system

• Strict regulation and negative public sentiment toward gambling business

• Limited range of products outside of betting on sports events

2. VRI Analysis

To evaluate how important Betfair’s strengths are, I have used VRI analysis on the key strengths above:

Resources Valuable Rare Inimitable

Technology Infrastructure   

Betting Exchange  