New Betfair product targets exchange and fixed-odds convergence

Betfair has continued its drive to converge its sportsbook and exchange offerings, describing the launch of its Price Rush feature as the latest in a series of innovations to support the project.

Price Rush is a new feature that allows bettors to offset a fixed-odds bet by placing the same wager on the exchange, offering better value to the customer, with no commission to be charged on winnings.

Speaking following publication of the company’s third quarter results yesterday, Betfair chief executive Breon Corcoran said that Betfair was trialling the product for racing – it is currently only live for football in the UK – but added that it was still “at a very early stage.”

This, he said, showed the operator was leading the market in terms of sportsbook innovation.

“Without being too self-congratulatory about it, we were the first with [early withdrawal feature] Cashout, and the first to offer Cashout on multiples,” Corcoran said. “We are the only ones to offer Price Rush, and we are still excited about what we can bring to market.”

He hinted at the launch of a Yes/No bet feature, which he said was currently being trialled in beta.

The increased convergence of sportsbook and exchange could ultimately see the two products reported as one revenue line, chief financial officer Alex Gersh added. While he refused to confirm this would take place, Gersh said it would be more likely to happen in the company’s next financial year.

Betfair also highlighted the advantage of the exchange in mitigating the effect of adverse sporting results on the company’s earnings at a time when results going against operators have impacted a number of other sportsbooks.

“We saw some small impact in January, but made it up in February,” Corcoran said.

He added that sportsbook customer volumes had increased as a result of more recreational customers wagering on the offering. He also noted that while a number of sports needed to be “fleshed out” the product was “materially there.”

The operator will support the growth of its sportsbook offering by ramping up its marketing spend, focusing on TV advertising. As part of this strategy Betfair has become a gold advertising partner with ITV, giving the operator’s advertising precedence around the broadcaster’s World Cup and Champions League coverage, which Corcoran said would be “valuable” for the business.

Betfair also gave an update on its strategy to focus on sustainable, regulated markets, noting that the company’s 5 per cent year-on-year revenue increase had been driven primarily by the 12 per cent rise in revenue from such markets.

While the decline in revenue from other markets slowed, Corcoran said that he did not expect this decline to stop. He explained that he believed the “regulatory tone” of the industry is changing, and said he “would not discount” Betfair from having to withdraw from more grey markets in the year.

Commenting on Betfair’s entry to the regulated New Jersey market through a partnership with GameAccount and the Trump Plaza Casino, Gersh stressed the long-term nature of the project.

“We are not breaking out New Jersey losses for the quarter,” Gersh explained. “it’s a multi-year investment and clearly we expect net negative impact on EBITDA this year and next year.”

“We see this as the early stage,” Corcoran added. “I think it’s going to be bumpy, some months we’ll take share, some months we’ll lose share, but we’re taking a longer-term view.”

The company’s racing business in the US, TVG, saw revenue rise 19 per cent for the quarter, benefitting from the introduction of horse wagering in New Jersey.

The company is also preparing to launch in the Italian market, admitting to a degree of uncertainty as to when its exchange offering would go live, the first time Italian regulator AAMS would license such a product.

“We guided end of the full year for the launch; that gives us seven to eight weeks,” Corcoran said. “It could be imminently, but will be the first time Italians have licensed the exchange. It’s just dragging on though it feels very close.”

Shares in Betfair Group plc (Co. Data) (LSE:BET) have risen 7 pence to 1,150.00 pence per share as at 10:21 GMT in London this morning, having hit a three-year high of 1,192.94 per cent in early trading following the announcement yesterday.