Betfair Essay

1293 WordsJul 29, 20116 Pages
1. What aspects (choices) of Betfair’s business model inter-link to create a powerful interactive system? In particular, why did these choices make it successful in its initial competitive battle with Flutter.com? The main choice of Betfair was to use an online platform system allowing bettors to bet against each other, instead of betting against a bookmaker. Without knowing each other, bettors had access to an enormous network base, allowing them to interact and at the same time, creating a risk-free source of income to Betfair’s business. There was no risk exposure like in the bookmaker model. Betfair’s platform was a remarkable breakthrough for easy betting. Differently from the Flutter.com’s model, Betfair allowed the creation of a more dynamic market, following the trading style system where users/customers trade in and out according to the market movements. Flutter.com’s model had to combine peer-to-peer offers in full and matching exactly the amounts and odds of each offer. By doing so, Flutter.com limited the flexibility of the platform and providing less liquidity. Betfair, in contrast, decided to increase the chances of matching the offers by aggregating all offers, without the need of a peer-to-peer direct transaction. Betfair also reinforced this intention by giving incentives to high volume punters such as preferential commission rates. This, in the end, helped to balance supply and demand at Betfair’s marketplace. This also allowed Betfair to expand its platform to real time/live betting experiences as people could trade “odds” according to the different outcomes of each competition. This could not be copied neither by Flutter.com, due its slow response as a consequence of the full peer-to-peer matching scheme, nor by street bookmakers, who didn’t have a dynamic and high-liquidity online platform. Moreover, Betfair also decided to promote

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