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Betting giant wagers it can win over horse-racing monopoly despite opposition

When Betfair, the world's largest online betting exchange, began taking wagers on Hong Kong racing last year, the Britain-based  firm hoped to win over the Hong Kong Jockey Club.

The idea was to demonstrate to the club the market potential for Hong Kong races  outside the city. Betfair also offered the Jockey Club 10 per cent of the profit.

However, the idea  only put the club offside,   seeing the move   as encroaching on  its territory.

'We started off on the wrong foot with the Jockey Club,' Betfair Asia managing director Tim Levene said. 'We believe we can work with them as a partner. We're going to start with a fresh piece of paper. Clearly, there are some wounds to heal.'

Betfair is evaluating whether to continue coverage of Hong Kong races in the next season.

In the meantime, it hopes to co-operate with the club on  football betting, saying its 'betting exchange' model can help lure business away from illegal bookmakers.

The company says the model - in which punters  bet against each other instead of the house, with Betfair taking a percentage from the winner's net profit - offers a wider variety of bets and better pricing.

Mr Levene estimated about  US$1 billion in illegal wagers would be placed during Euro 2004, largely because offshore bookies offer better prices than those available at the Jockey Club.

Online gambling is prohibited in Hong Kong, but regulation would allow the government to curtail illegal activity, he said.

However, a Jockey Club official  said no partnership was needed.

'I cannot think of what way we would co-operate' on soccer betting,  said Li Tak-nang, a club spokesman.

He also took issue with the suggestion that the Jockey Club was not competing with illegal bookies on prices, saying business was still going to black market odds-makers because they offer credit.

'We have figures on hand that show we're offering the best or second best odds in the world,' Mr Li said.

He added that while the club may not offer every  type of football  bet available in Britain, its products suited the local market.

The Jockey Club's football  betting monopoly expires in 2008. Mr Levene hopes for a partnership by then, saying it could help the club set up exchange betting.

'We can be extremely flexible as to what type of structure it will take,' he said.

Betfair could provide the software and technology.  Although the  club has the option to develop this on its own, to do so would be costly.

Betfair could also provide everything needed at the back end, from technology to customer service to providing access to its deep pool of liquidity. The company matches GBP50 million (HK$713 million) in bets a week.

However, Mr Li  saw no need to set up exchange betting for  football. 'I think we're going fine with our model,' he said.



Gambling exchange still eyes Jockey Club link