Betfair risks are revealed in prospectus

Steve Dinneen
Follow Steve
BETFAIR yesterday released the prospectus that helped it float for almost £1.4bn earlier this month.

The document includes 15 pages of risk factors that could derail the business, including attempts by EU member states to prevent online betting operators and clarification of online gaming regulation which could hit Betfair’s position as an exchange, rather than a bookmaker.

It also raised concerns about the image of the industry as a whole, in light of sporting corruption allegations, such as that surrounding the Pakistan cricket team.

Another concern was the illegal use of the site for money laundering by either its employees or customers or a scandal involving underage gambling, which could undermine the firm’s reputation.

Its prospectus also admitted chief executive David Yu had been “absent from work for a brief period in March 2010 with a cardiological complaint,” although it insisted he is still fit for duty.

Betfair priced its initial public offering at 1,300p per share – valuing the company at £1.4bn. The world’s largest betting website said it had sold 16.2m shares in the offering, excluding an overallotment option, or 15.2 per cent of the company. It had offered the shares at 1,100-1,400p.

It also launched a majority-owned trading service, LMAX, which opened for business this week. It offers contracts for difference on US and European share indices, commodities and UK gilts.
The platform adopts its parent’s model as a peer-to-peer exchange rather than a traditional broker.