June 2, 2012
We had some serious downtime today. I apologise for the extended downtime and the aggravation that it caused our customers. I would also like to give our customers an explanation as to what happened and what we’re doing to fix it.
Last night around 8 pm, a transaction entered the exchange engine which triggered an error. This error did not affect anything else on the site and operations continued as normal. However, the exchange engine continued to report this error at a pace that filled up our error log. Around 8 am this morning, this particular server ran out of disk space. This caused the exchange engine to shut down, but because it was out of disk space, it was unable to save to disk the the status of current orders.
I made the decision to keep the site offline until we were able to restore all of our customers’ orders. Everything was backed up on another database. It took around ten hours for our engineers to fix the exchange engine to their satisfaction that everything was 100% correct.
At 8 pm tonight, we were able to successfully bring the website online with all services functioning normally.
We will be adding software to alert us if the disk space is low and gracefully shut down the exchange engine if there is a danger situation. We will also improve the error logging capabilities. The software that triggered the transaction error in the first place has been fixed.
I would like to sincerely apologise for the downtime, especially on such a busy sports day. Our customers rely on us to stay available 24/7 and we failed to deliver today. It’s simply not good enough. We will fix this and we stay committed to our goal of making Smarkets the best place to bet in the world.
CEO of Smarkets
October 26, 2010
We’re pleased to reveal Smarkets has been shortlisted in the ‘VC/Angel backed Business of the Year’ category at this year’s Startups.co.uk awards. The last six months have seen a huge growth in our site, and having surpassed £1 million traded on Saturday, Smarkets is quickly building up momentum.
We’re looking forward to the awards ceremony on December 2nd. Wish us luck!
October 25, 2010
The weekend saw a bit of Smarkets history being made. As Techcrunch have reported, shortly before 3:00 PM on Saturday a small bet on a League Two football match took Smarkets’ total lifetime traded over the £1 million mark.
This is a huge milestone for us, and shows how we’ve been gaining traction in the tough online betting market. In the past weeks, we’ve seen increasing activity on our site, with more sign-ups, more matched bets and more payouts, and this growth looks set to continue.
We’re very pleased with our success so far, but we’re not complacent. The coming months will see us rolling out new features and more market types, and we will be working hard to make sure that the betting experience with Smarkets is the best on the web.
September 23, 2010
N.B. The following piece was penned for the FT Alphablog. You can find a link here.
At long last, Betfair is IPOing. This means they won’t be talking for a while – they’re undoubtedly going through the standard quiet period – but as someone who’s been following them for years, I thought I’d lend my thoughts.
Betfair was founded 10 years ago at the height of the dotcom boom by an investment banker and a professional gambler. They were the first company to coalesce the idea of backing as well as laying horses in one marketplace — Microsoft Access powered, no less. They merged a year later with a similiar peer to peer betting site called Flutter which was founded by some Americans, and Betfair was off to the races growing at an amazing pace.
The Betfair IPO is great validation of the UK tech scene. Joining the ranks of MySQL, Skype, QXL and ARM, Betfair shows that Europe produces billion dollar tech companies. There is much to celebrate about Betfair coming to market, and it is also validation that great billion dollar companies can come from the betting industry.
There have been a lot articles about the IPO itself, but since the betting industry tends not to be very transparent or well understood, I thought I’d highlight the top risks and strengths in my opinion of the Betfair IPO.
- Strong revenue growth: Betfair is a revenue generating machine, pure and simple. Their latest reported figure was £340 million in revenue with a profit of £17.8 million. Their revenues have been increasing around 20-30% a year since they were founded.
- Global presence: Betfair has offices in the UK, Malta, Australia, USA and Romania and customers from many, many more countries. This will give them stability as the legal status of betting changes in different countries and decreases the risk of Betfair. Betfair pulled out of France because of its disadvantageous licensing structure.
- Large user base: They have three million accounts. While this is a lot less than Facebook or LinkedIn, it’s a user base that has cash and spends lots of it. The lifetime value of a betting customer can be anywhere from hundreds of pounds to several thousand pounds.
- Product/market fit: Betfair is a platform for everyone: casual punters, large betting syndicates, bookmakers, hedgers and traders. It works well combining the needs of different customers into one website which drives Betfair’s substantial liquidity.
- Diversified revenue stream: Betfair’s dependency on horse racing and sports betting revenues has been lessened by offering poker, casino and arcarde products. Standard betting accounts for roughly two thirds of the company’s revenue.
- Transparency: One of the things I’ve always admired about Betfair is their stance on transparency and licensing. Betfair has only taken customers from countries that allow online betting. Most other betting companies don’t go down this path. I think this corporate value will serve them well in the future.
- US market: There are a lot of signs from Congressman Barney Frank and others that point to the US liberalising its stance on online gambling. This will be a boon for companies like Betfair, who are well positioned to take advantage of the change.
As you can see the bankers will have an easy time selling the strengths of this tech giant. However, there are key risks, which haven’t been discussed in as much detail.
- Slow innovation: Aside from a few cosmetic tweaks, reliability improvements and the Starting Price feature, Betfair hasn’t innovated much over the last few years. For a company that boasts several hundred developers, it should be able to release more major new features. Betfair gets very little traffic from organic search and has no social features apart from a forum.
- Tax on top traders: About a year ago Betfair introduced a “Premium Charge” on their most successful traders, taxing their profits up to 20%. This runs contrary to typical volume rebate schemes where the more one trades, the smaller the transaction costs one incurs. The company claims the tax is to offset the cost of bringing new punters to the platform, but appears to outsiders as a clear move to increase revenue taking advantage of Betfair’s position as a monopoly.
- Expensive transaction costs: Betfair takes 5% of traders’ winnings. If a trader bets £100 and wins £1000, Betfair will charge £50 for the transaction. This is very expensive in a world of $8 online stock executions. As betting exchanges become more financial in nature, these transaction costs will shrink substantially.
- Market Size and Competition: As Greg Wood from the Guardian wrote recently, horse racing liquidity has hit a ceiling. Will Betfair be able to maintain the revenue growth? With high costs and a smaller profit margin than Paddy Power, Betfair has found itself in a bit of “grow or die” situation. It will need to find ways to entice more customers to join its platform and spend their betting dollars with them. Betfair is looking to new sports – particularly football – and overseas markets like the US, China and India as opportunities for growth.
- Headcount: Betfair has a tech team close to 500 people. While there is strength in numbers at times, the most successful tech projects in history started with small, nimble teams. The more tech people involved on a product, the less agile a company can be. Adapting to changing tech trends can be a crucial ingredient to remaining competitive in today’s internet startup world.
The impending Betfair IPO is an exciting time for the betting industry, the UK tech scene and for the founders Ed Wray and Andrew Black. They have been truly disruptive in an old industry. It’s something to celebrate and my hat is off to them for building a valuable company.
September 23, 2010
At Smarkets we believe that imitation is the highest form of flattery. So when Ladbrokes created not one, but two ever-so-slightly-similar markets to our own yesterday, we chose not to interpret this as a well-established bookmaker running out of ideas, but as a recognition that Smarkets is constantly ahead of the curve in offering members innovative and interesting political markets on which to trade.
But seriously Ladbrokes, next time you guys run out of ideas you are welcome to give us a call. We are brimming with them…
September 8, 2010
The 1% birthday offer has boosted our profile considerably in the betting community this week, and a lot of people are discovering Smarkets betting for the first time. Subsequently, I’ve received several calls this week from potential new customers inquiring about the security of deposited money. Those of you who have been around this industry for awhile probably recall more than one betting company going under, taking your money along with it. Sporting Options famously used client funds to seed their betting exchange, only to lose clients’ money as well.
This is something that will never happen at Smarkets and an issue I personally take very seriously.
We are regulated by the well-respected Lotteries and Gaming Authority in Malta and are regularly inspected to ensure our security and financial procedures comply with their regulations. The LGA requires that all client funds are kept in a separate, ring fenced account that cannot be touched by the company. We must supply evidence at least monthly to the LGA that we are in compliance. In the unlikely event of Smarkets going out of business, your funds will be refunded to you in whole.
We are not a big company like the other betting giants. We are a team of 10 financial and web professionals in London who are passionate about offering the best betting experience in the world. Everyone is invited to visit our operation in Clerkenwell. Furthermore, please phone me personally if you have any concerns. You can reach me at +44 20 7617 7413.
CEO and co-founder of Smarkets
September 18, 2009
Smarkets is delighted to announce that Alex Lee [csensedesign.co.uk / Twitter] is Smarkets’ newest employee. Alex is a cycling-obsessed user experience specialist who arrives fresh off the plane from a year working on an American start-up.
He has worked with companies such as Yahoo!, RealNetworks, the BBC and Virgin Media. Alex has a record of successful and user-focused launches on some of the strongest brands in the UK, including Global’s Capital Radio and Yahoo! TV.
Smarkets is happy to have Alex on board…and we look forward to the inevitable Tour de France office sweepstakes!
August 10, 2009
Smarkets continues to grow! I am pleased to announce that Ed Stone [Twitter] will be joining our team. Ed has been involved in the web industry for over ten years working as a developer and later manager. He brings a wealth of web expertise to Smarkets and has worked in both London and Syndey.
Prior to Smarkets, Ed was the Web Development Manager for Yahoo! Search Europe, and then Project Director at Squiz UK, introducing them to web standards and progressive enhancement. I am really happy Ed has decided to make Smarkets his new home!
July 13, 2009
Smarkets is proud to announce the addition of Russ Garrett [russ.garrett.co.uk / Twitter] to our team. He brings an extensive amount of web experience to Smarkets and will head up our technical operations.
Russ loves working at startups. Prior to Smarkets, Russ was one of the first employees at Last.fm (via Audioscrobbler). He worked as System Architect for the past six years growing it from a small project to the top streaming music website that it is today. Russ also started the Hackspace Foundation which provides a collaborative environment for people to work on technology.
I am really excited that Russ is joining us. He’s one of the best in the business and will play a key role in helping Smarkets scale as we grow.
March 27, 2008
Smarkets is a pre-launch internet startup based in London. We’re creating an online betting exchange that is easy to use and social. On Smarkets, you get to play the bookie. You’ll be able to bet for and against:
- who will win Best Actor in the Oscars,
- will it snow in London on Christmas,
- will David win American Idol,
- can Hillary become the first female American president,
- Arsenal winning the Premier League, or
- any of the day’s most popular events.