Betfairgate

It hasn't just been the boots buzzing around my head in recent weeks. I've also had Betfairgate exercising me, so I'll express my puzzlement on that one too. First, though, the important stuff: my favourite topic, the weather. It's easy to forget that we had a couple of days of very strong winds in the middle of last week, because since then conditions really have been very clement. Just like spring, really. Dry, warm, still, plenty of sun; and yesterday we had, I read, a top temperature of 13, which is about as balmy as one could get in the second week of January. The surface of the field is soil rather than mud, so that's a real bonus for man and beast alike. The horses have been revelling in that, while out on the Heath it's been lovely. There was a frost this morning for a change (and I'm sure that we're going to get a harder one tonight) but once the sun came up (as the final six photographs show) we had once again a lovely day. Anyway, this chapter will be illustrated with some of this week's photographs, with no further explanation for them attached other than my saying that the first five shots were taken a couple of days ago and show Karma Chameleon keeping himself fresh for his trip to Wolverhampton on Monday.

Yes, the Betfair thing. Let's start at the beginning. Initially I couldn't understand how Betfair was legal. It was clear to me that Betfair was a commission agent, with the problem that many of the bookmakers with whom Betfair placed the commissions were unlicensed, which made the whole business illegal. Anyway, it was eventually explained to be that, while in practice this is how it worked, in theory it is different: Betfair is a bookmaker who runs a completely balanced book and who accepts bets not only for a horse to win, but also for a horse to lose. His way of balancing his book is making sure that the bets he takes on each horse to win are exactly the same as the bets he takes on each horse to lose. That way he can't lose money. He can't, of course, make money either, because he breaks even on every race irrespective of which horse wins - so what he does is charge a commission, and therein lies his profit. So that all made sense: we might describe the people backing the horses to lose as layers, but (while they are clearly in practice laying the bets, which is not legal, other than for the minority of layers who did hold bookmakers' licenses) technically they aren't laying the horses: Betfair is laying the horses, and these people are backing them to lose. Semantics, maybe, but that's grand. All is legal and above board.

Now things look rather different. A couple of days after Christmas, Betfair dropped its guard. It accepted 23 million pounds' worth of bets at unrealistically long odds from one punter that Voler La Vedette, the hot favourite, would lose, and so simultaneously accepted bets from other punters (totalling a potential outlay of 23 million pounds, of course, were she to win) that she would win, also laying these punters unrealistically long odds. All would have been fine had she lost because the man who had backed her to lose would have collected while her backers would have lost and would have paid up; but she won. Anyway, Betfair, which operates only deposit accounts and no credit accounts, then discovered that the man who had placed 23 million pounds on her to lose only had a thousand pounds in his account. Betfair clearly was not going to get paid by the man who had backed her to lose. Therefore Betfair, for once, did not have a balanced book. In theory it was balanced because the man who had backed her to lose owed Betfair 23 million, but in practice it was hopelessly skewed: that man could not and would not pay, while Betfair still owed 23 million to the punters who had backed her at long odds to win. Still, Betfair wasn't the first bookmaker to make a major blunder, so it could put that one down to experience, pay the 23 million and reflect that, as a plc worth billions and with plenty of assets on which to call, it had had a very bad result indeed, but was still solvent and had still ended up less damaged than numerous other bookmakers (eg Gary Wiltshire on the day he got things badly wrong when Frankie rode his Magnificent Seven) had been in the past, when their unbalanced books had left them facing disaster because the results had gone the wrong way. Betfair wouldn't go broke, life would go on - and, you never know, Betfair could always try to recoup whatever it could from the man who had backed the mare to lose, even if clearly it would never be able to get anything like 23 million from him.

That's not how it has turned out, though. Betfair has decided not to pay the punters who have won on the race, on the basis that, as it is not going to be paid by the losing punter, it is thus absolved of its responsibilities to pay the winners. How can this be right? Were Betfair, as I had at first assumed, a commission agent, then Betfair clearly wouldn't be paying out: if the layer defaults, then the commission agent has nothing to pass on to the winning punters on whose behalf he had placed the bets. But, as we have established, Betfair is not a commission agent. (Just as well, because if he is, he's been placing bets with unlicensed bookmakers, which is illegal). Betfair is the bookmaker who has laid the bets. I can see no justification for a bookmaker deciding after the race that, simply because in retrospect he was unwise to have accepted a bet, the bet is void. Gary Wiltshire didn't take that view after his Ascot fiasco. Say Black Caviar and Frankel meet in a match. One punter stakes 23 million on Black Caviar with one bookie, so the bookie realises that he can afford to take plenty of bets on Frankel, and duly accomodates all and sundry. Frankel wins. After the race, the bookie realises that the man who has placed the 23 million on Black Caviar isn't going to pay him - so he just decides that he won't pay out Frankel's punters because otherwise the race ends up a big loser for him. Is bookmaking really allowed to operate on that basis? Maybe it is. Maybe in this 21st century which seems to baffle me at every turn we have reached the stage that it is now considered acceptable for bookmakers to "void" (ie default on) bets whenever it suits them. It would, though, be sad if we have reached that stage; and you'd like to think that the great layers of the past, who'd have paid every penny which they possessed (which is something which Betfair wouldn't even need to come close to doing to pay out those who backed Voler La Vedette) rather than welsh on a bet, would be turning in their graves.