SportingOptions goes under, the anti-betting exchange lobby continues to lobby for the taxation and regulation of exchange users, Betfair draws steadily closer to a stock market flotation - exchange punters continue to live in ''interesting times.''
I wasn't entirely surprised when SportingOptions ceased trading, though I was a bit surprised that an outfit which prided itself on being a low-rent version of Betfair managed to leave a multi-million debt in their wake.
"The following sounds immodest, arrogant and pompous, but guess what - I don't care, because I'm all three and worse besides.."
The following sounds immodest, arrogant and pompous, but guess what - I don't care, because I'm all three and worse besides.
Having been instrumental in the betting exchange Flutter, the success of which prompted Betfair to merge with them, and having by mutual consent left Flutter.com's offices in December 2001, on the night of that merger, determined to found an exchange of my own, no one, not Dermot Desmond, owner of Betdaq, not Kevin Griffiths the apparently now disgraced head of SportingOptions, and not Rocky Mirza, proprietor of iBetx, knows better than I do just how hard it is to break into the betting exchange industry and take on Betfair which, while not in person-to-person betting terms, has most definitely, in betting exchange terms, always held first-mover advantage.
Because I was in that industry and racking what little brains I have, trying to devise ways of eating into Betfair's market share (and with some success at heavily-funded Flutter) before any of them.
I've been saying since the year 2000, betting exchanges, essentially, are no-risk bookmakers which, instead of attempting to construct a balanced book on markets, made up a guaranteed profitable market on each matched bet between its users.
As there's no risk, betting exchanges can work to incredibly tight margins - Betfair has a maximum commission rate of 5% and, as you all hopefully know by now, at www.backandlay.com we charge just 1% to everyone.
The bet-matching technology is nifty, the facility to cut out the middle man and bet with other punters, backing, laying, asking for prices and trading is cool, but what really drives betting exchanges forward is the simple fact that they undercut the traditional bookmakers on pricing the betting product.
This is illustrated by the fact that Betfair's profits, while annually now running into millions, continue to be dwarfed by those of the big bookmakers.
William Hill and Ladbrokes, for example, made combined profits of £415 million in 2003.
This poses a bit of a problem for Betfair, whose major shareholders are seeking a flotation.
Founder Ed Wray is a businessman - not a betting industry career man - and co-founder Andrew Black - though clearly a lifelong betting man - has also made it clear in interviews he is also more interested in cashing in his shares than in keeping Betfair a ''family business.''
This has implications for betting exchange users.
A betting exchange floating on the stock market is the equivalent of a building society demutualising, except that the accountholders don't even get a one-off cash lump sum sweetener to immunise them against what is to follow.
For building societies, demutualisation means lower interest rates for savers and higher interest rates for borrowers in order to push up profits to provide dividends for the new plc's shareholders, which will including the demanding big City of London financial institutions.
So for a betting exchange, it might well mean higher commission rates - it certainly won't mean lower ones.
In the meantime, Betfair are holding off from flotation until the position on tax and regulation becomes clear.
The Treasury, which is advised by HM Customs & Excise, determines betting taxation and, when, in the March 2003 Budget, it was announced that betting exchanges would, from June 2003 onwards, pay 15% gross profits tax on their commission revenue while betting exchange users would - unless licensed bookmakers using exchanges for hedging purposes - all be treated as punters and go tax free.
However, the lobby from the Big Bookmakers and the British Horseracing Board prompted Chancellor Gordon Brown, in the March 2004 budget, to announce a' 'review of the taxation of betting exchanges and their clients.''
Two senior HM Customs & excise civil servants came out to Basingstoke to meet me as part of this review.
"exchanges will get the regulatory environment they seek and betting exchange users will be no more regulated than punters down your local Ladbrokes betting shop."
It was an illuminating encounter.
They assured me there was no question of altering the taxation of betting exchanges, but said they might tax exchange users if it could be established that a ''qualitative difference'' existed between betting on an exchange platform and betting via other mediums.
I responded that this was not the case and that, unless all other punters using other platforms - cash betting in betting shops and at racecourses, telephone betting, spread betting Tote betting etc etc, such a tax on exchanges would be inequitable and subject to a legal challenge which, if unsuccessful, would simply prompt the betting exchanges to move offshore.
I also said that, tax wise, exchanges were a soft target because of the audit trail, whereas other forms of betting would be a logistical nightmare and assessment and collection would cost more than it yielded in taxes.
The officials disputed none of this.
We'll know whether they were convinced by my argument - and no doubt similar arguments from Betfair et al - in the March Budget.
Meanwhile, The Gambling Bill had its third reading in the House of Commons recently and still stands a chance of becoming law before the next election.
If it does, unless there is an 11th-hour amendment (and I doubt this will happen) betting exchanges will get the regulatory environment they seek and betting exchange users will be no more regulated than punters down your local Ladbrokes betting shop.
If The Gambling Bill does not beat the election, then the status quo will prevail until the legislation is brought in by Labour as it enters its third consecutive term of government.
If, however Labour lose - personally I think it's marginally more likely that Elvis Presley will return to earth in a flying saucer and become John McCririck's homosexual lover than that Michael Howard will become the next prime minister, but there you go - then all bets are off: anything could happen.
Interesting times indeed.
BBC
