Crown's move on Betfair shortens odds on James Packer wagering play
Date
March 18, 2014 - 6:36PM
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Jessica Gardiner and Patrick Bartley

James Packer.
Casino operator Crown Resorts is poised to swoop on the remaining 50 per cent of online betting exchange Betfair that it doesn't already own, increasing the odds that chairman James Packer is ready to make a major play for the $26 billion wagering market.

Betfair operates in Australia as a joint venture between Crown and the British parent company. It is understood that the British operator is keen to dump its Australian stake because the venture has been far less profitable than it hoped.

Unlike standard bookmakers, which manage a book of bets, Betfair's model matches up punters who will take either side of a bet.

In the year ended April 30 2013 Betfair increased revenue, which comes from a commission on the amount won by punters, 8.6 per cent to $54.9 million.

But the venture is so far a long way from delivering a return on investment for shareholders. A $1.6 million loss in the 2013 financial year was Betfair's sixth loss in seven years, taking the balance of losses to $47.3 million since it began operating in 2007.

Sources have told Fairfax Media that Mr Packer and Crown are keen to take over Betfair because it would give them 100 per cent control of the company's Tasmanian bookmaking licence.

This would give Crown the power to change Betfair's business model and push into the lucrative fixed odds segment.

A spokesman for Betfair declined to comment. Crown did not respond to requests for comment.

Although the overall wagering pie is growing modestly, at low single digits annually, there is a significant shift away from traditional totalisator betting to fixed odds occurring.

The shift is clearly seen in turnover, the total amount of bets placed, on thoroughbred racing. Fixed odds turnover from traditional tote operators like Tabcorp and Tatts Group rose 19 per cent in 2012-13 to $2.2 billion, according to the Australian Racing board. But turnover to the tote for those same operators dropped 10 per cent to $7.6 billion. Turnover for online bookmakers offering fixed odds rose 16 per cent in the same period to $3.7 billion.

The entry of a new low cost, online-only player, with the cash reserves of Mr Packer and Crown, could gazump smaller online only players, as well as threaten the incumbent wagering operators Tatts Group and Tabcorp.

The move also shows Mr Packer's taste for digital investments shows no sign of abating. Mr Packer was an early investor in job marketplace Seek. He only recently sold out of the company, so he could take a stake in US online real estate classified site Zillow. He is also an investor in Australian online retail player Catch Group, which operates daily deal websites like Catch of the Day and Scoopon.

Selling out would be an about face for Betfair, which has failed to profit from the Australian wagering market, despite it proving to be an attractive opportunity for its British peers.

Dublin and London-listed Paddy Power was the first British operator to make an Australian foray, when it bought out Matthew Tripp's pioneering online site Sportsbet. Mr Packer could derail the return of Mr Tripp, who just this month announced he would be returning to the online bookmaking sector with a new website Beteasy, fresh from a non-compete period after the Sportsbet sale.

William Hill has splashed the most cash of the raiding operators, buying up Sportingbet, Centrebet and Tom Waterhouse's controversial operations.

Read more: http://www.smh.com.au/business/crow...-20140318-3506r