Scotney speech

I read with dismay this speech made to US horseracing people by the BHA’s Director of Security, Paul Scotney, which mentions how Betfair was “in the vanguard of those agreeing to co-operate” with sports regulators, but that “this was, of course, driven by their business need, not least due to the fact that the exchange model does create a new and wide avenue for potential corruption”.

I’m not here to argue the final clause, since I’ve done that plenty of times in the past and it seems to me blindingly obvious that people who want to corrupt will tend to do so via the avenue where they are least likely to be detected. I’d be surprised if Paul disagrees with that, and over the years that I was there, he was a good friend to Betfair as a company and a supporter of me personally. But the bold assertion that we worked with the authorities ‘as a result of a business need’ – a line which looks suspiciously like it would have been added to a second draft – is made by someone who wasn’t there at the time, and is simply wrong.

I was at the forefront of our decision in 2003 to introduce MOUs with sport, starting with racing, and I remember our doing so very well –  not least because it nearly cost me my job.

Most of us in the early Betfair team had come out of the City, and although it sounds funny to say it now with everything that has happened there since, we arrived with a desire to bring financial-market best practice to the betting market. The industry as a whole was under pressure, with Panorama running exposes with iconic pictures of the William Hill chairman waving the cameras away from his gnome-filled front garden citing client confidentiality as a reason why race-fixing could not be investigated. They were very different times.

In the Betfair office, we spent a lot of time discussing how the extent to which we were able to track all betting (in a way which had previously not been possible) gave us levels of information which were extremely valuable to regulators of sport. But we were very aware that for all the fact that we thought his stance was wrong, the William Hill chairman’s basic point was right: like him, we were not able to share any of the information we had with a third party, for reasons of Data Protection. We therefore set about finding a way to overcome what we considered to be a hurdle rather than a protective barrier, and we sat down with lawyers to assess how we might do it.

The answer we got was that we could share information with third parties if we included, as part of our Terms and Conditions, the fact that we would. But the caveat, which would stop us having a blanket pass which would effectively mean we could sell information to double-glazing salesmen, was that we had to have a list of those organisations with which we planned to share; and that the terms under which we would do the sharing could be clear and transparent. Thus was born the MOU, which laid out the basis on which information could be exchanged. Every time we added a partner to the MOU list, we had to say so to allow our customers to decide whether they were prepared for their information to be exchanged with that particular party, in the event we felt that doing so was justified. If a customer was not comfortable, he or she would have to close their account.

We were all prepared to launch the plan:  the changes to our Terms and Conditions were made, and we had simply to mail our customer-base and tell them. They then had the option to sign up to the new Ts and Cs or not.

At this point, I left to go to Australia on business. I was in Australia the day before we were due to mail our customers, and at 3am I had a phonecall to my hotel room. On the other end of the line were our legal director, David Williams; and our two founders, Andrew Black and Edward Wray. I can’t remember which of them it was who told me that a decision had been made not to implement the changes, or share the information; but I remember Bert explaining that the business risk was simply too great: no other bookmaking organisation in the world shared customer information, and large numbers of our customers would therefore refuse to accept the changes. Betdaq’s exchange had been going for two years and they were not going to implement the same system, while we had another competitor in the shape of Sporting Options and no-one was sure whether they would or not. The very real concern was that we would lose large numbers of our users, and with it our crucial liquidity, to a very realistic competitor. The risk was far too great for a business which had been profitable for only just over a year; and the plan, I was told, was being shelved.

Exactly what words came next, I don’t recall; but I do remember replying to Ed’s comment that “you don’t have to get shitty with us just because we’ve woken you up at 3am”  with “I don’t give a f*ck what the time is… What annoys me is that we’ve discussed that that we think we should be breaking the mold, and why we think we should be breaking it, and now we’re about to chicken out because it’s a business risk!” A debate ensued, and by the end of it, we had agreed we were going to stick to our guns and implement the plan.

By the following Monday’s management meeting, we had done the deed; more than 99% of our customers had accepted the changes (if memory serves me right, only seven refused to do so);  there had not been the flight to Betdaq that had worried us; and I was back in London.

As we sat around our Boardroom table, Bert was the first to speak.

“I think the changes have gone very well,” he said, “and I’m pleased with how people have responded. I’d also like to credit Mark for pushing on this.  And I say that because if he had been wrong, I would now be firing him.”

So to set the record straight, we didn’t introduce it “as a result of a business need” at all.

On the contrary: a business need very nearly stopped us from doing it.