Betfair may lose out by not explaining how £600m lay bet was accepted


For a statement that Betfair hopes will be the "full and final" explanation of the bedlam that gripped the in-running market on Wednesday's Christmas Hurdle at Leopardstown, Friday's communication from Stephen Morana, the exchange's interim CEO, still seems to leave obvious questions hanging in the air.

The statement contains as much of the "who?" and "why?" of the affair as the Data Protection Act will allow Betfair to reveal, though the answers may not be ones that many of those whose bets were declared void will want to hear or, indeed, believe. The client whose rogue "bot" caused all the chaos, Betfair says, was a small-time player with less than £1,000 in his account, a pretty ordinary Joe Punter, by exchange standards at any rate.

The real significance of this is who he was not. This was not a hedging account operated by a bookmaking firm with unlimited credit, or an account connected to the "bots" which Betfair itself operates on the site.

In either of those cases there might have been something for a smart lawyer to get stuck into regarding the £23m that around 200 Betfair clients appeared to "win" on the race. But the truth is that the £21m worth of 28-1 offered about Voler La Vedette was a mirage. Wishing it otherwise will make no difference. You cannot win – or lose – what is not there in the first place and even the most opportunistic ambulance-chaser is likely to take one look at this fact and point to the door.

As for the "why", it cannot be a complete coincidence that – as was pointed out on Betfair's own forum within a few hours of Wednesday's race – the initial sum offered against Voler La Vedette was the highest possible in a 32-bit binary computer system.

It may be that this is simply, by definition, a power of two, and that the rogue "bot" was operating a variant of the doubling-up "Martingale" system that has ruined so many roulette players down the years. But in some respects, how the bot arrived at its particular choice of bet and stake is much less important than the question of how on earth Betfair's system was able to look at a bet risking £600m against an £800 balance and cheerfully wave it through.

There are plenty of Betfair customers using bots, after all, and their potential to do some very strange things if their code is not sufficiently tight is well known. Even non-automated Betfair punters – which numerically must be the great majority – get things wrong from time to time. Indeed, there are probably dozens of people every day who try to put through a huge bet that they cannot afford, just to see what happens.

In all there may well be thousands of bets each week that get rejected because the account concerned does not have the funds to cover it. Yet this one got through.

This is the "how" question, the one that really matters, and it is scarcely acknowledged in Friday's statement. Betfair says commercial sensitivity about its systems – and the possibility that some might look for other loopholes if it broadcast the exact reasons for Wednesday's debacle – means that it cannot go into any more detail.

But this comes with a significant PR cost attached, since it may suggest to customers – as well as Betfair's many vocal critics – that it has something to hide. If it truly has confidence that its systems are robust, and that Wednesday's events can never happen again, why not be more forthcoming about the detail of how it managed to get this one bet so horribly wrong? The question that some customers of the exchange will be asking themselves now is: why should I trust Betfair, if Betfair does not trust me?

Powered by article was written by Greg Wood, for on Friday 30th December 2011 22.37 Europe/London © Guardian News and Media Limited 2010


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