Who would have believed that in just over four years Betfair has somewhat controversially brought an unprecedented transparency into the sports betting market and are now sponsoring the oldest Classic of them all? In some people's minds they are the bad guys who are highlighting the grey areas of racing. Others see the organisation as significantly aiding the fight against corruption in sport. I find it hard to accept Betfair, because it allows any Tom, Dick or Harry to lay a horse to lose as well as being able to back one to win. Betfair is a registered bookmaker in Britain, yet they cannot lose. They provide a service which allows punters to back or lay horses with others trying to make their betting pay. Betfair take a commission of two to five per cent on net winnings on a given market for providing that facility. For the record, Betfair has over 250,000 customers, an average of 40,000 of whom are active in any given week, from 85 countries worldwide. The system deals with over a million transactions a day and, at peak times, matches up to 12,000 bets a minute. The company employs over 400 people in its offices at Hammersmith, West London, and last year Betfair was bestowed a Queen's Award for Enterprise in the Innovation category, the most prestigious award in the United Kingdom. And in 2003, the company was the third most prolific sponsor of horseracing in Britain. They call it bookmaking for the 21st century - betting exchanges that record every detail of every bet and share information with sporting authorities. Betfair also has information-sharing agreements with a host of international sports bodies, including the Jockey Club, the International Cricket Council, the Association of Tennis Professionals, and the Football Association. Betfair was launched in June, 2000. The product was the brainchild of Andrew Black, a former professional punter and derivatives pricing modeller, and he founded the company alongside Edward Wray, a former vice-president of JP Morgan, debt capital markets, and now a director of the company. What is a betting exchange? It's a `bookmaker' that offsets all its risk through sophisticated technology. It brings together two counterparties with directly opposing views which results in odds that are, acccording to one independent study, on average more than 20pc better than the starting prices offered by the conventional bookmaker. And just to clarify that they, too, make a contribution to the Government and racing's purse-holders, they pay 15pc of its gross profits in General Betting Duty and 10 per cent of profits on British horseracing to the Horserace Betting Levy Board in line with all bookmakers in this country. So, what's the problem with betting exchanges? Well, if I have a bet with a traditional bookmaker it's a private transaction that nobody else should be aware of. That's how it should be. However, if you get involved on-line with any betting exchange every transaction is recorded and is there for ever and a day. Betting exchanges are now seen as `blowing the whistle' on punters. There are no prizes for guessing who were the first to object to betting exchanges, especially in the current climate when 16 arrests were made into alleged race-fixing. The bookmakers. They reacted immediately by urging the Government to introduce regulations relating to betting exchanges. Why? Not so much because of possible corruption but because Betfair and others were affecting their business. The recent dawn raids on various addresses up and down the country, including three jockeys and a trainer, was the direct result of Betfair providing evidence to the Jockey Club of disturbing betting trends which eventually was handed to the police. It all surrounds one man, Yorkshire businessman Miles Rodgers, founder and former director of Platinum Racing, who was warned off by the Jockey Club for laying his club's horses to lose and making a tidy profit. This week, the Racing Post published a list of Rodgers' Betfair activities which showed a handsome profit but the worrying aspect was that it included horses from other yards not associated with Platinum Racing. I was interested to read that Sun Bird, trained at Pallinsburn, near Cornhill-on-Tweed, by Dick Allan, was laid by Rodgers to lose at Chester last year - and it did. Fergal Lynch rode the horse and he was one of the jockeys arrested. Long before betting exchanges arrived, we had to accept that dishonest punters and bookmakers were making money from the knowledge that a horse would not win. There are two sides to the story about exchanges posing as a potential threat to the integrity of racing. You either want to know it's happening and, hopefully, the bad guys are brought to justice or go back to the dark ages when nobody saw the light of day but had an inkling something suspicious was always going on. | 
