By Robert Jones, Rakeback.com Staff Writer
At the end of October, the world’s largest sports betting company, Betfair, joined the London Stock Exchange, and so far its Initial Public Offering has been a success. The Betfair stock hit the LSE selling at £13.00 a share. It was predicted that the company would trade between £11.00 and £14.00 a share, but by the end of the first day the stock was already trading at £15.50. The company is now valued at estimates of £1.39 Billion.
Some experts suggest that Betfair should not expect to continue this kind of success in the current market, but others suggest that Betfair should enjoy a continual rise, particularly because of the current popularity of sports betting, and the popularity of Betfair in the United Kingdom.
One of the people that perhaps saw a risk in going public was the co-founder, Andrew Black. On September 22, the day Betfair announced its intentions to join the LSE, Black announced he was resigning from the company. It had been long hypothesized that both Betfair would at least attempt to join the LSE, and that Black was looking to step down from the company. However, nobody expected that both of these major events would happen on the same day.
While the timing is bizarre, Betfair announcing that it would be joining the LSE was most likely not Black’s sole reason for stepping down. Black had admitted previously that he was advised to step down from the company because he was frustrated in some of the decisions Betfair was making. Black had long ago stepped far enough back in his role that he wasn’t involved in the daily operations, so after he relinquished those duties he couldn’t do much about the decisions those on the board were making for the company he co-founded.
Another concern for potential investors revolves around the growth of the company. Many feel that Betfair can’t really grow much more because it will run out of people that will use its services. Betfair does not operate in the United States, due to the current gambling laws in the USA. The same can be said for many other potential customers, like China. Because of the law limitations, experts feel the market may be reaching its peak, but for now that’s a risk the LSE is willing to take.
Additionally, while Betfair is in theory a sports betting company, they do not fall under the title “sports bookie,” because the patrons of Betfair create the line and bet on those, as opposed to a bookie setting the line. This small change in the business model, differentiating it from the true definition of a “bookie,” was apparently enough for the LSE to not worry about taking on a controversial business.
In a time when a lot of companies and businesses are hesitant to work alongside anything gambling related, the LSE thought the upsides outweighed the potential negatives.
Betfair entered the LSE in the Financial Stock Exchange 250 and trades under the symbol: BET.
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