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Betting on a sure thing


With around 6.4 million transactions completed every day, online betting exchange Betfair is busier than all of Europes stock exchanges combined. Its a British phenomenon born in favourite among shrewd punters. Julian Rogers goes behind the scenes and meets CTO Tony McAlister. the aftermath of the dot.com crash that has become a red hot

ts a Thursday morning in July at Betfairs headquarters in Hammersmith, London, overlooking the River Thames. Tiger Woods has just teed off at the British Open on a windswept Turnberry course while Englands cricket team is about to lock horns with Australia in the second test match of the Ashes. Theres a buzz in the trading room as call handlers match bets from punters over the phone while arm-chair gamblers back and lay (see page 58) on Betfairs website. Computer screens in the room are a frenzy of activity as money from all over the world comes pouring in for Tiger who is now a clear 2/1 favourite. Todays going to be one of the busiest betting days of the year. Betfair currently boasts more than two million registered customers from more than 140 countries. At peak periods the site has to be robust enough to stand up to 450,000 page views per minute and 1000 bets a second. Keeping this extremely complex site running smoothly 24/7 is the responsibility of the companys ebullient American CTO Tony McAlister. Although having only been in the tech hot seat for six months, McAlister is relishing the job so far and the technology challenges ahead as Betfair looks to penetrate new markets around the world. He is also in awe of what founders Andrew Black and Ed Wray have created in nine years, turning the company from internet upstart into the worlds largest betting exchange with a 90 percent share of the market. I get to stand on the shoulders of giants, as Isaac Newton once wrote, McAlister explains. What the company does today is because Ed Wray and Andrew Black created the exchange nine years ago, which is a pretty incredible foundation for me to build from. When the company launched in June 2000 just UK30,000 was matched between punters on the opening event the Oaks horse race. Fast forward to July 2009 and a wallet-busting UK53 million was matched on the five-set thriller between Roger Federer and Andy Roddick in the mens Wimbledon final. This was a record for Betfair. The volume [of bets] here is astronomical, McAlister enthuses. This creates the obviously huge challenge of maintaining the appropriate level of uptime and response time for our customers. And while the site started life as a sports exchange, Betfair now houses an online casino, poker room, games and more. Unsurprising, the role was somewhat of a baptism of fire for McAlister who

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has 30 years experience in systems development in non-gaming related industries across Europe and the US. He admits that although he enjoys sports, the only wagers he has ever struck were in his homeland on casino blackjack or the odd game of poker. Getting his head around how the exchange works, the markets and gaming on offer, as well as gambling rules and legislation, was initially a tough hurdle. Its been a pretty steep learning curve, he admits. However, I am more excited about the job today than when I first took it, mainly because of what I have learned about the industry, the company and the growth possibilities, as well as the tools and the pretty amazing people I have here to help solve problems. He also reveals that his impression during the interview process was that this was more of a technology company than a betting company. After six months I can strongly say this is indeed what it is.

HOW IT WORKS
t Betfair punters with differing opinions on an outcome can wager with each other instead of using a traditional bookmaker. For instance, John thinks footballing giants Barcelona (2/1) will beat a star-studded Real Madrid in the Spanish capital. He wishes to bet 10 at 2/1, which will return 20 plus his 10 stake (30 in total). On the other hand, Jack believes Barcelona wont emerge victorious so lays (accepts) Johns 10. If Barcelona lose or draw he pockets the 10 but if they win he pays John 20 as well as his original 10 bet. Betfair then charges commission of between two and five percent (commission is reduced the more you use Betfair) on winning bets. If you dont fancy the odds on offer you can ask for a better price. Likewise, you can determine what odds you offer when you lay a selection. Its then up the other players whether or not they chose to place a bet with you. More importantly, because you are betting with individuals you can often get better odds than those on offer with a bookmaker who has to factor a profit margin into his odds. At Betfair all bets are matched anonymously with gamblers all over the world and you can wager on a bewildering array of markets (9700 a week) from popular sports and events like horse racing and tennis to the more obscure such as water polo and this summers hottest temperature.

For McAlister and his customers, speed is of the essence. A significant chunk of betting activity on the site occurs in play right up to the finishing line or the final whistle. But while cricket matches can last five days, other sports like a five-furlong

Place your bets now

In-play betting: not for the faint-hearted

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Tony McAlister

One of the things both I and the company believe in is investing in a business during a downturn

horse race lasts around one minute from start to finish. Punters will be backing, laying and trading their positions in play as the sprint unfolds. Speed is key because I have to get those bets matched very quickly for the customer, he explains. When [David] Beckham steps up to take a penalty people will be trading their positions at this point so if I am a second late the shot has already been taken. Betfair claims that 99.9 percent of all transactions are executed in less than a second the average time is 23 milliseconds. The complex IT infrastructure powering Betfair is an Oracle database. In fact, the California-based firm rates Betfair as one of its top five customers, alongside the likes of eBay and Google. I have some of the most sophisticated Oracle PL/SQL developers in the world, says McAlister. We push that database probably as hard as any Oracle customer, which creates a lot of opportunities from this database that they dont get to see from their other customers. As well as his engineering team at Betfair HQ, McAlister also has 65 local developers and staff at his disposal in the Romanian city of Cluj, dubbed the Silicon Valley of Eastern Europe. This Betfair-owned facility is responsible for around a quarter of the companys development projects and is focused on innovations. We have given them some of our product sets to build and it is our intention to double the size of the team in the next couple of years. It is also allowing me to stretch my development team outside of London and I am looking at other parts of the globe too. McAlister recently returned from Romania to welcome the team onboard and spent a few weeks in the US in June interviewing people with a view to expanding a technical team across the pond.

The globalisation of the back-office functions mirrors the exchanges desire to crack new markets as it becomes an increasingly recognised player and international brand. However, McAlister is forced to create what he calls jurisdictional architectural due to the legal constraints of

The right architecture

Now and then


1998
Software engineer and former professional gambler Andrew Black formulates the idea of being able to buy and sell, or back and lay, sporting event outcomes in a similar 62 www.cxo.eu.com fashion to buying and selling shares 2000 Site launches with its first market being the Oaks horse race, won by Love Divine. UK30,000 is matched on the race 2003 Betfair wins the Queen's Award for Enterprise, in the Innovation category, on the recommendation of the British Prime Minister

2001

First in-play market offered on UEFA cup final between Alaves and Liverpool. Betfair merges with rival Flutter.com

operating a betting exchange in certain countries. As we expand globally ability to do this?. Keeping your eye firmly on what the business is trying we realise that we need to build our solutions and products and services to achieve and not being distracted by your IT blinkers is key. Indeed, so that they can easily be turned on or off depending on the regulatory McAlister says he always stays close to the business. requirements. Therefore, I have to make sure my technical architecture I have been in technology almost 30 years now but I have always matches the business architecture and go into a region and use one prodviewed myself as a business person first and foremost. I work directly uct but not another and then a different product in another region. That with the business and get to know it very well and work closely with my has created a pretty difficult challenge for the technology department commercial counterparts. I attend all of their meetings, stand in there here. McAlister has spent a great deal of time recently in the company and do strategy sessions with them, and these might not have anything of Betfairs legal team and the regulators to better understand what he to do with the technology itself. can and cannot do in certain regions. The company plans to overhaul its platform in order to react nimbly to legal changes in countries where it Back a winner does not yet operate. The idea is for a Betfair in a box system that can be As the interview winds up I pick McAlisters brains on how the rolled out should laws allow Betfair to enter. blackening recession will impact on Betfair and its technology functions. One medium McAlister has been keen to get his teeth When a recession bites people will look to curb their expenditure stuck into is Betfair Mobile. This stripped down verand gambling could be one pleasure to get the chop. McAlister sion of the site allows users to place bets and check believes however that the company will emerge from the odds through their internet-enabled mobile downturn stronger and healthier, which is why investphones. And with previously experience as CTO ment in IT people and technology is being made now. At peak periods up to of Vodafones mobile content division, he is One of the things both I and the company believe in is confident he can leverage its power. Mobile is investing in a business during a downturn, McAlister a perfect example of what was traditionally in suggests. The whole world knows the market now is in bets are matched the internet boom, around 1999/2000, one-toa pretty difficult financial situation. Betfair is cautiously every second one marketing. With mobile I really can do that optimistic that we are doing OK and we do believe the because you have that computer in your pocket and market will turn around. My goal is that when we come out I can get to you anywhere you are and likewise you can of this recession, we will have a stronger architecture, better get to me. He continues: I want to leverage mobile and products and services, a more efficient development process and use the power of the exchange to push our mobile products more have a globally dispersed technology team. strongly than most people are doing today. Staying in tune with where the business is heading and its requireWith all of these back-office and customer-facing technologies on ments will be paramount for this IT chief. I need to align my technical his plate, its clear to see why he feels Betfair is more about technology architecture with the business architecture so I have got to build an inthan gambling. And while his remit is to align the IT architecture with novative platform that can change quickly into different shapes and sizes the business architecture, he has found technology can prove to be a real that I cannot even see today. game-changer. Sometimes because the company is very technically foIn case you were wondering, Tiger Woods struggled with the inclemcused and very innovative, the technical architecture can influence the ent weather and crashed out of the British Open before the third days business architecture. I can go to them and say do you know I have the play. This time the layers got it right and bagged some juicy profits. n

1000

2005 Named the UK's seventh fastest-growing technology company in The Sunday Times Tech Track 100. Betfair is granted a licence in Austria, its first outside the UK 2006 French, Bulgarian and Czech language sites are added, taking the total to 18

2009

A record UK53 million is matched on the mens final at Wimbledon between Roger Federer and Andy Roddick

2004

worldwide. An online casino launched 2008 Registers its two millionth customer. Wins an unprecedented second Queen's Award for Enterprise, this time in the International Trade category

Successfully migrates 300,000 customers to Betex, its new platform. Also hosts its first online poker tournament with UK100,000 prize money

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