James Packer of Crown Resorts has announced that he is attempting to revive Australian gambling company Betfair by taking over the business. Crown Resorts already owned half of Betfair Australia, but has now purchased the other 50% for the sum of approximately $10 million.
Crown Resorts and Betfair have been a joint venture since 2004, but in Australia’s highly competitive gambling sector Betfair has failed to become profitable despite enticements such as free bookie bets. The thriving free bets Australia market did not prevent Betfair Australia from losing nearly two million dollars in the second half of last year. Figures released by the Australia Securities and Investment Commission suggest that over the past seven years, Betfair has lost nearly $50 million dollars.
As Betfair’s British partner, Crown Resorts will provide the technological and other services necessary for Betfair Australiasia to modernize their operation. No layoffs have been announced so far, and Betfair management will maintain its operational independence at least initially. The pooled resources of both companies should be especially helpful to Betfair, with free bookie bets and other forms of free bets Australia promotions likely to continue. Betfair should also be helped by its strong presence locally and the fast growth in the Australian gambling market’s online sector.
While Crown Resorts has not been explicit in outlining its new promotions and survival strategy for Betfair, some analysts suggest that Crown will try to broaden the range of gaming products Betfair offers to include online casino games such as bingo and poker. Betfair, which was originally started as a British company in 2000, has been known for its innovative betting exchange model which involves the ability to bet on both the chances of whether a horse or team will win, and also on whether or not it will lose. Yet, this two-sided feature has not been as popular as hoped.
The new corporate arrangement will give Crown Resorts total control over the licensing company Betfair used. The deal also resulted in a surge for Crown on the stock market. However, that increase was still insufficient to bring Crown stock up to where it was a year ago. The Crown/Betfair deal is in some ways typical of the continuing consolidation of players in the online betting field. There have been a wave of new entrants into the Australian online betting market, with over #13 billion in new investors participating in just the past five years.
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