Andrew Black & Edward Wray
Who says finance can't be fun? Certainly not Andrew Black and Edward Wray, ex-traders who turned their flair for the stock market into a flourishing Internet betting business. Black, 42, who also has been a software programmer and a professional card player, came up with the idea of peer-to-peer gambling site Betfair.com in the late '90s. "I worked up a prototype in my spare time and was confident it would attract punters [gamblers] -- because I am one," he says. Persuading Wray, who had spent eight years trading at JPMorgan Chase & Co. (JPM ), to join him was easy. "Betfair is just like a stock market, but more fun," says Wray, 37. "Now I can't imagine doing anything else."
Indeed, Betfair operates more like an electronic stock exchange than a traditional bookmaker. Just as NASDAQ matches bids and offers for stocks, Betfair pairs bets between gamblers on sporting events. Betfair doesn't take on any risk by setting the odds. It makes its money on commissions, which run 2% to 5% depending on the size and frequency of the winners' bets. Players set up a Betfair account and put down enough money to cover a bet's worst-case scenario. The system automatically collects from the loser and pays the winner.
Betfair launched in June, 2000, and in three months was matching up to $95,000 worth of bets a week. Today it does more transactions than the London Stock Exchange -- some 2 million bets a day. In the year ended Apr. 30, 2004, it made $25 million in pretax profit. This year it expects double-digit growth from 13 Web sites around the world, and it plans to open an office in Australia. Betfair is riding so high that its founders are talking about going public.
What have Black and Wray done with their profits? They bought four racehorses, of course. "Every one we've bought has been a winner -- bar one filly, who shows excellent potential," Black says. He also bets regularly on his own site, just to check that it's running smoothly, you understand. Even when he loses, Betfair makes a commission. This is one gambler who has made his penchant for risk work for him.
By Rachel Tiplady