Betfair is the world's largest Internet betting exchange. The company is based in Hammersmith in West London, England.

Since Betfair was launched in June 2000 it has become the largest online betting company in the UK and the largest bet exchange in the world. Betfair claim to have over 2,000,000 clients and a turnover in excess of £50m/week.

A betting exchange allows punters (gamblers) to bet at odds set and requested by other punters rather than by a bookmaker. Members can make both 'Back' bets (normal bets on a selection to win) and 'Lay' bets (bets on the opposite side of the Back, against the selection), thereby eliminating the traditional bookmaker.

Betfair's bookmaking model brings together two counterparties with opposing views, and thus removes the need for a bookmaker's mark-up or overround. At the more fancied end of the market the odds offered on Betfair might be closer to the bookmakers' odds, whereas for a more speculative bet the odds available may be over 50% higher on BetfairFact: date=April 2009, more accurately reflecting the bet's true chances of success. On average the odds found on Betfair are 20% better than those offered by a fixed-odds bookmaker.Fact: date=April 2009

Betfair punters are able to offer odds based on their own opinion rather than on a set bookmakers' margin. Betfair charges a commission on all winning bets, which is set at 5% of the net winnings for most markets, although according to how much a client wagers on the site, it is possible to reduce the amount of commission paid to as low as 2%. On the 8th of September 2008 Betfair announced that it will introduce an extra "Premium Charge" for a small number of winning gamblers - who over the preceding 60 weeks have reached a certain threshold - which attempts to ensure that they pay 20% of their profits in commission or other charges.

The Betfair interface can be seen as bearing a strong similarity to that of the Stock Exchange, with the 'bet' and 'lay' options comparing to the buying and selling of derivatives. Indeed there are many professionals who play the Betfair market for profit, using purpose-designed software 'robots', in much the same way as a Stock market trader.

The company has attracted much comment in the British and Australian press.

History

Betfair's co-founders, Andrew Black and Edward Wray, won the Ernst and Young Emerging Entrepreneur of the Year award. In 2003, the company was one of about 50 recipients of the Queen's Awards for Enterprise in the Innovation category. The Queen's Awards are the UKs highest official awards for business.

In October 2005 chief executive Stephen Hill announced his resignation when the board decided not to proceed with plans for a stock market flotation, the investors holding out for a higher valuation.

In November 2005 the Tasmanian government announced a deal to licence Betfair in the state. It was the second licence awarded to Betfair outside the UK - the first being in Malta with subsequent licences following in Austria and Germany - and Tasmania now receives substantial tax revenues. However it infuriated the established monopolistic totalisators and bookmakers (due to loss of revenue) and governments (due to loss of taxes) in the other Australian states. A ban on the use of betting exchanges took effect in Western Australia on the 29 January 2007 but Betfair successfully claimed this new law violated the Constitution of Australia.