Online betting company Betfair runs its international business from Malta. This represents a rare opportunity to run a fast-paced internet company while living a Mediterranean idyll, says Niall Wass, managing director of Betfair's international business.
Launched in 2000, Betfair’s $318m annual revenues are roughly split between the UK and its international business, which is growing much faster at 50% a year.
“We are investing more internationally because as we enter new territories we need the requisite language skills and operational support for the expansion,” says Mr Wass.
The company hosts its online games portfolio platform from its international headquarters in Malta, which is also home to a 24/7 operations team including a call centre, which together with a sister operation in the UK supports both businesses and ensures effective disaster recovery.
Headcount in Malta currently stands at 170 but the signing of a 10-year lease on a new office will support further expansion into new territories and accommodate 250 staff by the middle of next year.
The firm is also broadening its product portfolio and developing its business model of charging a small commission on a customer’s winnings to include new revenue streams, such as providing price feeds from its exchange to third parties, as well as white-label exchanges, and its Betfair Mobile product.
Division of labour
The company’s IT nerve centre in Malta only employs a small group of the hundreds of engineers working across the company, and they are predominantly involved in the operation and maintenance of the site’s IT infrastructure.
The work of software development is carried out in the UK and Romania because those skills are not available in Malta, says Mr Wass. Other locational challenges include power supply and connectivity, although both have improved dramatically over the past two years.
The commercial benefits of being based in Malta lie in cheaper language skills, lower-cost operational staff, and competitive office and running costs. Factor in a tax rate of 5%, significantly lower than the UK’s, plus a comparatively strong regulatory framework, and Malta makes an excellent business proposition.
Outside the UK, Malta probably has the strongest regulatory framework in Europe, says Mr Wass. “The regulatory landscape in which we operate is not clear-cut so we like to use European law as an argument for why we should be able to market and operate across Europe,” he says.
But the primary challenge across the business as a whole is regulation, and that does not change by being in Malta. EU regulation is open to interpretation by member states, and the firm has had to set up separate licensing agreements with Italy, for example.
“Countries are slow to regulate online gaming, which means our business expansion is often held up by the slowness of governments to address the issue,” says Mr Wass. Betfair has started looking at the US, China and India for future expansion. “There are ways into markets such as the US, for example, where you can bet online on horseracing but not on online poker.”
The company has a joint venture in Australia and is starting to put more effort into Russia and central Europe, but everything depends on how regulation develops in those markets. And while Betfair has customers in 110 countries around the world, regulation restricts active marketing mainly to countries in Europe.
Apart from regulatory questions, which are particularly pertinent to the online gaming industry, Betfair faces the obvious challenges associated with overseas expansion. Running a global business with staff located across the UK, Ireland, Australia, Malta and Denmark means dealing with different time zones and people in remote offices, which adds a level of complexity, says Mr Wass.
“It means giving more autonomy to people in different parts of the company to run their own business and report back, rather than how we’ve grown up with senior executives being involved in every decision.”
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