Betting on a sure thing

by Julian Rogers

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

It's a Thursday morning in July at Betfair's headquarters in Hammersmith, London, overlooking the River Thames. Tiger Woods has just teed off at the British Open on a windswept Turnberry course while England's cricket team is about to lock horns with Australia in the second test match of the Ashes. There's 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 Betfair's 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. Today's 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 company's 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 world's 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 UK£30,000 was matched between punters on the opening event - the Oaks horse race. Fast forward to July 2009 and a wallet-busting UK£53 million was matched on the five-set thriller between Roger Federer and Andy Roddick in the men's 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 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. "It's 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."

Place your bets now

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 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 it's 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 don't 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 company's 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 right architecture

The globalisation of the back-office functions mirrors the exchange's 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 operating a betting exchange in certain countries. "As we expand globally we realise that we need to build our solutions and products and services so that they can easily be turned on or off depending on the regulatory requirements. Therefore, I have to make sure my technical architecture matches the business architecture and go into a region and use one product but not another and then a different product in another region. That has created a pretty difficult challenge for the technology department here." McAlister has spent a great deal of time recently in the company of Betfair's legal team and the regulators to better understand what he 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 does not yet operate. The idea is for a 'Betfair in a box' system that can be rolled out should laws allow Betfair to enter.

One medium McAlister has been keen to get his teeth stuck into is Betfair Mobile. This stripped down version of the site allows users to place bets and check odds through their internet-enabled mobile phones. And with previously experience as CTO of Vodafone's mobile content division, he is confident he can leverage its power. "Mobile is a perfect example of what was traditionally in the internet boom, around 1999/2000, one-to-one marketing. With mobile I really can do that because you have that computer in your pocket and I can get to you anywhere you are and likewise you can get to me." He continues: "I want to leverage mobile and use the power of the exchange to push our mobile products more strongly than most people are doing today."

With all of these back-office and customer-facing technologies on his plate, it's clear to see why he feels Betfair is more about technology than gambling. And while his remit is to align the IT architecture with the business architecture, he has found technology can prove to be a real game-changer. "Sometimes because the company is very technically focused and very innovative, the technical architecture can influence the business architecture. I can go to them and say 'do you know I have the ability to do this?'. Keeping your eye firmly on what the business is trying to achieve and not being distracted by your 'IT blinkers' is key. Indeed, McAlister says he always "stays close" to the business.

"I have been in technology almost 30 years now but I have always viewed myself as a business person first and foremost. I work directly with the business and get to know it very well and work closely with my commercial counterparts. I attend all of their meetings, stand in there and do strategy sessions with them, and these might not have anything to do with the technology itself."

Back a winner

As the interview winds up I pick McAlister's brains on how the blackening recession will impact on Betfair and its technology functions. When a recession bites people will look to curb their expenditure and gambling could be one pleasure to get the chop. McAlister believes however that the company will emerge from the downturn stronger and healthier, which is why investment in IT people and technology is being made now. "One of the things both I and the company believe in is investing in a business during a downturn," McAlister suggests. "The whole world knows the market now is in a pretty difficult financial situation. Betfair is cautiously optimistic that we are doing OK and we do believe the market will turn around. My goal is that when we come out of this recession, we will have a stronger architecture, better products and services, a more efficient development process and have a globally dispersed technology team."

Staying in tune with where the business is heading and its requirements will be paramount for this IT chief. "I need to align my technical architecture with the business architecture so I have got to build an innovative platform that can change quickly into different shapes and sizes that I cannot even see today."

In case you were wondering, Tiger Woods struggled with the inclement weather and crashed out of the British Open before the third day's play. This time the layers got it right and bagged some juicy profits.