Meet the pioneers who are making millions from online gambling
They spotted the potential early on in Britain's betting boom. Now they are looking at new markets
Paul Gallagher is a reporter for the Independent and Independent on Sunday having joined the group in 2012. He has previously worked for the European Voice, Daily Mirror and the Observer and been based in Brussels, Belfast, Tokyo and London.
Sunday 17 February 2013
They made hundreds of millions from the online gambling industry. Some face criminal charges in the US; others secured their fortunes from a 10-year betting boom and moved on. Most, if not all, are considered pioneers and every one of them is very, very wealthy.
As Britain's online gambling market reaches saturation point, these innovators are now looking for new markets abroad. And, despite a gloomy economic outlook, they have high hopes for 2013. In the fourth part of our series, The Independent on Sunday profiles some of the main players who capitalised on the growth of a gambling nation.
Victor Chandler (BetVictor)
Known as the "gentleman bookmaker", Victor Chandler is a pioneer of offshore bookmaking and online gambling, especially casinos and poker. He took over his father's betting business in 1975. Originally based in the UK, BetVictor moved to Gibraltar in 1999 and the company gives its founder a net worth of £160m. After picking up the hitch-hiking artist in Kensington, Chandler became the subject of the 1989 Lucian Freud portrait Man in a String Chair; the painting was sold by Christie's in 2006 for about £4m.
In the early 1990s, Chandler began to accept football wagers from far-eastern clients. Recognising the potential growth in foreign markets, he opened up an office in Antigua to enable these clients to bet without the need to pay UK tax. Chandler now employs more than 400 people and is the largest private employer on the island. After George Osborne proposed in last year's Budget to tax betting firms at the point of consumption, the company dismissed a return to the UK. "Gibraltar has done well in making itself the hub of gaming and I don't think a change of tax regime would make moving back an option," a spokesman said.
The Coates Family (Bet365)
Peter Coates, his son John and daughter Denise have turned Bet365 into one of Britain's most successful companies. The company was founded in a Stoke Portakabin in 2000, the year after Peter became majority shareholder of Stoke City football club where the 74-year-old is chairman. Denise developed a sports betting platform and trading team to launch the business online in March 2001.
Peter, a miner's son and the youngest of 14 children, controversially donated £50,000 to Labour in July 2004 when the then Labour government was in the midst of revising gambling legislation. He followed this with a £100,000 donation in December 2005 and his company donated a further £150,000 in 2007, the year the Act came into force. Bet365's profits have ballooned from £3.8m in 2005 to £116.5m, from an annual turnover of £646m, last year. In July 2005, it sold its betting shops for £40m to concentrate on the online business. Bet365, which continues to be based in Stoke, is now bigger than William Hill and Ladbrokes online businesses put together. As well as traditional betting, its poker and bingo revenues have also rocketed.
Speaking on radio last week, Peter Coates said the UK's gambling regulations should be mirrored abroad. "We have the best regulation in the world in the UK, and the more people who copy it, the better we shall be. If we see anything suspicious we have to report it. If we didn't report it, not only is it not in our interest, we could lose our licence. We have to abide by strict rules, quite rightly."
Calvin Ayre (Bodog)
Canadian billionaire Calvin Ayre, founder of Bodog online gaming, is considered a rebel figure in the industry. The 51-year-old, reportedly worth $1.2bn, has offices in London, Malaga and South-east Asia. Last year, he was indicted by the US, accused of contravening US money laundering and gambling laws. A company spokeswoman called the indictment baseless and said it is business as usual. This year, Ayre predicts the depressed share prices of European online gaming companies will tempt a cash-rich Asian operator to set up a European bridgehead. Operators such as 888, 32Red, mobile specialists Probability, software outfit Openbet and Ladbrokes are all potential acquisition targets, he says.
Gambling legislation in the UK has got "kind of messy" he said, adding: "Before, it was a straightforward 'offshore' vs 'onshore' – but now you have operators splitting their business, with some in, say, Gibraltar and the rest in the UK. This new measure is a logical one for the Government and if taxed competitively could work for both sides, especially given that the UK is the such a competitive market. Any regulation where both sides have input to the process is good for the industry." More can be done to protect problem gamblers, he says, but adds: "The online industry does more to spot and stop problem gambling than anybody else."
Avi and Aaron Shaked (888 Holdings)
Aaron Shaked is said to have pioneered the online casino concept after the idea came to him while at a dentists' conference in a Monte Carlo casino. He and his brother Avi teamed up with brothers Shay and Ron Ben-Yitzhak and established Virtual Holdings Limited in 1997, later becoming 888 Holdings. The Shaked brothers sold £95m worth of their shares in the Gibraltar-based company when it floated on the London Stock Exchange in 2005. Avi Shaked also has a long political career, including two unsuccessful attempts to run for the Israeli parliament under the slogan "a socialist and a millionaire". Aaron, who passed away in 2010, and his brother mortgaged their homes to fund the company. Their families and the Ben-Yitzhaks retain majority control.
Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
Shock poll shows voters believe Ukip is to the left of the Tories
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
New era of cheap oil 'will destroy green revolution'
Ukip founder Alan Sked and Nigel Farage 'begged Enoch Powell to stand as a candidate'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
£38000 - £44000 per annum + Bonus and Benefits: Ampersand Consulting LLP: Virt...
£30000 - £40000 per annum: Recruitment Genius: This company specialises in the...
£25000 per annum: Ashdown Group: An established media firm based in Surrey is ...
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...