Andrew Black: punter who revolutionised gambling

Sitting in the garden of his 330-acre Surrey farm, Andrew Black, 46, is understandably proud of his achievements. In just nine years, the tousle-haired maths boffin has revolutionised the gambling industry with Betfair, the £300m-a-year online betting site. But if his grandfather the anti-booze, sex and gambling campaigner Sir Cyril Black MP were still around, he probably wouldn't think much of it. "A Baptist and leading man in the temperance movement betting was completely off the agenda."

Top of the class in maths at Kings College, Wimbledon, Black went "a bit crazy" once let off the leash at Exeter University, spending most of his time at the bookies. Kicked out in his second year, he was forced to take a succession of "rubbish" jobs to makes ends meet. These included stacking shelves in B&Q, and working as a golf caddy, before a spell at GCHQ in Cheltenham led to the inspiration for Betfair in 1998. Locked out of the office at five on the dot every day, "i sat in my cottage with just too much time on my hands to do nothing."

A keen gambler, Black dreamed of an online betting exchange that would allow two punters to bet directly against one another. One would offer a wager, and the other would accept it. That way gamblers could set their own odds, and cut out any middleman, such as a high-street bookie. After knocking the "bare bones" of it together on a computer, Ed Wray, a City banker and fellow bridge player, agreed to go 50-50 with him on the business. In June 2000, it launched from a "poky little office in Russell Square". The £1m needed was cobbled together from family and friends after venture capitalists refused to back them.

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Some nifty marketing followed, including a procession through the City with coffins saying 'death of the bookmaker'. That got Black on to the front of the Times Business Section. But it was fending off competition, rather than generating publicity, that proved the bigger obstacle. Six weeks before launch, a rival website, Flutter, popped up. It tried to copy the auction site Ebay. So someone offering odds on a bet of, say, £10, would simply be matched up with someone else who wanted to accept a bet of £10. But this limited bet sizes and the odds on offer. Betfair on the other hand could handle say a £1,000 bet from one punter by matching it with ten counter-bets from other punters all prepared to wager £100 each. A year after launch Betfair took out its rival by buying it.

Betfair soon grabbed over 90% of the market, despite having limited money to spend on marketing, as word spread of its more flexible model. Taking 5% of the profits on every winning bet, the company turned over £1m after year one, and by 2005 was making profits of £12m on a turnover of £66m. With an 11% share of the business, Black now worth £185m will never worry about money again. However, he accepts that some may disappear on his new stud farm venture for flat racing. "I never did Betfair for the money or to get rich. I did it to do it. My grandfather always told me to go forth and conquer and do something amazing with my life." Black's assault on the gambling industry shows it was pretty sound advice.