You Bet: The Betfair Story and How Two Men Changed the World of Gambling

‘I was an occasional punter. Looking back, it is surprising how few of the founder team were mad keen punters. Most days, I would wander past my local William Hill shop. I’d actually go in on Grand National day so that made me no more than a classic National punter. I don’t think I had bet on a horse at all other than that race.’

Along with Black and Wray, Davies – who does boast of having won money on Manchester United winning the Champions’ League in 1999 – cannot claim a concise analysis of the betting market compelled him to take a chance. ‘It was the trading side for me. I was trading for a living at J.P. Morgan. This was also trading. I understood that. I looked at the prototype for Betfair and thought, my god, that is such a simple idea, so well executed. If one in ten, or even one in 100 react the way that I am reacting to it then it is a viable business. The overall betting market? I didn’t really think about it. It was the simplicity of the idea that captured your mind.’

So Davies was betting on best odds of 10-1. Would anything from between 1 and 10 per cent of the market therefore be a success? Ed Wray was eyeing just a similarly small corner of the betting market for Betfair. It was enough for him, like Davies, to turn his back on what had been previously most gainful employment. Black, mean-while, was the more intimately involved with both the concept – as the creator – and the world of betting, itself. Today, he laughs. On one hand, he maintains he had a vision. On the other hand, he sees himself as a bit of a buffoon.

Not the sort of person, Black shrugs, who is going to come up with the next brilliant idea that would make millions over and over, year after year.

Chapter TWO (#ulink_9920ce4c-9928-57e1-9c19-522e6d3d5357)

SPREAD THIN

Bookmaking is sometimes referred to as the world’s second oldest profession, just on the heels of prostitution. For years in Britain, both taking bets and what is generally accepted as a vocation with even more years against its name than turf accountancy remained tied up in preventative law and restrictive practices. Likewise, worldwide, with varying degrees of tolerance. Certainly, these were not trades for the high street. Then in May 1961, when the Betting and Gaming Act took effect, betting shops were, at least, granted above-board status in Britain. Though there were restrictions on what these new establishments could offer customers and how they might operate, premises that could accommodate anyone over a certain age wanting a bet were soon widespread. Within twelve months more than 10,000 opened for business, nationwide. With this, gambling went mainstream and Britain became a country more densely populated with places to bet than anywhere else in the world.

And after that breakthrough? Now, looking back over nearly half a century of history, the conclusion is unavoidable; largely no change or significant innovation in the betting industry at all over the thirty years that followed legalisation. Between 1961 and 1991, interiors of betting shops enjoyed a modest splash of paint and the addition of some contemporary fixtures and fittings (if that adequately describes television sets and actual seats, initially outlawed). But externally, windows still had to be blocked out to avoid potential customers being drawn in against their better judgement (also, betting shop regulars noted, maintaining privacy for anyone who didn’t want to be seen). Drinks of any sort were only allowed after enabling legislation became law in 1986 and then only the likes of coffee and tea from a machine. As for alcohol, though a pub would most likely be close by – the majority of betting shops in Britain had and have today urban locations – a beer, or, as betting often requires, something stronger, remained beyond the threshold of betting shops throughout the UK. As it does today. Back in the 1980s, bookmakers’ doorways would sometimes be graced with lame, thin, plastic coloured drapes that might otherwise have been made up into hula-hula skirts. They merely raised expectations that there might be something colourful through them. Instead, for most of the first three decades following the formal creation of the licensed betting shop, drab spaces accommodated die-hard, regular gamblers. These punters were denied a full range of refreshments for fear that anything too homely might be cause for the weak minded to extend their stay.

Much of this was out of bookmakers’ hands. They couldn’t just break the law (could they now?). Some restrictions did eventually pass into history. The arrival of television coverage, along with tea and coffee, in 1986 ahead of the thirty-year anniversary of legislation that brought betting shops into being also proved, with hindsight, a relatively major watershed. Not only did it bring to an end the frustration of listening to radio commentary and not even hearing so much as a mention of the horse carrying your money, betting shops became places of extended stays, and correspondingly better furnished.

In 1995, following legislation that brought in, among other changes, Sunday opening, windows were allowed to be clear. What’s more, today there is more on offer. In addition to the staples of horseracing and greyhounds, sport is now a huge feature. Furthermore, betting shops are now home to one-armed bandits – known in the trade as Fixed Odds Betting Terminals, or FOBTs. There is also virtual racing, computer-generated events at cyber racecourses such as Lucksin Downs, Sprint Valley, or Steepledowns. Something for everyone and any weather, then. Nonetheless, the central premise holds true. Betting has largely been a trade comfortable with the status quo.

In the end it was thirty-one years after the birth of betting shops before a shake up. If 1961 was a milestone and 1986 another legislative landmark of sorts ahead of 1995, then 1992 should be added to the timeline in bold. That year, Compton Hellyer attempted to take a grip of the profession that had up to then largely remained in a state of paralysis for the previous three decades.

Hellyer, an effervescent presence with the qualities of a rebounding rubber ball that have served him well through the many business cycles that he has experienced, championed a concept called spread betting. This was well established as a means for gambling on the fluctuations of the money markets. Hellyer attempted to adapt this into an alternative to traditional, fixed-odds betting.

Hellyer’s company was called Sporting Index. His main objective, in partnership with Lindsay McNeile, who took Ed Wray’s role to Compton’s own interpretation of an Andrew Black-style figure, was to form spread betting markets primarily on sport. Ultimately, he went after horseracing, too, simply unable to ignore the demand. The operation continues today – indeed thrives, from a solid basis established in the Nineties. Soon after launching, with Hellyer to the fore in a public relations operation that was a masterclass to any corporation seeking profile wildly in excess of market share, you might have expected it to be the principal form of bookmaking into the millennium and beyond. In 1992, spread betting was, or at least seemed to be seen by some, as the future.

As Hellyer readily concedes, Sporting Index’s business was an offshoot of an established spread betting market, which was, itself, a derivative of the financial world’s futures trading. In the futures’ market, traders buy and sell options on shares, commodities, and foreign exchange, in the process speculating on price fluctuations. The goods, themselves, need not change hands. Deals are struck with settlement at some agreed point in the future. Depending on the path of the price of the share, the goods, or the currency, traders either end up in profit or out of pocket and settle accordingly.

Financial spread betting was also speculation on market fluctuations. Similarly, shares, commodities, and foreign currency of sorts didn’t change hands. Wagers were settled on prices rising and falling around upper and lower parameters, known as ‘the spread’. You just had to guess in which direction the market would move.

Sporting Index’s version of spread betting involved taking events, such as the Open Golf Championship and offering spreads – high and low marks – on what, in the case of golf, individual players would score. For example, Tiger Woods to take between 268 to 272 shots. Gamblers would then be free either to buy or sell – with those buying of the belief that Woods would take more strokes than predicted and those selling of the view that he would out perform expectations. With sports like horseracing there would be a points system – for example, seventy-five points for a win, fifty points for finishing second – and the spread would be on the basis of expectations of points won by a particular horse, or indeed jockey or trainer. For example, Red Rum to win the Grand National, a spread of 18-20 points. If he wins, you collect fifty-five (the seventy-five points for a win minus twenty, the top of the spread) times your stake. If he fails to finish even second, losses are eighteen (the bottom of the spread, eighteen, minus zero, the points you have won) times your stake.

For sports like cricket, American football, and baseball, markets would be made for number of runs or wickets, points and touchdowns, and home runs respectively. The most innovative spread betting bookmakers would offer the widest range of spread bets including, for example, the time, during a ninety-minute game of football of the first corner, or throw in. In due course, the arrival of new fads in sport such as football squad numbers – beyond the traditional one to eleven on the back of shirts – inspired the creation of further markets. In this case, betting was, and flourishes today, on the sum of goalscorers’ shirt numbers in a match.

At the time of Sporting Index’s emergence, John Brown was on his way to assuming the chief executive’s chair and chairman’s office at William Hill. Ultimately, his company took the threat to market share of Britain’s second biggest fixed-odds bookmakers (behind only Ladbrokes) sufficiently to launch William Hill’s own spread betting service. Looking back, Brown, who can be both charming and menacing in the same sentence, rarely referencing the benefits of hindsight, maintains that William Hill Index – not the most imaginative of names – was an initiative simply to take some of the ‘easy money’ the new market offered. His success in rising from the shop floor at William Hill all the way to the boardroom means that today he can ponder the past from a most comfortable Florida outpost. Spread betting’s potential? ‘A real niche market,’ Brown insists. ‘I always felt that, right from the start. With spread betting you had to be live and on the market all the time. In other words, it was for only a sophisticated type of punter. Not the regulars at the betting shop.’

So, small, but nonetheless welcome, relatively straightforward pickings? In fact, William Hill’s own spread betting efforts were a huge flop. The money was far from easy and Hellyer maintains that traditional bookmakers cut corners in not paying market makers to reflect their specialist gifts, failing to recruit from the most obvious source; traders from the City’s Life Floor wanting a change. Brown prefers to blame William Hill’s late entry into the sports spread betting market fray – 1995 – for the subsequent failure of the company. ‘When you are late in you don’t get in’, maintains Brown, repeating a well-worn business mantra. (Ladbrokes, which set up the following year, also ultimately floundered, having failed at financial spreads, too, the previous decade). William Hill, Brown adds, never got a critical mass of turnover, which is essential for an operation to thrive within a spread betting market, or pretty much all gambling endeavours (as Betfair knew, too, well ahead of its own launch). Like Peter Jones, the former chairman of the Tote, Brown places some of the blame on journalists for the seriousness with which spread betting – at its peak, according to Jones, perhaps no more than 10 per cent of domestic telephone betting, itself just a slice of total take through 8,000-plus betting shops – was taken. The Media’s fault again, then.

Be all that as it may, what is the significance of spread betting to the emergence of Betfair? When Brown, one of Betfair’s greatest adversaries, looks back to recall spread betting’s early days he could as easily be speaking about the first few months of betting exchanges and Betfair’s ascent to market domination. Indeed, in conversation about Betfair, you can end up asking yourself whether he actually means predecessors like Sporting Index. He confides today in response to a question on these related subjects: ‘I didn’t think they would take off.’ Spread betting or betting exchanges? In this case he is talking about the former, namely firms such as Sporting Index, and not in fact Betfair. Many of Brown’s observations about spread betting could be transposed, almost verbatim, to be included in his overall views of betting exchanges; back in 2000, with Sporting Index the grand old age of eight, he at least at first didn’t expect the exchanges to take off.

An established industry figure rubbishing newcomers in an effort to preserve market share? What is new about that? Indeed, it is almost as old as bookmaking. The precise importance to Betfair of spread betting’s struggle with fixed-odds bookmakers was that this gave Black and Wray a clear and relevant case history of what its main adversary’s reaction would be when a newcomer emerged. Even with their respective years in business, both benefited from insight over and above what one might expect from applying a basic understanding of market behaviour.

Andrew Black refers to the ‘three Cs’ when considering the arc of bookmaker reaction to the emergence of betting exchanges in general and Betfair in particular. That is: ‘Contempt, Confrontation, and Capitulation’. The history of spread betting features all three appearing to varying degrees. The path of spread betting in the 1990s – which rose to a peak that decade, after which point the concept largely hit a plateau – proved most educational to Betfair for when at the end of the 1990s Black and Wray unveiled their own concept to the world.

Bookmakers’ initial complacency towards Betfair was, Black suggests, perhaps as a result of having survived – ultimately with ease – the emergence of fresh competition in the previous decade. Then, as you would anticipate from a group such as bookmakers with four decades of market domination, once it was understood that the new force had been underestimated and market share was under threat, steps soon began to be taken to preserve what was considered almost a birthright of profit. This would be the period of confrontation, then? Looking back, Black, eagerly anticipating capitulation, chuckles: ‘We knew exactly what to expect. I am sure spread betting shaped their thinking. With spread betting, they thought, “Oh my goodness, they are challenging us with this completely new way of thinking.” After that, they panicked for a while, tried to copy it, then failed, before ultimately everyone said, “don’t worry, it is just a niche”, in other words nothing to worry about after all. Then we came along. With their relatively recent experiences, they thought, “just another niche”. Except that we were more than that.’

Since selling up his stake in Sporting Index in 2003 as part of a £55 million deal, Compton Hellyer has taken an interest in a host of projects and companies. Mainly these have involved pastimes and pursuits synonymous with the interests of rake-like males of a certain wealth and age (and also, like the 62-year-old Hellyer, those senior to them still young at heart). There is the chairmanship of a golf tours company, as well as an involvement with a web endeavour that seeks to analyse football data to generate predictive statistics. (Hellyer supports Hull City who gained a place in the Premier League, which needed some explaining). Never easy is distinguishing between what is work for Hellyer, small in stature but not in his appetite for fun, and what is play.

If there has been a perfect blend for him in his business career, which began in the altogether more sombre world of the City, it was probably Sporting Index. Sport is an ongoing passion. A gamble also remains central to his life, as you would expect from someone who took a social punt and used the size of a woman’s chest to illustrate the nature of spread betting to the lady who subsequently became his second wife; the spread might, he suggested, be 32-34, or maybe 34-36, with Hellyer, ever the optimist, a buyer. Incidentally, the other example in Hellyer’s repertoire to illustrate to the uninitiated the scope for spread betting on anything, including sport, was the number of lovers a gentleman or lady might have taken over a period of time. During dinner parties, he went round the table making markets for individual guests – ten to twelve for the prettiest or most handsome, five to six for the more seemingly conservative-minded – by and large to general amusement with the occasional controversial reaction, hopefully, to keep things lively.

Hellyer admits that in starting a business specialising in spread betting on sport, he was just adapting something that was long established with a pedigree of more than two decades. In fact, another company, City Index, founded in 1983 to trade on financial markets, had just beaten him to the sports spread betting market, albeit without Hellyer’s all singing and dancing style which affords him the place in history as the de facto founder of the application beyond financial markets. Indeed, this and Sporting Index’s more inclusive name helped the company quickly assume the dominant market position in its sphere. ‘The best business decision I made was to use the word “sporting” in the name,’ Hellyer reflects. ‘It differentiated Sporting Index. We were something new.’

Exactly what Hellyer adapted for sport was spread betting on financial futures. The origins of that date back at least to the 1970s. In 1974, Stuart Wheeler, a new breed of speculator for the Square Mile who came to wider prominence when donating £5 million in 2001 to a Conservative Party led by William Hague, set up IG Index. This allowed for speculation on the price of gold. If you believed that the price of gold would rise above a given price over a set period of time you would ‘buy’ gold. If you had faith the opposite would happen, you ‘sold’. Again, no gold actually changed hands. All that did ultimately was money. For example, a £1 bet for every cent that the American price of gold changed meant that if gold went up 50c, and you had bought, you took home £50. And, of course, vice versa if the market went against you. Along the way, not a single bar of gold bullion changed hands. Within two years of setting up, Wheeler extended betting to cover all commodities traded in London. In 1979, IG expanded further to take bets on movements in US markets with betting on the FTSE and Dow Jones indices following two years later.

Hellyer fully acknowledges that he was only formally presenting as new and innovative what was already thriving, informally. Long before the creation of City Index – even IG, which, incidentally, went into sport in 1993 – spread betting had an established and illustrious history, albeit underground. ‘Sports spread betting was taking place on the floor of the Stock Exchange before us all,’ admits Hellyer. ‘Traders on the life floor would make a market on say, the number of points in a rugby match at the weekend. Then, depending on the results, they would settle up on Monday.’

Hellyer maintains that it was the people in the City of London financial market who understood market fluctuations, currency market, and the price of gold. ‘There was already a natural base for us. It had been tested. They traded for a living. And also with spread betting you have to be prepared to lose a sizeable sum of money. You won’t get away with just losing a tenner.’ This meant spread betting lent itself to people who received bonuses – in other words, those who work in the City of London again – which could act as a spread betting bank for those bad days. The logic was, according to Hellyer, ‘salary goes on the mortgage and to my wife and children but the bonus is mine.’

A loyal and local following was enough for Sporting Index to thrive. ‘The Nineties was a wonderful time for the City but, equally, the size of bonus being paid was not nationwide,’ recalls Hellyer. ‘We belatedly concluded, after efforts to take spread betting north of Birmingham, the best way to get a new client was to have an existing client recommend someone.’

Publicity for Sporting Index was key to the business thriving. In this there was good fortune from launch. This was in the spring of 1992. A summer of sport was ahead and exploiting this was, understandably, the plan. But before then there was a general election. Indeed, campaigning was in full swing at the time of Sporting Index’s birth. Very soon, the merit of making markets on this, as much as sport became clear. ‘We didn’t realise it,’ Hellyer admits now. ‘But, leaving aside sport at the time, interest in betting on the outcome of the election was great, generally, for spread betting. In this election, betting on the winner with the bookmakers at fixed odds was pretty dead. The outcome was not sufficiently compelling – two potential winners, with Neil Kinnock favoured at the start of the campaign to beat John Major – to engage the general public to have a bet. But spread betting on the overall majority? What the final make up of parliament would be was far from clear. That lent itself to what we were doing. We received huge press coverage on the election, which was a fluke. We originally wanted our launch to be around a football match. But, thanks to the election, we got a flyer.’

Once up and running, and after a month of publicity in a volume that shouldn’t even be imagined for a start-up company, press coverage continued. Hellyer, along with his public relations sidekick, Wally Pyrah (his impact was comparable to that which Eric Cantona had on Manchester United, according to Hellyer), reached platforms for self-promotion previously beyond the reach of mere bookmakers. Critically, broadcasters showed a huge appetite for spread betting related stories. This included outlets such as Test Match Special. Appearances at the luncheon interval on BBC Radio 4’s TMS broadcasts became commonplace. ‘We got out and about,’ Hellyer shrugs; a rare understatement on what was an orchestrated campaign of hype. ‘There I was next to Henry Blofeld on air, part of TMS, and he is asking me what we were betting on runs England might make in their innings.’ Such a conversation fell easily into the narrative of a broadcast at moments such as lunch or even between overs.

The advent of Sky’s extended coverage of all sports, live, was also key. ‘It was obvious very quickly that when an event was live, we would get many more bets,’ Hellyer recalls. ‘At first we would spend time making markets for the biggest events. Then we realised that, if an event was on television, it was effectively a big event. Manchester United v Arsenal, or Chelsea, or Liverpool was less of a deal to us than Sheffield United v Watford on television if the Watford game was the only one screened. People like to see where their money goes.’

As a rule, human nature sustained Sporting Index in the early days. ‘We won money because punters were optimists,’ Hellyer admits. ‘Our clients always went high. For example, if we worked out statistically that Graham Gooch would make 270 runs in a series against New Zealand, we would make the spread 289-290, to factor in human nature. People want a good game and for players like Gooch – England, generally – to do well so they would take us up and buy at 290. We always wanted to finish short, with the punters long. And even if the punters won, they came back.’

A niche was established. ‘Let’s say, after ten years we had opened 30,000 accounts of which 25 per cent were active,’ ponders Hellyer. ‘When you analysed it about 250 accounts really mattered. Small accounts created liquidity but what mattered was beating our big punters, that they lost tens of thousands a year, rather than just the hundreds that small players might lose.’

Hellyer has a theory about Betfair. The running water of the nearby Thames creates good karma, he jokes. To match Betfair’s running water the thought of nightingales in Berkeley Square ensures a degree of serenity and calm for Stuart Wheeler, who lives nearby on Davies Street, London. Mayfair’s landmark Cipriani restaurant is so close as to be tantamount to Wheeler’s local trattoria. On the side of the block which is home to his two-floor, high-rise, penthouse-style apartment is engraved: ‘Les mots juste et injuste sont entendus par toutes les consciences’ – rights and wrongs are heard by all conscience – and ‘where man obeys without being presumed good there is neither liberty nor a native land’. These are implicit testimony to Wheeler’s reputation for deep thinking that was behind him coming up with IG in 1974.

His personal thinking ultimately yielded £64 million, following IG’s flotation in 2000, a quarter century on from when he founded the company. Even after bankrolling William Hague, he still had enough to buy a castle in Kent.

Since childhood, he had always dreamt of living in such a place and funded refurbishment – as a political animal, an example, you would imagine, of fixing the roof during the good times – by selling in 2003 the last slice of IG he held.

To Wheeler’s mind, bookmakers need not have worried to the extent they did about spread betting. Looking back, he cannot recall a year when IG’s sports spread betting generated more than 15 per cent of the company’s total profits (for the year ending May 2008, £98.5 million, pretax, to give a ball park). In other words, relatively unimportant amounts. Those who were commensurate with financial markets naturally bought and sold around the spreads with ease. They were in the business of trading. But beyond them? Spread betting, Wheeler admits, was a surprising struggle for those with simply a passion for sport. ‘Some very intelligent friends of mine cannot understand spread betting,’ he laments. ‘They have been brought up on fixed-odds betting. If they had been raised on spread betting this might be different. The form of betting would be a natural one for them.’

Spread betting’s other great weakness was the potential for unlimited losses. Wheeler smiles ruefully in telling the tale of a client who learned the hardest of ways that spread betting was not for the faint hearted. This hopeful client bought at £100 a run in a spread bet on the total runs the England cricket team would manage during a tour of the West Indies over Christmas 1997. The first Test was abandoned without a ball being bowled and England’s final total was, as a consequence (coupled with some poor batting), well under the spread set for the tour. With each run below expectations costing the client £100, the tab was finally into tens of thousands, which in all cost him his job and wife. ‘You never know for sure what you are going to lose,’ Wheeler accepts.

Bookmakers, themselves, did their utmost to put limits on spread betting. Wheeler reckons that, definitively, it was tax that placed a lid on spread betting. ‘That was the way they got to us in the end,’ Wheeler shrugs. ‘We ended up paying two or three times as much as we had been paying. Bookmakers argued with the Treasury that betting duty at the time – in 1995, with spread betting thriving this stood at 7.75 per cent – was crippling them and we were getting away with paying less. They were not wrong. Certainly, they did have a case.’

He continues: ‘The main point about tax is that, if you speculate in the normal way on stock indices or shares or commodities, you pay capital gains tax on any profits. My recollection, though I am not quite certain about this, was that for some time it was income tax. Anyway the point is that in Britain there is no tax on betting profits. So if a transaction which enables you to speculate on, say, stock indices or shares or many other financial instruments, can be in the form of a bet, that is very attractive to a client. Curiously enough it is also quite attractive to the Chancellor of the Exchequer! This is because, due to the expenses of dealing, there are in the end likely to be more losers with us than winners. Those losers could, if they had done the transaction in a more normal way instead of with us by way of a bet, have set those losses against capital gains tax but, because they did do the transaction by way of a bet, they cannot do that. Quite apart from that the Chancellor gets normal corporation tax, betting duty, and PAYE from the spread betting company.’

Wheeler gives credit where credit is due. Fixed-odds bookmakers actually moved first on the development of spread betting, he concedes. Before even IG, Joe Coral founded Coral Index, which was the predecessor to Ladbroke Index, renamed when Bass Charrington bought Coral. Struggling with the concept, Bass offloaded the index onto Ladbrokes. He recognises the irony in admitting that it was an experiment by traditional bookmaking that inspired him to create IG. ‘Coral Index registered on my personal radar a very long time ago,’ Wheeler recalls. ‘It offered clients the ability to bet on what was then the FT30 Share Index and on the Dow Jones Index and I certainly remember taking advantage of its facilities, to my own loss, in the Sixties. I thought that what it had to offer was very attractive and so, after I had been sacked from one job and made redundant from another, I approached Cyril Stein, the head of Ladbrokes, suggesting that he should set up a competing company. The implication was, of course, that I would run it. He never said, no, but he never said, yes. So I approached William Hill with much the same result. As you may know, the Coral Group was taken over by Bass Charrington and they did not want to know about this very small subsidiary, Coral Index. So Ladbrokes bought it and renamed it Ladbroke Index.’

Nearly a decade after this, Wheeler recalls asking Ladbrokes – again – to form a partnership in sports spread betting, which was also rejected. He puts traditional bookmakers’ failure to profit from spread betting as down to the simple fact that whenever a bookmaker loses his or her market ascendancy by entering a field where they have limited expertise they are no more successful than your average punter. Bookmakers, who were used to being in the know and dealing with clients who were less connected than them with the goings-on in racing stables around the country, found this advantage eroded or even eliminated on unfamiliar turf. ‘By adopting sports spread betting bookmakers found that, to match the specialists like us who took bets on a much wider range of events, they had over 300 markets to assess,’ says Wheeler. ‘Experienced spread bettors with dedicated spread operations would be very good at spotting the one market in which the new boys had under or overestimated matters.’ That was true of whichever company it was, IG, or otherwise.

From a personal point of view, Wheeler did ultimately have the satisfaction of buying the shells of both companies’ efforts to develop the spread betting market. In Ladbrokes’ case this was twice. The acquisition of Ladbrokes Sporting Spreads in 1998 followed his purchase twelve years previously of Ladbroke Index. In 2001, he concluded business by buying William Hill Index.

The embarrassment that William Hill felt about the company’s failure in the spread betting market and ultimate sale of William Hill Index to IG is encapsulated in the conditions of sale. Wheeler recalls that, under the terms of the agreement reached, he was unable to discuss the price he paid, or indeed any reason for William Hill having sold out. Indeed, that remains the case today (as if that prevents anyone drawing his or her own conclusions).

Recalling his spread betting days, Wheeler now laughs at some of the misconceptions and misunderstandings. He bears a striking resemblance to the former Conservative Party Home and Foreign Secretary, Douglas Hurd, and has a highly analytical mind. In addition to being delighted by three cover-girl daughters, he seems greatly amused by the absurd.

Back in his IG days in the Nineties, an area of concern for a short while was the markets that spread betting firms offered on winning distances in horse races; it became an issue in relation to the sport’s integrity. This presented a dilemma for the authorities. You could manipulate margins of victory against the spirit of the sport without the result – namely who finished first, second and third – being affected. In other words exploit a betting market without jeopardising, in the case of a jockey or trainer, professional livelihoods. Wheeler recalls a particular trainer who took an occasional interest in this sort of wager and was believed to be working an advantage without drawing much attention from the authorities who were satisfied that his horses were, as the rules dictated, seeking to gain ‘the best possible placing’ as required. ‘It is funny how analytical evidence differs from anecdotal evidence,’ Wheeler laughs. ‘Our guys on the sports desk were at one time alarmed at this. But when they looked at the market for winning distances they found it to be one of our most profitable.’

As far as Betfair, which would encounter its own problems in relation to the corruption of sport, is concerned, Wheeler is one of many to have been invited to become a founding investor. He is not alone is turning them down. Maybe the arrival of Betfair and the betting exchange’s trade on sport limited spread betting further, he muses. ‘They came to see me. Maybe I didn’t understand the concept [which is hard to imagine]. Decent people,’ he notes. ‘I just didn’t think they would succeed. I realised relatively soon after they started to trade that they would’.

Wheeler remembers that Sporting Index also wanted a partnership, which he turned down, too. ‘Wrong again,’ he jokes.