At Flutter.com, online betting is personal. The U.K.-based wagering site has developed a person-to-person model that allows bettors to place wagers on any eventuality they think has a chance of coming to pass — from the victor of the next horse race to where the Dow Jones Industrial Average will close tomorrow, or even which contestant will be kicked off next on the U.K.s version of Survivor. As long as another bettor is willing to take up a wager, the bet is on.
Flutters unusual name is British slang for placing a bet, but the idea was born in San Francisco when founders Josh Hannah and Vince Monical entered a bet at a 1999 Super Bowl party. Hannah lost, but the two friends kept challenging each other to wagers via e-mail. The two venture capitalists soon realized they had struck on a marketable idea.
Flutter operates much like popular auction site eBay. Users sign on, open an account and become regular members. If you dont want to bet on an existing “flutter,” you can propose your own and see if there are any takers. Unlike traditional bookmakers, who offer odds on a limited number of events and take up to 20 percent of the stakes, Flutter takes only about 2.3 percent of the transaction.
“We dont take a position [in the wager]. We only make the transaction possible,” says Hannah, Flutters CEO. “You have to have the money up front to take a bet.”
Flutter makes money both on the transactions and on the float in member accounts — the interest that accrues on that money. Since it does not carry the overhead of a stable of oddsmakers, Hannah says, Flutter offers a much better payout for bettors.
The site, launched in 1999, has proven to be a hit. The company has 200,000 customers and has handled $5 million in bets. The largest winning stake so far? About $6,000 bet on a horse race. London resident Simon Stone, who uses the site about twice per week, says his biggest win so far is 42 pounds sterling, or about $59.
Flutter has big plans for growth, but it blocks access from U.S. domains and doesnt take American credit cards. About 85 percent of the sites traffic is from the U.K. “We dont allow U.S. players on our site,” Hannah says. “Serving the U.S. population is not a winning proposition.”
The problem is the 1961 Wire Act, which outlaws sports betting over telephone lines. While many Caribbean-based bookmakers ignore the law, Hannah has decided not to because he doesnt want legal hassles.
Sidestepping the American market hasnt dissuaded investors from taking a bet on the company. Flutter has raised $44 million so far in two rounds of venture capital financing.
Of course, the overall person-to-person gaming market is still small — about $150 million today, Hannah says. But there isnt much competition yet, which means Flutter could rake in a handsome payoff.