Digital divide: the story of how bet365.com left the competition trailing in its wake

The tale of bet365’s staggering rise is the stuff of industry legend. It was March 2001 when, around 12 months after the dotcom bubble went pop in spectacular fashion, bet365.com launched and began accepting bets over the internet. Denise Coates, who had bought the domain off eBay for a reported $25,000 and secured a £15m loan against her father Peter’s betting shops to build the site, was convinced online was where her family’s fortunes lay. This was a calculated gamble she was prepared to take and so the 33-year-old at the time famously established bet365 from a portable cabin in the inauspicious surroundings of a Stoke-on-Trent car park near to one of the betting shops. What followed was Denise Coates, a maths whizz with a first-class honours degree in econometrics (statistics applied to economics), and her younger brother, John, turned this online start-up into a global powerhouse. It also made them multi-billionaires along the way. Twenty years ago, however, bet365 with its green, yellow and white livery was just another new online betting brand that had sprouted up and was fighting for attention on this newish medium. “I was convinced early on that gambling would work on the internet,” Denise Coates once told the local newspaper in a rare interview. Outside investment was hard to come by, though. “At the time, the dotcom bubble had burst and a loss-making internet company wasn’t looking the best investment,” she revealed.

Words of advice

Chris Welch, VP of sports at Catena Media, was Coral Eurobet’s executive marketing director when, in 2001, he was invited to the annual Betting Shop Manager of the Year awards at a plush hotel in central London. Seated on his table that evening was a family that owned a small chain of betting shops: Peter, John and Denise Coates. While tucking into the main course, Welch heard from the Coates’ how they had recently launched an online betting site (bet365) and had grand plans for their digital venture. Welch listened politely, yet he feared the worst and advised the trio to focus on their retail estate as, he mused, his company was haemorrhaging cash in the nascent online arena. Indeed, the previous year internet-only brand Eurobet lost £12m on football’s Euro 2000 alone. “To my mind, a small regional bookmaker trying to enter this space and be successful was almost inconceivable – clearly the Coates family had different ideas,” Welch tells EGR Intel 20 years on. Bet365 was predominantly a tele-betting operation back then, while advertising the latest prices and the all-important telephone number on Teletext was still a thing. Bet365 had a bank of call handlers taking bets and dealing with customers’ queries seated alongside the odds compilers when Nigel Ridgway joined in 2002 to work the phones. By then, the fledgling business had moved from the temporary building into a proper open-plan office with the small IT department situated at the back of the room behind a glass partition. There was also a kitchen and an office each for the Coates family. “It was a real buzz; everything was going off around you,” Ridgway remembers. Something that would be incongruous at an online bookmaking operation today – or even back then – was the fact bet365 employed tea ladies to push drinks trolleys around the office and supply staff with hot beverages. By the time Ridgway left in 2012, there were around a dozen on the payroll to keep the growing army of employees refreshed. “It was very British,” Ridgway remarks. The overall headcount, he says, swelled from around 25 members of staff when he first arrived to more than 1,000 at the time of his departure. “It just grew exponentially,” he recalls. “Every year it seemed like we needed more space. We were able to expand in the existing building and we completely took it over.” Online betting was still in its infancy in the early 2000s, of course. According to data by the Office of National Statistics, an estimated 36% of UK households had internet access back in 2001. And those that did had to endure sluggish 56k dial-up connections, data limits and crude websites. The UK’s big three established retail bookmakers, William Hill, Ladbrokes and Coral, all released sports betting sites prior to bet365’s launch in March 2001. In fact, William Hill’s online sportsbook, willhill.com, first flickered into life in 1998 (a winery in California originally used WilliamHill.com). Yet bet365 would eventually breeze past these household names to become a true global giant of digital sports betting. “You don’t have to be first to be the best,” states Mark Blandford, who, much like the Coates’, owned a chain of betting shops before he launched online bookmaker Sportingbet in 1998. “There’s nothing wrong in looking at the market and the competition and being able to spot opportunities to improve on what’s in the market. I think that’s exactly what Denise did.” Bet365 also focused on doing as much as possible in-house rather than relying on third parties. This included the affiliate programme, which had initially been farmed out to a company in Vancouver, Canada. Matthew Glazier was chiefly responsible for bringing the programme in-house when he joined bet365 in 2004 as head of marketing after firing off a speculative letter outlining his credentials to John Coates. “They were an up-and-coming bookmaker at the time,” Glazier says. “John Coates himself said when I first spoke to him that they regarded themselves as being in the second tier of bookmakers at that time, which sounds incredible to say now but that was the case.” Realising online was the future for bookmaking, alongside aspirations of becoming a first-tier bookmaker, Denise Coates took the decision to sell the family’s betting shops to Coral in 2005 for £40m. This was a pivotal moment in the company’s history as the cash from the sale was used to pay off the RBS loan, while part of the proceeds was also ploughed into technology as online gambling began to really take off. In addition, bet365 went multi-lingual, and so, bilingual and polyglot staff were recruited to manage overseas customers. By that point, the company had expanded into online casino, bingo and poker. However, this was a sports betting brand first and foremost. Even if you visit the website nowadays, the tabs for games are quite inconspicuous and certainly less prominent than rival sites. Another significant move for bet365 was, when the laws allowed it, enlisting gravel-throated cockney actor Ray Winstone to front the TV ad campaigns. Winstone’s disembodied head and his direct delivery promoting in-play odds were certainly memorable. Moreover, leading customer offers, competitive prices and a great UX turbocharged the brand. “Bet365 had smart, driven leadership,” says Welch. “They developed great products, most of which were in-house, combined with some excellent marketing and a real focus on live betting promoted by the great Ray Winstone.”

A family affair

As is the case with most founders, Denise and John Coates (co-CEO) were very much hands-on. Denise Coates was the driving force behind the business and her younger brother, who has a law degree, oversaw legal aspects and marketing. “Throughout my time there, they micromanaged everything,” says Glazier. “Everything went through them and every major decision required their approval. Denise was working around the clock on the betslip functionality, the new site, or the tech side of things…nothing major was ever really delegated. I’m not sure how much that has changed because it’s virtually impossible for them to make every decision now given how enormous the company has become, but it certainly was the case when I was there [2004-2010].” This strong work ethic is echoed by Richard Smith who served in mobile operations roles at the firm between 2010 and 2014. “The C-level all worked weekends. Denise worked weekends – she was in the office seven days a week when I was there. I worked weekends, sometimes nights. You go to Betsson [where Smith was employed after bet365] and every person above a certain level finishes at five o’clock on a Friday. My boss [at bet365] said to me, ‘Saturday is our busiest day of the week [so] why wouldn’t we have all the key people in the office?’. It wasn’t run operationally like any other company, and that feeds into a better experience for the customer and issues were solved quicker.” When Smith arrived and went on a six-month ‘tour’ of the company working in customer services, payments and fraud, and software testing before ending up in the mobile team, handheld devices accounted for a sliver of the business. “Mobile was nothing, like 0.5% of revenue and was a very basic mobile site,” Smith explains. This was before mobile’s explosion when dedicated betting apps were only just starting to arrive on the scene due to Apple now allowing iOS apps entry into its store. Bet365’s owners realised they had to get ahead of the curve on mobile as the channel and in-play betting – very much synonymous with bet365 – made for perfect bedfellows (the latest accounts, published in 2019, revealed live betting accounted for 79% of sportsbook revenue). Mobile development was brought in-house in 2010, just a few days before the World Cup in South Africa. The mobile site at the time was an HTML4 slimmed down version of the desktop site, yet the advent of HTML5 allowed the code base to be consolidated and not have to separately develop for tablet and low- and high-end devices. Plus, the evolution of portable devices allowed engineers to create a more feature-rich user experience for customers. Live streaming and Match Live, the operator’s graphical representation of on-field action, were added to mobile. As was cash-out, which incidentally bet365 initially called ‘Closed Bet’ before switching to the more commonly known term for exiting a position. Bet365 was the first major operator to offer partial cash-out and would eventually go on to release its Bet Builder tool, allowing users to create an accumulator within a single match. By 2013, around half of bet365’s customers were accessing the company’s services on smartphones and tablets. This was also the point when a specialised R&D team was established to adopt best techniques and tools, and to solve scalability and business problems. Smith had a team working under him tasked with benchmarking bet365 against the competition. For instance, they would time how long it took to settle a bet with the likes of Ladbrokes, William Hill and Paddy Power versus their own product. Or how long bet365’s markets were suspended in-play after a goal or red card versus rivals’ sites. “It was literally just to focus on being number one,” Smith stresses. “No one had a team doing that as far as I’m aware. That was the kind of detail we went into from a product point of view.” Mobile development and tech engineering teams swelled as an arms race developed between operators to capture hearts and minds of consumers spending increasing chunks of their time on portable devices. For bet365, there has always been an obsession with product and customer experience. And while the desktop and mobile sites probably wouldn’t win any awards in the looks department, pages loading in double-quick fashion and the layout and navigation being logical to cope with the breadth of markets on offer was crucial. “One of the things that differentiated them during their journey was usability – the speed, convenience and simplicity of the site,” Blandford says. “If you want to have a bet on a Premier League match at three o’clock on a Saturday – there’s a lot of people who log on at 2.55pm – it’s got to be functional and intuitive.” When it came to launching in new markets (bet365 today holds 15 licences in various jurisdictions), the firm didn’t adopt a one-size-fits-all approach or leave things to chance and troubleshoot issues on the fly. Indeed, Smith says some operators appeared to be “making it up as they go along and waiting to find problems”, however bet365 spent an inordinate amount of time researching and localising the product to prioritise betting markets popular in a particular country and deploying the appropriate terminology. Australia is a good example. “It was months of research on competitors and the market before feeding these recommendations to product development,” Smith explains. All the time, the Coates siblings still maintained a close eye on all facets of the now-sprawling business. Smith says: “They [bet365] used to send a CRM email every Friday to customers and the guy who was responsible for it would double, triple check it and print it out perfectly on a colour printer. He would take it to John Coates’ desk, stand there and John Coates would read it and then go, ‘yes’, ‘no’, or ‘this needs to change’. That was done every week. No other company of their size would do that.” EGR Intel heard another, albeit unconfirmed, anecdote where a tech employee once showed Denise Coates a product redesign and she took a ruler from her drawer before measuring its dimensions, displayed on her office’s wall-mounted screen, and questioned why it was ever-so-slightly lopsided.

Continuity is key

The obsession to detail goes some way to explaining bet365’s success. The business has also had consistency at the top with the same founders leading the company throughout the journey. By comparison, William Hill has gone through five CEOs in the time bet365 has been around, while some brands have been bought and amalgamated into other companies. That consistency at bet365 extends to the EGR Power 50 rankings where the operator spent 10 years from 2010 to 2019 sitting pretty at the top, only to be dislodged last November by Flutter Entertainment. Yet that was more to do with Flutter swallowing The Stars Group to form what is now a £25bn behemoth rather than bet365 relinquishing the lead through mismanagement or anyone there taking a foot off the gas. Bet365’s latest financial accounts are due to be published with Companies House in a few days, but the most recent figures we have for the 53 weeks to the end of March 2019 showed the company achieved revenue of nearly £3bn – 10 times that of the revenue a decade earlier. Pre-tax profit was £791m, while customers gambled £64.5bn. Or £2,045 a second. Or, to put it another way, more than the annual GDP of Sri Lanka. It’s all made the Coates’ very wealthy indeed. The family, which owns 93.3% of the business, as well as Stoke City, were 16th on the most recent Sunday Times Rich List with an estimated personal fortune of £7.2bn. Denise Coates, who was appointed CBE in 2012 for services to the community and business, is Britain’s highest-paid boss and the best paid female executive in the world. The latest accounts show she took home £320m in pay and dividends (£277m net salary), a disclosure which generated headlines and caused quite a stir in the media. “It really annoys me when I hear criticism of the fact she is paying herself so much money,” Ridgway asserts. “Not only is she paying tax on it, but she’s put the hours in so she deserves everything she gets. Bet365 has been such a huge success story.” On top of this, Denise Coates is known for her philanthropy, with the latest results revealing her foundation donated £85m to good causes. This inherent generosity extended to her 4,500-strong workforce when, this time last year, the operator guaranteed full staff wages and no lay-offs for five months due to the pandemic. Bet365 is Stoke-on-Trent’s largest private-sector employer, with its UK base since 2016 a 120 metre-long angular and grey-coloured building just off a roundabout in the suburb of Etruria. But despite the imposing building having the bet365 logo plastered on all four sides in large lettering, Denise Coates prefers to avoid the limelight. The 53-year-old is notoriously media shy and very rarely agrees to interviews (a request for an interview for this article was declined). By remaining a privately owned business, not only has bet365 been able to largely avoid scrutiny from the media and City analysts but it has meant the operator has been able to enter territories its listed rivals would fear to tread.

Denise epitomises something that I’m quite a passionate believer in, and that is she’d actually worked in the shops. She knew the psychology of the custom­er – Mark Blandford, Burlywood Capital

The owners have also steered clear of the M&A frenzy. Flutter, Entain and Kindred Group each boast a bulging portfolio of betting and gaming sites, and yet bet365 continues to forge ahead with its standalone brand. And it doesn’t seem to have hampered the firm in any way. Reflecting on his inward thoughts when he met the Coates family two decades ago, Welch believes bet365’s success story is unmatched in the sector. “Most industries have innovators and pioneers: Apple in technology and design, or Amazon in online retailing. To my mind, bet365 in terms of our industry falls into the same category. A small chain of provincial betting shops built and developed a world leader in sports betting which even today are leaders in most markets in which they operate.” For Blandford, Sportingbet’s founder, part of bet365’s success can be traced back to the fact Denise Coates first cut her teeth in the world of bookmaking as a cashier in her father’s betting shops. “Denise epitomises something that I’m quite a passionate believer in, and that is she’d actually worked in the shops. She knew the psychology of the customer. When you look at people who’ve been successful in our sector, it’s a bit of a common theme. [Former Sky Bet CEO] Richard Flint had it. And I know for a fact that [ex-Entain CEO] Kenny Alexander had it.” Combine that experience with her academic skills and it is quite a combination. In fact, an old teacher of hers said this to the BBC in 2019: “If we were talking Mensa, she’d be in the top 1%.” As for bet365, this online juggernaut seems set to power on as a global industry leader, with the next (enormous) market to crack being the US. That might be the toughest task to date judging by the limited impact the brand has made so far across the pond but bet365 certainly has the financial firepower and in-house technology to compete. Closer to home, the company decided last June to hang up its telephone betting service as it became such a small part of the operations that it didn’t warrant the staffing costs. It was very much an analogue anachronism with today’s mobile apps and biometric logins. Two decades after humble beginnings in a temporary structure in a Stoke-on-Trent car park, bet365 had fully pivoted to being an entirely digital bookmaker.