I don't buy the William Hill line that Betfair has increased corruption in horse racing

You might not have heard of Paul Austin, but it's a good bet you will have heard him talking. For well over a decade, if the subject was gambling and the media wanted a comment then it was Austin's job to put himself in front of the microphone. As PR, first for Ladbrokes and then for City Index and IG Index, Austin was an industry mouthpiece. If gambling is in his blood, and it is - he remembers his first bet being a teenage punt on Peter Walwyn's English Prince in the 1974 Irish Derby - then talking about gambling is his true calling.

'It was something I had always wanted to do,' he says. 'Getting paid to talk about something I love.'

Lotto changes

After 30 years working, first in the shops and latterly at head office, if you cut Austin through the middle then by rights you should find the modern history of the UK betting industry ringed through him. Now managing director at IG Sport, he may be out of the PR side but over a couple of beers at a restaurant opposite the IG offices in Southwark, Austin is more than happy to share his views on where he thinks the industry is, how it got there and what it will offer for punters in the future.

Clearly, in the ten years since Austin started on the publicity side of the game, the gambling and betting industries have gone from strength to strength, to the extent that punters gambling on the hosting of the 2012 Olympics hit the front page of the Evening Standard the day before London won.

But for Austin, the kick-start for this rise to prominence came from an unlikely source - John Major's late and unlamented Tory government. 'If you look at the landscape today, I don't think the bookmakers can take any credit. The National Lottery changed the landscape much more dramatically than anything the bookies ever did.'

Like everyone else in the industry, Austin had thought the Lottery would spell disaster for the high-street bookmakers - all those people previously 'shooting for the moon' on a Saturday with the football coupons were expected to be lured away by the bigger jackpots available every Saturday evening.

But, indirectly, the lotto actually ended up changing attitudes among the masses. A hitherto unrealised appetite for gambling was being stoked while complementary changes were taking place in the industry itself.

Next in line to give both a shove was Premiership football. 'Football helped to challenge the traditional bookmaking mentality,' says Austin. 'With a 30-runner handicap at Goodwood, the bookies are making a good margin from people in the shops betting on their favourite jockey or their favourite colour. The theoretical margins are quite good.

'But take the Champions League final - Liverpool play AC Milan and at the end of normal time it's 3-3 with 30 minutes left. How do you bet on this three-runner race? It will be relatively small margins. If you were a punter you'd have been more interested in that than in a night meeting at Ripon.'

A further challenge to the high street bookies came from the emergence of sports spread betting and, after four years in the PR role at Ladbrokes, Austin did the equivalent of switching codes in rugby, moving to City Index.

'I was always aware of spread betting. It was addictive, it was noisy and, looking back, some of the prices were an utter shambles,' says Austin. 'Firms were quoting corners on a football match at 15 to 16 when today they would be more like ten to 11 or even lower. They couldn't have made a lot of money in those days because the prices were shocking.'

Blue despair

Austin took up a role as head of communications with Michael Spencer's City at what turned out to be a turbulent time for the company. In the space of 18 months Austin served seven bosses, and at one point was called into a meeting to be told he had done his job too well - the company was opening up more credit accounts than it could handle.

'The only disappointment about working with the Spencer organisation is that I do believe I invented Blue Square but was never given credit for it. It was about the time of the 1997 British Open golf and I said: "Why are we only offering spread betting?" We had a bookies licence, so why didn't we offer fixed odds? Everyone was 5/2 Tiger Woods, so I suggested we go 7/2. When Blue Square was later sold on (to Rank), Michael never phoned me to say thanks.'

By the time of the sale, Austin had long since decamped once again, this time to City's then arch-rival, IG Index. Before long, IG was in the process of preparing its first flotation on the stock exchange, and not long after it was heading for the newspaper front pages when founder and head of IG at the time, Stuart Wheeler, visited some considerable financial largesse on the Tory party.

'That was the maddest part of my career - Stuart and I sitting in front of the political editors of The Telegraph, The Mail and The Sun explaining why Stuart was giving five million quid to the Tories. That night Stuart's donation was lead item on the 10 o'clock news, with Andrew Marr talking to camera saying: "All I can find out is that he's a spreadbetting millionaire who is whiter than white." You obviously can't buy that type of publicity. We spent the next 72 hours in a frenzy with everybody writing about spread betting.'

Now, of course, everybody's writing about poker, betting exchanges, super-casinos and all the rest, and Austin sees the industry continuing its process of evolution. Once again, he says, it comes down to margins.

The need for greed

'If Ladbrokes, Hills and Coral are betting on a greyhound race to 25% theoretical margin, it's obvious that by cutting out the middle man and allowing punters to trade with each other then it can be done on a substantially more attractive set of prices.'

He has some sympathy for the high street bookies, though he notes it was greed that landed them in trouble. 'Year after year, profits were going up and up and up. But if you spoke to the bosses at the big three in the mid-Nineties and suggested they would make more money if they cut their theoretical margins, they would have said you were mad. But in hindsight, if they had done that then maybe Betfair would never have existed.'

Now the genie is out of the bottle the industry is still not all that sure of how it should react to the changed circumstances. 'I don't buy the William Hill line that Betfair has increased corruption in horse racing. But on the other hand, when people say that you have always been able to lay a horse, well, that's a bit of a fib. You have only been able to lay a horse if the price of that horse was very short and you could then back every other horse in the race.'

Shutting the barn door...

Anonymity is another new factor, but old-fashioned problems with racing's creaking regulatory system remain. 'A big part of the problem is that Betfair hands over the betting patterns after a race, then six months later the Jockey Club announces they are opening hearings. It's too bloody late, and the reason there isn't a bigger outrage is that the people who were backing the horse are people like you and me. The layers are not turning over one company or individual for big money, they are taking lots of little people for a fiver or a pound, and those people just put it down to experience.'

Experience is what Austin has in abundance. The long-term impact of Betfair, he says, is in terms of standards of service as punters measure other firms against the exchanges. Those manning the desks at IG are marketers rather than bookmakers and Austin measures business by volume, not by whether the firm is winning or losing on any given position.

This is not the same way of doing business as when Austin, fresh out of university, first got a job behind the counter with Ladbrokes after successfully completing an interview over a game of darts in a pub. But then the changes in the industry also reflect the changes in his personal attitudes. 'I am a very different gambler to the one I was ten or 15 years ago. I haven't had a bet on a horse race, for instance, since Royal Ascot last year.'

It would have sounded like sacrilege, maybe, to the young man geeing on Pat Eddery on board English Prince back in the dim and distant days of the early Seventies. But as his subsequent betting history showed, maybe it's for the best - having won on one of Walwyn's horses, he backed Grundy for the Derby the following summer.

'Those were probably the worst two bets of my life. I went on to follow his stable religiously, but that was his golden patch. By the time I was really able to bet, I don't think he had another winner.'