NEWS
California bill on exchange wagering, takeout increase progresses
Posted: Tuesday, August 24, 2010 4:20 PM
by Frank Angst
A bill that would allow exchange wagering in California continues to progress through the state’s general assembly.
The bill, sponsored by John Perez (D-Los Angeles), would allow for exchange wagering, in which patrons barter with other patrons in assigning odds while the exchange provider retains a small fee. Typically, the betting form relies on Internet technology.
Betfair Group Ltd., which purchased racing channel and advance-deposit wagering company TVG last year for $50-million, pioneered exchange wagering.
The bill would require the betting exchange to be licensed by the California Horse Racing Board, the racing association or fair conducting the meet, and the horsemen’s organization responsible for negotiated purse agreements. These provisions appear to assure the involved parties the opportunity to negotiate a percentage of money from the exchange provider’s fee be committed to the tracks and horsemen.
The CHRB would have the ability to prescribe rules, regulations, and conditions for exchange wagering in the state. New Jersey lawmakers also are considering allowing exchange wagering on horse racing. The California bill was amended on Friday to include language that would allow betting exchanges in the state.
The bill also calls for a 2% takeout increase to 22.68% on exotic wagers requiring two wagering interests, like exactas and daily doubles; and a 3% increase to 23.68% on wagers requiring three or more wagering interests, such as trifectas, pick threes, superfectas, and pick fours. The additional takeout money would be committed to overnight purses.
The bill, which requires two-thirds approval, has received a third reading on the Senate floor, and has been referred to the Committee on Rules.
The bill says changes are needed because Thoroughbred owners are not supporting California racing, instead opting for higher purses in other states. Unlike many of the states it is competing with, California does not use revenues from added gambling to supplement purses.
The bill also includes provisions that would require a host of the Breeders’ Cup World Championships to set aside money from the increased takeout to promote the event. The bill notes the Los Angeles Economic Development Commission estimates the Breeders’ Cup, which was hosted by the Oak Tree Racing Association at Santa Anita Park in 2008 and ’09, pumps $60-million into the state and Los Angeles region.
Frank Angst is senior writer for Thoroughbred Times
READER COMMENTS
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Posted by: Walter, Boston, MA on August 26, 2010 at 10:48 AM
Racetracks have been raising the take for 50 years and losing business. If it wasn't for the shorter term stimulus of simulcasting and online betting, racing would have disappeared entirely. Most tracks are lucky to get 1200 suckers a day to show up.
Exchange wagering is the only hope for this business, but track operators make dinosaurs look like greyhounds when talking about innovation.
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Posted by: patrick, mill valley, CA on August 26, 2010 at 01:34 AM
As an enthusiastic horseplayer, I am dismayed by the proposed takeout hike. What the supporters of this tax increase are saying is illogical and counter-productive. The “logic” of the proposed tax hike is, “business is declining, customers are walking away in droves from our product… so let’s raise prices.” In the face of decreased demand it is nonsensical to raise prices. And yes, the casual two dollar better, doesn’t care about pari-mutual tax increases, but the folks who wager hundreds of thousands a year, do care. Because they know how the churn affects the bottom line.
Secondly, California racing suffers immensely from short fields. Who wants to choose between a trio of valueless contenders at 2/1 in a five horse field? Why isn’t anyone discussing the wildly successful experiment at Monmouth, where field size was increased dramatically by implementing a 3 day race week?
Finally, exchange betting, would revolutionize, and reinvigorate wagering handle- precisely because costs to the consumers (e.g. horseplayers) would be dramatically lowered. What sophisticated player in his right mind would not be motivated by a substantial reduction in takeout (let’s say from 15% to Betfair’s 5%.)
In conclusion AB2414 is a mixed bag of the good and the bad. What’s bad is raising prices when demand is dying through pari-mutual tax increases, and what’s good is implementing new technologies that lower costs for the consumer-such as exchange betting.
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Posted by: Roxy, Towson, MD on August 25, 2010 at 08:41 PM
Maryland racing - the Maryland Jockey Club still has no clue that raising the takeout was the final straw.
Other than the Preakness, there is no reason to bet their races. Except the Grade I Defrancis Memorial Dash, never mind that was just cancelled to boost overnight purses - sound familiar?
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Posted by: Larry, Pasadena, CA on August 25, 2010 at 08:22 PM
10% and 15% increase. The $2 player won't mind, but the $50 or $100 player will bet zero. There are other more responsible tracks to play. At some point the game is not worth playing. Over 20% takeout with short fields and way too many 3-5 shots. No wonder the younger generations would rather play slots.
People, you are seeing the beginning to the end of CA racing. Long live the memory of Seabiscuit.
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Posted by: Jerry, Pacific Palisades, CA on August 25, 2010 at 06:33 PM
It is a 2 percentage point increase and not a 2% increase.
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