NEWS
California committee makes no recommendation on exchange wagering
Posted: Thursday, February 09, 2012 5:58 PM
by Frank Angst
Although state lawmakers have approved exchange wagering for California beginning in May, a committee of the state’s horse racing regulatory board will make no recommendation on the wagering form following a four-hour meeting on Thursday at Santa Anita Park.
The Exchange Wagering Ad Hoc Committee of the California Horse Racing Board said it was not prepared to make a recommendation to the full board on the wagering form that allows bettors to both wager on horses; as well as offer odds on horses—playing the role of the house, generally through state-of-the-art Internet platforms.
Committee members said there appeared to be too much opposition from key industry players to current plans and suggested more discussion is needed.
The only exchange betting platform prepared to launch by May is Betfair, which is the world leader in exchange betting technology. Stephen Burn, chief executive officer of Betfair’s U.S. advance-deposit wagering platform Television Games Network, said the new form of wagering would allow horse racing to tap into a new market of players, for instance people who enjoy financial markets.
“We have a marketing plan ready to target web sites that focus on stock trading,” Burn said. “We would market this differently than we do ADW. We need a new market.”
Burn said Betfair would like to launch at the Hollywood Park meeting beginning in May, but no Hollywood Park representatives spoke at Thursday’s meeting. Del Mar Chief Executive Officer Joe Harper said his track is in talks with Betfair and would like to reach an agreement to allow the wagering, at least on a test basis, at its meeting this year.
“We are in support of exchange wagering,” Harper said. “It’s innovative. It gets us into a market area we have not been in previously. This industry is in the pits. This is a small step.”
Two California tracks that will not support exchange wagering, at least under the current plan, are Santa Anita Park and Golden Gate Fields, both owned by the Stronach Group. Speaking for the Stronach Group, Scott Daruty said the track owner would consider legal action if the CHRB approved exchange wagering for its tracks.
“We think the whole way this thing came about is questionable,” Daruty said, before addressing relaying Stronach Group owner and prominent Thoroughbred owner and breeder, Frank Stronach’s opinion. “He believes betting on a horse to lose is just fundamentally bad and he questions the economic model. He wants to see this sport succeed.”
The Stronach Group, which also owns the ADW XpressBet.com, and Churchill Downs Inc.’s ADW TwinSpires.com both oppose the addition of exchange wagering, which would cannibalize wagering—to some level—from current pari-mutuel pools. The representatives outlined concerns about the economic model and integrity concerns.
“We’re running the risk of trading off a high-rate return to the industry in ADW for a low-rate return to the industry in exchange wagering,” said Brad Blackwell, of TwinSpires.
“It is absolutely easier to fix a race by having one horse lose than having one horse win,” Daruty said.
Although committee members acknowledged the concerns, they also noted that some might believe groups such as TwinSpires and XpressBet simply were stalling the process until they developed their own exchange wagering platforms.
The economic model Burn outlined is the same one he presented in December at the Symposium on Racing and Gaming presented by the University of Arizona Race Track Industry Program. Winning players would pay a 10% commission to Betfair, which would return 60% of that collected money to the industry, retain 30%, and turn over 10% in the form of player rebates that would allow large volume players to effectively play for a 5% commission fee.
Betfair currently does not have an agreement with the Thoroughbred Owners of California. Representatives of the California Thoroughbred Trainers (CTT) and California Thoroughbred Horsemen’s Association expressed opposition to exchange wagering, citing concerns about the economic model, cannibalization of pari-mutuel pools, and integrity.
Representatives of the Jockeys’ Guild said a protocol for any investigation of riders would have to be put in place before it would support exchange wagering.
“We have significant anxieties,” said Barry Broad, representing the Guild. “When you start allowing people to bet on losing horses, the opportunity to cheat increases. Suspicions will increase and a disproportionate amount of that suspicion will fall on the jockeys.”
Jeff Platt, president of the Horseplayers Association of North America, said some of the concerns about integrity are overblown and he noted that the new wagering form would be attractive to current and new customers.
“Betting horses to lose is currently happening in pari-mutuel wagering,” Platt said, citing a statistical study of races where favorites lose and the profits that follow when wagering on the other horses in the field. Platt also noted that unlike pari-mutuel wagering, Betfair has real-time monitoring of pools and is aware of the person making each wager. “Cheating can be done anonymously at the track.”
Platt said allowing players to lock in odds would address late odds changes hated by many current players, would allow players more options to search for value, and would allow racing to reach new players currently not wagering on horse racing.
Staff from the CHRB said they have met with officials from the British Horseracing Authority on developing protocols to monitor exchange wagering. They said three additional employees would be needed to monitor the new wagering form.
Frank Angst is senior writer for Thoroughbred Times
READER COMMENTS
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Posted by: Tony, Hollywood, CA on February 20, 2012 at 04:16 AM
I am for exchange wagering. Anything that is more efficient is good. Of course my top concern is keeping the tracks open, and growing the handle, increasing the purses, and getting more people involved in racing. At the same time lets be real more and more people are staying at home. This phenomenon doesn't just hurt racing, we "socialize" online. We gamble online too.
For exchange wagering to really work we'd need to have an open platform that will allow almost anyone the ability to take any side of a wager. There are plenty of offshore betting parlors today. If we had one exchange that was licensed by the tracks they served (all of them we'd hope) then that exchange would attract the players and run the overseas shops out of biz - or onto the exchange! - where they can compete for bets like eveyrone else.
The tracks will, of course, ALWAYS get their cut. But if I want to offer you 7/2 instead of 3/1 why shouldn't I be allowed to? And why should you want to take my better offer?
It has to be an open source inclusive system.
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Posted by: Father Sarducci, Bronx, NY on February 11, 2012 at 08:02 PM
Hey Newjoyzy, its you self-proclaimed "gamblers" who think you understand gambling, who dont understand the devastation to a thing that you think will be good but is actually a thief in the night. If they allow these bookmakers to set-up shop here and offer our product to say, off-shore gambling operations, then if it does get popular with you "gamblers" the resulting non-handle in the US at the host tracks will force purse to drop, more owners to quit, more tracks to close etc... They got nuthin invested or risked. Why the hell should we give them carte blanche'???? Glad you "gamblers dont have licenses.
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Posted by: LH, SD, CA on February 11, 2012 at 07:55 PM
And there is the great divide between us horsemen and you "Gamblers"!! Its not really your faults though as of you have no real clue as to the WORK, as well as the entire lives and money that we sacrifice to put on a show your you. If it was your investment you truly might have a much different prospective.
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Posted by: Mike, Garfield, NJ on February 10, 2012 at 05:40 AM
I am SHOCKED that a lifelong horsemen wouldn't want to listen to the President of a Horseplayers anything (Insert sarcasm emoticon here). This is the problem with the game - people with zero understanding of wagering have the most influence on it. Not a big deal though, the game is doing quite well at the moment. Handle is up year after year. Uh, not so much. Players aren't leaving in droves. Oops, they have been for quite some time now. At least tracks have done their best at finding what the optimal takeout rates are that maximizes revenue for ALL parties.(tracks, horsemen, horseplayers, etc. for the self absorbed in this game) Oops again because they haven't. Not a big deal, let's just add slots if we can. No need to grow the game as state government will always let tracks and horsemen keep their full share. Wave hi Pennsylvania!!!
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Posted by: Lifelong horsemen, Racetrack, KY on February 10, 2012 at 01:28 AM
Why in the world would anyone listen to the "opinion" of the president of a so-called horseplayers anything? If the jockeys Guild is concerned about the riders already, its a very bad idea. These other outfits are trying to get a free ride on the decades of blood/sweat/tears/billions of dollars spent by breeders-owners-trainers-true fans etc of this US industry. Take your illegal bookmakers back across the pond. This is one issue the horsemen should rally round Mr. stronach. He and his peoiple have this right.
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