Exchange wagering inches forward in Delaware
I’m a Chatterbox with trainer Larry Jones prior to last month’s Delaware Handicap. Photo by The Racing Biz.
by Frank Vespe
Exchange wagering may be, as some have said, the wave of the future. But it seems likely the future won’t hit Delaware Park until 2017.
That was the upshot of a lengthy discussion at yesterday’s monthly meeting of the Delaware Thoroughbred Racing Commission (DTRC). Though it did not vote, the Commission generally seemed receptive to the concept.
“I think the overriding reason to endorse this is… it’s incumbent on our sport” to attract more and younger bettors, said DTRC chairman Duncan Patterson during the meeting.
But in the end, the Commission deferred action on the matter until the Delaware Thoroughbred Horsemen’s Association (DTHA) has had a chance to review the proposal. The organization is soon to seat a new board of directors, which will take the matter up, said DTHA executive director Bessie Gruwell. The DTHA’s consent to the signal’s export is required under federal law.
With the next Commission meeting not until the middle of next month, and Delaware’s 2016 meet set to end October 15, it seems unlikely that the track’s signal will appear on the exchange prior to next season.
The proposal on the table is to include Delaware Park’s racing in the nation’s only operating wagering exchange, which is operated by Betfair and limited to residents of New Jersey who are physically located in New Jersey when they wager.
Because the state of Delaware currently does not permit account wagering, a legislative change would be required to allow an exchange open to Delaware residents to operate there.
Exchange wagering hit the United States for the first time earlier this year when the US subsidiary of Paddy Power Betfair, the Dublin-based wagering giant, launched an online exchange in conjunction with Monmouth Park. The exchange matches bets between players, allowing them to back (bet on) or lay (bet against) a horse, as well as to wager during the running of a race. Betfair takes a 12 percent commission on net winnings, which then is split with racetracks and horsemen; that takeout is far below the industry’s typical 20 percent blended rake on dollars wagered.
“A lot of results have been very encouraging in New Jersey,” Betfair general counsel John Hindman told the DTRC, though he allowed that, to date, the exchange’s returns have been “very small.”
The exchange launched in May and includes, Hindman said, signals from 21 tracks so far. Among the positive results he cited are a customer base 20 years younger, on average, than that of the 4NJBets.com traditional wagering platform the company also manages for Monmouth. At the same time, he said, the exchange has had no negative impact on the handle generated by the traditional platform.
This audience, he said, is “tech-savvy, younger, and want[s] more control” over their wagering experience. As a result, he said, 45 percent of players on the site have tried in-race wagering.
All of that sounds good to Delaware Park, said track president Bill Fasy.
“The track position is that we need to find a new customer that’s not here,” Fasy told the DTRC. “I believe this is the future of how bets are going to be made.”
But Jockeys’ Guild in-house counsel Mindy Coleman told the DTRC that her organization opposed allowing exchange wagering.
“They’re giving the account holder the opportunity to bet not to win, not to place, and not to show,” she said, suggesting that the exchanges could provide a financial incentive for people to throw races and cast doubt on the sport’s integrity even when conducted on the square.
“Integrity and perception of integrity is the second most important thing” [after safety], she said. “Is it really going to bring in new fans? Is it worth the potential harm? We have all unanswered question.”
Betfair’s Hindman rejected those arguments.
“What’s right is right, and what’s not right is not right, and this doesn’t change that,” he said. “Nothing about this changes any of the rules of racing in any jurisdiction.”
What’s more, he said, Betfair’s wagering audit trail and other integrity products might strengthen regulators’ ability to identify corruption and track down bad actors.
“We’ve put in a system for integrity-monitoring that is state-of-the-art,” he told the DTRC. “We can follow the money all the way through.”
Integrity arguments aside, it seems clear that if states and tracks do begin to participate in greater numbers in exchange wagering, it will be because of the imperative to reach a new customer base.
“If we don’t do anything, then we’re not going to go forward,” Patterson said.
