Quarter Horse and Standardbred races in California may be the first U.S. horse races to offer exchange wagering if the California Horse Racing Board approves rules Nov. 15, lawmakers give final approval, and licenses are granted.
The CHRB could give its final approval to exchange wagering rules Nov. 15 when it meets at 9:30 a.m. PST in the Sunset Room at Betfair Hollywood Park. Betfair U.S., which seeks to offer exchange wagering in the state, has a naming rights agreement with Hollywood Park.
The CHRB in October granted initial approval to exchange wagering rules recommended by its Exchange Wagering Ad Hoc Committee. That committee updated language in some of its recommendations following comments from the CHRB in September.
If approved Nov. 15, the rules would then go to the state's Office of Administration Law for review, a period that could take up to two months, and then on to the Secretary of State for final confirmation.
That schedule could fit well with initial license requests for spring 2013.
Exchange wagering allows individual players to buy and sell, "back" or "lay" wagers. In horse racing for instance, one player could offer a horse at odds of 5-1 and if another player accepts those odds, the bet takes place. Internet technology has facilitated such account wagers, which began in England in 2000 with the launch of Betfair.
In 2010 California lawmakers allowed for such wagers, and in August 2011 the CHRB published notice of its intent to promulgate exchange wagering rules. On Nov. 15 the board will consider rules that would allow exchange wagers by state residents on California horse races. Rules also could allow out-of-state residents, who live in states where it is determined to be legal, to wager on California races.
Both Betfair U.S. and Churchill Downs Inc. have applied for a two-year betting exchange license, which carries a $1.4 million fee. Both companies have expressed interest in offering exchange betting on Thoroughbred, Quarter Horse, and Standardbred races in the state.
Exchange providers are required to reach agreements with the tracks and horsemen involved before offering races on their exchange platform. In its application, Betfair U.S. said it has the required agreements in place to offer exchange wagering on Standardbred racing from Cal-Expo and Quarter Horse racing from Los Alamitos.
Betfair would like to launch its platform in March and would offer exchange wagers, including in-race betting, on the races to California residents.
Betfair has not reached an agreement that would allow it to offer exchange wagering on Thoroughbred races in the state. CDI has not reached agreements for Thoroughbred racing or other breeds but is seeking approval for exchange wagering pending those agreements.
The Stronach Group, owner of Santa Anita Park and Golden Gate Fields, has opposed exchange wagering because of integrity concerns and a model it says does not return enough money to tracks and horsemen, especially considering the potential to poach pari-mutuel handle. Del Mar and Hollywood Park officials have expressed interest in offering exchange wagering.
The Thoroughbred Owners of California and the California Thoroughbred Trainers have raised concerns similar to Santa Anita regarding the business model and integrity.
Betfair, which owns the advance deposit wagering site TVG, would offer an exchange completely separate from its United Kingdom exchange. CDI, which owns the successful ADW TwinSpires.com, would offer its own exchange.
CHRB staff recommends approval of both license-seekers should exchange wagering be approved.
In its application, Betfair said it has invested more than $10 million to design, construct, and house an exchange wagering platform in Sacramento, Calif. The company has added more than 80 employees.
But the application does not list the percentage of betting exchange wagering that will be returned to racing. CDI noted the strong handle it registers in California on TwinSpires.com and plans to market exchange wagering, if approved.
Also on the Nov. 15 agenda, the CHRB will consider renewing the ADW licenses of TVG, TwinSpires.com, and XpressBet.com, and will look at the 2013 allocated race dates and host fees for Golden Gate Fields and the Humboldt County Fair at Ferndale.