Panel: Exchange Wagering Changes Everything

New bet will require changes of existing law, say experts at legislative conference.

As exchange wagering edges closer to its American debut, regulators will have to deal with many makeovers of existing laws.
According to a panel assembled for the National Council of Legislators from Gaming States, exchange wagering will change everything.

Each racing state will need to revise its regulations to find ways to make this latest innovation in wagering work, the panel said. But sweeping and rapid changes are needed to halt racing's decline.
“Horse racing is in trouble,” said Ed Martin, president of the Association of Racing Commissioners. “There are tons of people whose livelihoods rely on this industry. This industry has to adjust to the technological revolution.”
Meeting June 18 in the California wine country town of Napa, legislators from eight states focused on “States and Gaming Choices: Which Way to Go?” The exchange wagering panel followed an earlier in-depth discussion at the NCLGS’s winter session.
California and New Jersey are the only states so far to approve exchange wagering, which operates more like a stock exchange instead of the current pari-mutuel system. Online, technology connects bettors within instants.
In concept, it allows bettors to wager one-to-one in real time on all sorts of race-connected propositions, including  the outcome of a photo finish, an inquiry or head-to-head match-ups. But like advance deposit wagering or other innovations, it must be approved state by state.
“Hopefully, it will help save horse racing,” said moderator Rep. Jim Waldman of Florida. “It’s a new form of gaming that allows you to bet on almost anything. You can bet on losers.”
Stephen Burn, CEO of TVG/Betfair, said his company will make it simple to start.
“We’re looking in the U.S. to be very conservative,” Burn said. “We’ll start with win, place, show.”
Other aspects of the service will be added gradually, he said.

Betfair, the United Kingdom’s exchange wagering giant, hosts about 5 million transactions a day. In 2009, Betfair bought the Television Games Network and acquired a California foothold with TVG’s advance deposit wagering operation and television network.

“I’m one of the few zealots left in Betfair that loves horse racing,” Burn said. “I’m trying to do something to transform the racing industry.”

In concept, exchange wagering was legalized in California last year with a May 2012 target date for its debut. This summer, the California Horse Racing Board will hammer out proposed rules and regulations for how it will work in this state with a possible first reading in August, Burn said.

“I know it works,” Burn added. “We have the proof to show; we’re used by millions of people. We know what we’re doing. We just want a chance.”

Dr. Rick Arthur, the CHRB’s equine medical director and another panelist, emphasized that the industry needed to be as transparent as possible if it were to make something like exchange wagering work while protecting the integrity of the sport.

“Exchange wagering allows you to bet on a horse to lose,” Arthur said. “That’s an entirely different perspective on racing.”

Medication is part of that equation. Arthur discussed the International Race Day Medication Summit and the need for uniform regulations in the nation’s 38 racing states. A ban on race-day medications would be a necessity for exchange wagering, he added.

“People think there are drugs to give a horse to make it go faster; that’s actually hard to do,” Arthur said. “But it’s easy to give horses drugs to go slower.”

Dennis Dowd, a horse owner and former New Jersey racing regulator representing pari-mutuel technology company Longitude, suggested using technology to create a single wagering pool instead of separate pools for each bet, another possible way to grow the total handle. But such a change would need laws to be revised in almost every racing state.