A test model of the first exchange wagering system proposed for the United States will be demonstrated at the University of Arizona Symposium on Racing & Gaming in Tucson beginning Dec. 6.
The system, developed by TVG Betfair, is a “first stage application,” the company said Dec. 5. The racing network TVG is based in California and owned by Great Britain-based Betfair, which operates the largest exchange wagering platform in the world.
With exchange wagering, two or more individuals place directly opposing wagers on the outcome of various sporting events. Given the federal ban on sports betting in the U.S., with the exception of four states, most exchange wagering would occur on horse races.
A 2010 California law authorizing exchange betting takes effect in May 2012. New Jersey also approved exchange wagering under the auspices of the New Jersey Sports and Exposition Authority, but that entity is in the process of leasing its two racetracks to private operators.
The system to be unveiled Dec. 6 is basic and probably would be used for a California launch should all the necessary approvals be obtained.
“We are pleased to show the racing industry an early version of our proposed California exchange wagering product,” TVG chief executive officer Stephen Burn said. “This is very much a first phase and we’re hoping for extensive feedback from people at the symposium.
“We know the introduction of exchange wagering to the United States pari-mutuel market is eagerly anticipated by consumers, and we look forward to creating new wagering markets for horse racing. This is a tool to benefit the entire industry, and input from industry stakeholders will help us develop the right product, with the right pricing, for both the sport and the fans.”
The takeout rate, or commission, has been a subject of concern in the pari-mutuel racing industry. The blended takeout rate on pari-mutuel bets is roughly 20%, whereas the takeout rate on an exchange bet may be 5%.
TVG Betfair has said exchange wagering is based upon volume, and that new wagering will provide revenue for the racing industry.
A recent article in the San Francisco Chronicle said TVG Betfair is proposing a 10% commission, two-thirds of which would go to racing and one-third to Betfair. Racetracks, horsemen, and others would then split the two-thirds according to regulations and contracts.
The California legislation calls for a 50-50 split between racetracks and horsemen but also states the amount can be different should all parties agree. Bets could be taken on Thoroughbred, Standardbred, and Quarter Horse races.