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Tuesday, February 8, 2011

Exchange Wagering = Assisted Suicide?

So says Vic Zast in his most recent blog entry for Horserace Insider.  According to Zast, Governor Christie's signing of a bill to permit exchange wagering in the Garden State was akin to signing an assisted suicide bill for racing.  Quite the contrary, if anything the exchange wagering bill should be referred to as a life support bill.

First of all, what needs to be pointed out is the New Jersey racetracks and horsemen asked for the state to permit exchange wagering, it isn't being imposed upon them.  Zast claims horse racing will lose gamblers that wager into the parimutuel pools; probably most concerned about the whales.  Well, the whales are already gone.  The vast majority of whales if they are still wagering on horse racing may be wagering into the pools, but not at the track; they are wagering via ADWs which are paying peanuts for the product already into the purse accounts.  The vast majority of horseplayers still wagering directly into the pools at the local racetracks are the casual bettors who are not the ones who are going to significantly impact the balance sheet at their local track.  If anything is going to happen is the whales will forsake their ADWs for exchange wagering, so what will happen is the pennies per dollar tracks are going to get from an ADW will now be coming from Betfair; the only difference being who is wiring the funds into the purse account.

If anything, tracks should receive more money as a result of exchange wagering.  Perhaps not initially when New Jersey is the only state that permits exchange wagering,but as other state adopt exchange wagering the model will work.  Exchange wagering will get more people into the racing mode as you will get hedge fund bettors, dare I say computer wagering involved with computers playing the exchange as they do the stock market, playing both sides of a bet to take advantage of minor differences in the pricing; all producing artificial churn.  You will also get the computer savvy youth who need to be pried away from their computers giving racing a chance.  And lastly, you will get the horseplayers who have been lost due to being tired of betting a 15-1 morning line that was 5-1 when they wagered it and then was 2-1 at post time and finally 3-5 half way through the race; willing to return as they will get fixed prices.  In effect, exchange wagering will correct the problems that the racing industry has been unwilling or unable to fix.

Zast fails to recognize that exotic wagers will not be handled by exchange wagering.  Racetracks and ADWs will be needed for people to play their exactas, trifectas, and other exotic wagers.  Winners through exchange wagering will have more money available thanks to the low takeout so they may be able to play the exotics with their high takeout rates.

Zast talks about the possibility of owners fixing races by laying their horses in exchange wagering and then stiffing their horses.  News Flash for Mr. Zast.  There have already been cases of race-fixing before exchange wagering ever came upon the scene and Betfair has already detected cases of owners doing what fears; something seldom done currently.

Vic Zast, claims the example Jeff Platt of HANA cited regarding the record industry proves his point in that record sales have dropped from $14.6 million to $6.3 billion over the last decade proves his point that exchange wagering will hurt.  Well, before you had iTunes and other sites selling music for $.99 a song, you had people trading music over the Internet for free.  No, the record labels and artists are not earning as much as they did before the file-sharing became the rage, but how much lower would record sales have been without iTunes.  A lot lower than $5.3 billion; it helped stem the decline.

Of course, if racing had fixed their tote system years ago and lowered the takeouts to keep their pricing comparable to other gambling games, we wouldn't be having a need for exchange wagering, would we?  Exchange wagering won't bring racing back to its glory days, but it will throw a lifeline to the sport; stabilizing the revenue tracks and horsemen receive from off track wagering  options that exist.

2 comments:

Anonymous said...

I'm quite sure savvy owners have been using the Exacta pools to bet against their horses for , oh, DECADES. Two slots , you know. Do the math.

Pacingguy said...

Technically, an owner is only allowed to be an exacta with their horse on top. Does this mean owners never break the rule? Of course not.