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Tuesday, December 6, 2011

Rodeo Wagering Here to Stay?

Horsemen are screaming in Florida about pari-mutuel barrel racing as a end run around horse racing to get a card room and possibly a casino in Gretna, FL. Well, I am beginning to wonder if pari-mutuel rodeo wagering is here to stay.

The former owner of Wyoming Downs, who sold out to a hedge fund has repurchased the track for $450,000 at an auction (presumably at a discount to what he received when he sold out). His plans are to get things back in order and come 2013 offer pari-mutuel wagering on rodeo events and which rodeo event is most conducive to pari-mutuel wagering? Barrel Racing. Now to be fair, to the prior owner, Eric Nelson, it does appear he plans on offering regular (thoroughbred) racing as well as time goes on so this is not another track taking advantage of a faulty pari-mutuel law but you have to wonder if the door has opened on wagering on barrel racing. If so, will there be any gaming companies owning racinos in harness states seeking to introduce pari-mutuel barrel racing in an effort to reduce loses? I think it is unlikely, as one of the reasons for having slot machines is to stimulate local breeding programs and a few quarter horses is not going to sit well with active horsemen, but don't just dismiss wagering on rodeo events; it may be the next form of pari-mutuel wagering to be the competition.

The presentation of Betfair to the California Horse Racing Board with regards to exchange wagering indicates the proposed commission planned to be charged on exchange wagering in California is 10% on winnings with a rebate of up to 5% to the largest horseplayers on a monthly basis. This is larger than the 5% charged abroad with a rebate of up to 2% to the largest horseplayers elsewhere.

I must confess, while I would consider exchange wagering because I am sick of having odds change on me badly after I wager and the commission is cheaper, once again the smaller player is being shafted as a result of rebates. Let's say you are as good a handicapper as anyone but as a small player and you are using exchange wagering for your wagers, you will be paying Betfair 10% of your winnings as a commission. Meanwhile, someone who has deep pockets who decides to use the betting exchange as if the stock market and try to burn both ends of the candle to just collect the 5% rebate, you are going to be out of the game long while the institutional-type gambler keeps on going.

The pari-mutuel system is truly old and in need of being serious revamped but in some ways, exchange wagering is not horse racing. Whether the stock market or a betting exchange, there are going to be people with deep pockets that will learn to game the system and come out ahead. Horse racing will come out ahead with payment from the exchange operator, but with the exception of getting fixed odds, you need to remember as a small player you may be playing the horses, but the person you are playing against may be playing both end of the wager. Odds are horseplayer will be cleaned out long before the arbitrage player. Small player, you may be better off in the betting exchange, but the game is still against you.

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