While New Jersey continues its long battle to get legalized sports betting (and bring the United States into the 21st century compared to other developed countries' views on gambling), the Garden State is closer to doing the same thing with horse wagering.
Exchange wagering will be available to New Jersey residents starting on May 10 through Betfair US and Darby Development, the operator of Monmouth Park (whose 2016 meet opens May 14). The two companies, who received licenses to operate exchange wagering from the New Jersey Racing Commission back in late November, announced the launch date Wednesday.
The current pari-mutuel betting in this country requires horse players to make their bets without knowing what their final odds will be, while exchange wagering makes it possible for bettors to take fixed odds that are locked in at the time of their transaction (similar to what sports bettors are used to) but also allows bettors to ask for better odds from those on the exchange or to match other players' offerings.
You can also bet against a horse and trading can also take place during the running of a race -- an option every horse player has desired while watching races develop. Gamblers also like that they only pay a commission of about 12 percent of winnings as opposed to traditional takeout rates of around 20 percent in pari-mutuel wagering.
Betfair, whose parent company is now Paddy Power Betfair after a February merger, pioneered the betting exchange in the United Kingdom in 2000 and now averages more than 3 million transactions worldwide each day.
"Our experience in the UK and other markets has proven that exchange wagering is an attractive prospect for consumers and that it can bring new customers, increased engagement and new revenue to horse racing," said Kip Levin, CEO of Betfair US, which started its foray into the U.S. market in 2009 with the purchase of the Television Games Network (TVG). "New Jersey is a great place for us to start and then take our data to other states."
For starters, only New Jersey residents will be allowed to participate (unlike the account wagering system in Nevada where visitors can set up accounts while they're visiting) and only on tracks with which agreements have been reached.
Monmouth Park is the biggest track involved so far but organizers Woodbine (Canada), Tampa Bay Downs, Pennsylvania and West Virginia will also be involved, with more to come. Customers will need to deposit into a wagering account (Betfair operates the 4NJBets wagering platform and the online Betfair Casino in partnership with the Golden Nugget) but then can bet from their PC, phone or tablet.
One of the concerns is that exchange wagering will cannibalize the money bet into win pools at the tracks. While proponents of exchange wagering don't deny that will happen, they say that will more than offset by the new money brought to the sport: this form of wagering is more popular with Wall Street-types and arbitragers and a younger/tech-savvy demographic that might not otherwise get involved in horse racing.
John Hindman, corporate counsel for Betfair, said Wednesday on a conference call: "We've found that while bettors are drawn to the features on our exchange, they also get attracted to the exotic wagering [exactas, trifectas, pick sixes, etc.] that are available on tote wagering that we don't offer. As a result, those pools will see an increase."
Horse racing has long faced the fact that its main demographic is getting older, while younger generations haven't embraced the sport.
Gethin Evans, head of marketing for Betfair US, said that the TVG network is an outlet they didn't have when starting exchange wagering in Britain. He said they'll use it to educate players that they have more control with exchange wagering and reduces the element of luck in not knowing what odds they're getting. He said it can also help make older players more comfortable with the new technology.
If you want to see how the system works (including the fast-changing odds to both back a horse or bet against it), see Betfair's free online simulator.