For those who may have missed the breaking news last week, the state of New Jersey did indeed get a new form of wagering legalized. Hold on, don't gather up $10,000 and head to the Newark Airport to bet on the Steelers. NJ was the first state to legalize "exchange wagering", also known as the betting exchange, which is very popular in Europe. It will take place solely involving horse racing, proposed by the operators of Monmouth Park and run by international wagering giant Betfair. It will commence with Monmouth's opening in the spring of 2016.
Here's the standard Wikipedia definition to make you more familiar: EXCHANGES allow bets to be made in-running or in-play (i.e. to make bets while a race or match is in progress).
Whereas non-in-play bets are entered into the system immediately after being placed by the customer, when betting in-play a time delay might be instituted so as to make it somewhat more difficult for unscrupulous customers to accept offers for bets that for whatever reason have suddenly become highly favorable. Markets may also be actively managed by the operator. In this case, betting will be briefly halted after each occurrence likely to cause a substantial change in the odds so that unmatched bets can be cancelled. Another way of looking at it, through an internet and mobile platform, exchange wagering allows bettors fixed-odds wagering, as one bettor can assume the role of the "house" and offer win odds for individual horses, while other players can lock in those odds.
The exchange will have to make a monetary contribution to the tracks and to the purse accounts that everyone can agree on. Keep in mind, however, that since Betfair charges the customers so much less than what is the traditional takeout rate at American racetracks (15%-30%), the percentage that goes to the industry will have to be a lot less than what horsemen are used to.
That said, Betfair argues that because this is a new type of betting, it has been proven to bring in new handle and revenue where it has been launched. Betfair and other betting exchanges say that they are bringing new customers to racing, and therefore creating handle that doesn't exist. That's the upside as I am very cynical as to creating ancillary revenue from "old" or everyday customers. But the other good news is at least it won't cannibalize any existing revenue.
Involving horse racing and specifically the NJ Racing Commission, we'll await the specific rules to see how it will affect this brand new form of wagering for U.S. punters on & off the track. But despite the betting rules I am severely more worried about "behavior rules" affecting its potential success. Here's just a few:
From the very first day I fell in love with horse racing I noticed one specific aspect traveling to Aqueduct, Gulfstream, Pimlico and 38 other favorite tracks coast to coast. Everybody was significantly older and crankier than me. Flash forward many years later and they're STILL severely older than me!! How is that mathematically possible?
Maybe that's horse racing biggest problem and why I believe exchange wagering is a serious longshot for success. The mass audience carrys an AARP card and and since betting exchanges are strictly for online participants (no exchange wagering at the window), the latest betting innovation in the U.S. may be destined for failure Although online wagering has made nice progress with cable & Internet suppliers TVG and Twin Spires, there still is a huge percentage of lifetime in-person participants that are resistant to the latest technology, let alone online wagering. Yes, we could add iPhones and Androids to the potential debate, but who do you think is still carrying the world's arsenal of Samsung flip phones?
With serious respect to senior citizens, I don't want to make everyone a stereotype. It's just that racetrack guys are a special breed. They largely have been doing the same thing the same way for 30-60 years and are the most resistant to one key word – CHANGE. If they believe in lucky numbers, specific jockeys or racetrack biases, this bold innovation isn't going to change them for anything in the world. Requiring them to bet "against" something instead of "on" something is a bizarre concept. And doing it at lightning speed is not for the faint of heart or non-impulsive thinker. It will take a long time (if ever) getting them to put a major part of their betting budget into this.
Another fundamental reason is the U.S. player's love for exotic bets offering potential large payoffs. The largest pools are for exacta bets requiring horses to run exactly first or second. In California, pick 6 wagers, where you must select six winners, offering large daily and carryover payoffs have been a traditional staple for years. Potentially winning much smaller amounts requiring instant decisions is more for younger, analytical thinkers. It might be possible for co-mingled pools once legalized in California for example to draw larger bettors but that's for another day.
Here's hoping I am dead wrong and exchange wagering takes off right out of the starting gate. But don't ask me to bet on it. In fact I wish my first bet was to find somebody to bet against me. Now when exchange wagering for "sports betting" is legalized in New Jersey, I'll be on a plane for Newark to bet all over that Steelers game.
Glenn Greene covers the games from a betting angle every week exclusively at OSGA.com. For weekly betting insights, inlcuding NFL previews and picks from Glenn, click here.