Exchange Wagering Going Nowhere Fast in California

A working committee of the California Horse Racing Board (CHRB) met in February to obtain industry feedback on the implementation of exchange wagering in California. Exchange wagering was approved by the legislature, with the crafting of rules delegated to the CHRB. The Thoroughbred Times reported on the four-hour meeting with the result that the committee would make no recommendation to the full board for implementing exchange wagering at this time. According to the story, "committee members said there appeared to be too much opposition from key industry players to current plans and suggested more discussion is needed."

Opposition? That's an understatement. Were there some proponents? Sure. Betfair (the company that is prepared now to offer exchange wagering), Del Mar racetrack and the Horseplayers Association of North America (gamblers). It only makes sense that Betfair would be in favor as they would operate the wagering platform. The horseplayers are naturally in favor of any wagering modification that reduces takeout (vigorish).

Del Mar racetrack could be considered a non-profit, as opposed to other tracks in California, such as Golden Gate Fields and Santa Anita. Both of those for-profit venues were strenuously opposed to exchange wagering. Representatives for those entities stated that those tracks would not approve exchange wagering on their races, even if the CHRB approved rules. There may have also been a threat of legal action if the CHRB approved exchange wagering at Santa Anita and Golden Gate Fields without those tracks' approval.

The current issues with exchange wagering apparently are:

• Cannibalization of current pari-mutuel pools
• The ability to bet on horses to LOSE (danger danger danger)
  
• Lack of protection of jockeys from arbitrary charges of race fixing
• Insufficient takeout and increased handle to compensate for lower pari-mutuel handle
• Possible "cost-plus" takeout scheme for exchange wagering operators
  
• De facto monopoly for the lead vendor proponent (Betfair)
• Not all entities economically benefit from exchange takeout compared to current scheme
  

That's a LOT of issues. I read the entire 199 page transcript of the proceeding. If you like, you can do the same by clicking here. There was much more than what was reported by the Thorougbred Times. It appeared to me reading the transcript that Betfair may not have as elegantly made their case to the point that some may come to the conclusion that Betfair may have been more spin-heavy as opposed to just stating solid facts and evidence in support of the exchange wagering concept. (Yes, I'm being deliberately diplomatic in my language).

In my opinion, exchange wagering is not going to happen in California anytime soon, if ever.