Wednesday, December 21, 2011
When Will the Industry Finally Bet On Itself?
SARATOGA SPRINGS, NY, December 20, 2011—It matters not which side of the exchange betting argument you’re on, the fact that several jockeys were recently barred for “race-fixing” in Britain does little to advance the cause of Betfair or any other outfit to bring an alternative form of horse betting to America, even on a limited basis.
In fact, the latest just might have killed the chances of ever getting exchange betting in this country.
But let’s be honest. In games of chance such as horse racing, or other more popular sports in which betting is part of the landscape--albeit underground--there’s always someone willing to take an edge. Just ask Tim Donaghy.
Or ask Mark Cuban if he thinks “the whistle” once cost him an NBA championship. Come to think of it, why do “Jordan rules” exist?
Can any NFL bettor recall an incident when one bad call didn’t tilt the course of a winning pointspread?
Judgment calls, whether tied to gambling results or not, will always be subject to suspicion. Why is it widely accepted that some umpires give pitchers the low strike zone, or others three inches outside? Isn’t a strike a strike? Need I go on?
How about “fixing” a horse race? Try having the trainer not draw the feed tub before his horse races that afternoon? How about having him give the wrong instructions and watch the jockey as he burns the horse out on a needlessly fast early pace?
But the easiest way to make a score at the track, honestly or otherwise, is betting against a bad favorite, something that’s done each and every day without having the outcome predetermined.
But isn’t this why it’s called gambling in the first place?
In a poll taken after the jockey fix story broke in Britain, seven out of every 10 bettors said they “trusted” horse racing as a wagering sport.
In a Racing Post online story, British Horseracing Association official Paul Scotney said that racing is generally perceived in a favorable light. This came on the heels of a BHA investigation that found 11 people benefitted from betting against losing favorites never allowed to do their best. All were banned for a period of from six months to 14 years depending on their involvement level.
Scotney would not lay the blame on the exchanges, however, telling the Post “betting exchanges offer another way of cheating and that's a fact - anyone can lay a horse to lose. But I think if [exchanges] didn't exist there would still be people trying to cheat simply because there is money involved…
“I do want to stress that we are not talking about racing having a serious problem, but I think it's important people out there see that if there is cheating we will go after [the cheaters…] and throw them out of racing.”
It’s widely accepted horse racing needs to develop other wagering paradigms because handle is down 25 percent in recent years, trending to fall under $11 billion this year, the lowest since 1995. And those are not inflation-adjusted dollars.
If exchange betting, which wagering company Betfair and the Thoroughbred Owners of California are pushing for some time in 2012, is met with resistance, fixed-odds betting is another possibility to help grow handle.
Neither concept will jumpstart sagging handle if not given an excellent chance to succeed. Only through lower takeout could that occur quickly and more effectively.
Takeout on the Betfair exchange in Britain averages about 3%, depending on the size of the winnings. [An exchange pits one bettor against another, establishing a narrow range of market prices upon players can bet either on or against the odds. Takeout is extracted only from the winner.
If enacted in California, the hold would be 10 percent. A big improvement over standard pari-mutuel rates, yes, but whether that number is low enough to truly jumpstart the new concept quickly is arguable
There is another option, recently discussed at the annual Arizona University symposium and widely perceived as a safer “risk” to bettors; fixed-odds wagering. The concept is based on pari-mutuel principles but allows bettors to lock-in the win payoff at the time a wager is placed.
Fixed-odds wagering could stand alone, but given that the industry and many of its fans are resistant to change, it probably should be used to complement the existing pari-mutuel model. Both options can be made available at racetracks, bet shops and online.
By creating a fixed-odds market, overall handle could grow because of the arbitraging possibilities fixed-odds betting affords. It also is a way to eliminate last-minute odds fluctuations since the price you take at the time you bet doesn’t change.
Fixed-odds wagering should be explored as an alternative to exchange betting if the latter isn’t embraced, for whatever reason. It’s time for the industry to take a chance.
Written by John Pricci
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