Betfair buys TVG for $50MM in cash

[NoCal Boy]

Compliance issues will be interesting given Betfair's business is not legal in the US. The TV side has to lose quite a bit of money as advertisers are nil and the ADW side is concentrated in lower yielding CA. I give credit to Macrovision for getting $50MM in cash.

The rumored purchase by CDI did not materialize so now does CDI go after Youbet? How does CDI grow its ADW by any measurable amount without owning Youbet? Interesting that Youbet and CDI have been getting cozier with signals. CDI just established a new subsidiary to grow the online business with some thinking it was to purchase TVG.

[pandy]

I assume that Betfair will take over TVG's wagering accounts and I would expect that they will do much better with these accounts.

[highnote]

My first response...

:lol:

[DeanT]

The status quo, and those who support it, just got one swift kick in the ass.

[BUD]

This mean more European racing?


If so , I'm all on board.


But as always I have no idea what the Hell any of this stuff means..

[Charlie D]

Interesting move from BF towers

[Cangamble]

I was told it was going to happen on last Thursday. They also plan an aggressive campaign in Canada, even though according to what I know, it is illegal for them to advertise here.
Maybe they found a loophole.
They are looking to sign deals with all organizations in the USA. Good luck doing so in Canada. I can't see Willmot accept any deal with Betfair whatsoever, unless they get a piece of the pie from poker and sports betting as well. And even then I don't see him being pleased about it.
In the US, it is different because they don't take American players.

It will be interesting now that they have TVG if they can get laws passed so they can take US exchange betting for horse racing.

Exchange betting is pretty much pari-mutuel betting because the house is guaranteed to win, and it is the players who make the odds. So if horse racing is legal on the internet, Betfair on horse racing should be too.

[Indulto]

How does that $50M compare with what CDI paid for what they converted to Twin Spires?

How likely is it that TVG will now offer rebates?

What is their handle now and how much of an increase would enable it need to retain the same net while offering say a 6% rebate?

[lamboguy]

it don't seem like TVG is worth $55 million to me, maybe they think they can put their foot in the door for exchange betting in this country.

[Charlie D]

I feel for a company like PTC

Those guys try so hard to give customers something, but in doing so get crapped by the tracks, horsemen groups

Along comes BF bucks and they have it ready made

[miesque]

How does that $50M compare with what CDI paid for what they converted to Twin Spires?



Per the 2007 Financial Statements for Churchill Downs, Incorporated, the acquisition of AmericaTab, Bloodstock Information Research Services (BRIS) and the Thoroughbred Sports Network (TSN) had an aggregate purchase price of $80 Million.

[Indulto]

Per the 2007 Financial Statements for Churchill Downs, Incorporated, the acquisition of AmericaTab, Bloodstock Information Research Services (BRIS) and the Thoroughbred Sports Network (TSN) had an aggregate purchase price of $80 Million.Thanks.

[NoCal Boy]

I would be surprised if TVG's yield is even 6%. 58% or so of their handle derives from CA racing where the yields are lower.

Like I said, the more interesting part is what move will CDI make next now that TVG is gone to Betfair.
How does that $50M compare with what CDI paid for what they converted to Twin Spires?


How likely is it that TVG will now offer rebates?

What is their handle now and how much of an increase would enable it need to retain the same net while offering say a 6% rebate?

[Charlie D]

BF paid £15 million for Timeform to make a one stop horse racing betting shop and it would not surprise me if the next move was to provide US bettors with a similar service

Anyone for Timeform US :)

[Indulto]

I would be surprised if TVG's yield is even 6%. 58% or so of their handle derives from CA racing where the yields are lower.

Like I said, the more interesting part is what move will CDI make next now that TVG is gone to Betfair.So unless the tracks and horsemen are willing to give something back as well, no change to the status quo after all?

What enables XpressBet to give 2% back -- the fact that the track and ADW are one? If so, when should the same be expected from TwinSpires?

[highnote]

The biggest hurdle I see for any exchange becoming legal in the U.S. is the bookmaking aspect. As far as I know, the only place bookmaking is legal is in Nevada and you may have to have a license to be a bookmaker there.

If a player wants to book a bet on an exchange the law for the state in which the player bets from must allow bookmaking. If the state allows bookmaking will the state license every bettor who wants to book a bet?

[Cangamble]

The biggest hurdle I see for any exchange becoming legal in the U.S. is the bookmaking aspect. As far as I know, the only place bookmaking is legal is in Nevada and you may have to have a license to be a bookmaker there.

If a player wants to book a bet on an exchange the law for the state in which the player bets from must allow bookmaking. If the state allows bookmaking will the state license every bettor who wants to book a bet?
In theory, in a mutuel pool, zero bettors can bet, one bettor can bet, etc. The race goes no matter how many bettors play.

Lets say only two bettors wager. How is that any different from the way Betfair matches bets?

[startngate]

Betfair will have two major issues to overcome.

They will have to survive the licensing process in Oregon, California, Washington, Virginia and perhaps a few other spots. They will also have to sign a deal with the Maryland Jockey Club (Magna) to do business in Maryland.

Assuming they get through all of the licensing issues, they will then have to convince US racetracks and horsemen's groups to sell them the signal. I have no doubt that many racetracks will not care, so how the major tracks respond will be the key. I'm sure that Betfair has been making the rounds of racetracks and have some indication they will be OK content wise, but it will be interesting to see who wants to deal with them.

TVG already had gaps in content, so it's not a huge deal for BetFair yet. Will be interesting to see if they can make a deal with TrackNet.

As of now, the 'betting exchange' part of their business is illegal in the US and the DOJ would hammer them if they tried to roll it out. It's bookmaking, pure and simple. They would have to get a great many laws changed, both federally and at the State level to do it, which I am sure they will try to do. Their big 'hook' will be allowing their current (non US) customers to bet through the pools as an alternative to the exchange.

I'm sure this move makes YouBet a prime takeover target, as well as Premiere Turf and any of the other smaller ADW's. Agregation will likely happen, and probably pretty quickly. Will be interesting to see if the major tracks that currently don't do ADW on their own decide to get into the game, especially those that broke from TVG last year.

[pandy]

I agree about future takeovers, the first thing I thought about was Youbet. Most of the others are either too small for anyone to be interested or are tied to racetrack ownership. Youbet is the obvious target.

[startngate]

In theory, in a mutuel pool, zero bettors can bet, one bettor can bet, etc. The race goes no matter how many bettors play.

Lets say only two bettors wager. How is that any different from the way Betfair matches bets?In a parimutuel pool, both of those bettors could make the exact same wager. To match a wager at BetFair, the bettors would have to take opposite sides of the wager.

[Charlie D]

Betfair will tell you exchange betting is not bookmaking, bookmakers however, will tell you it is

Betfair won the argument over here and they seem to have won the argument in Australia too

Can they win the argument in US ??

[Cangamble]

In a parimutuel pool, both of those bettors could make the exact same wager. To match a wager at BetFair, the bettors would have to take opposite sides of the wager.
OK, try this. How is the player booking the bet, when the house is taking the commission from whoever wins the bet?

[highnote]

In theory, in a mutuel pool, zero bettors can bet, one bettor can bet, etc. The race goes no matter how many bettors play.

Lets say only two bettors wager. How is that any different from the way Betfair matches bets?


There is more than one scenario. What if both bettors bet the same horse?

What if there are more than two horses and neither bets the winner?

IF there are two bettors and two horses the bettor can only win if his horse wins. Is he betting the other will lose? In a sense he is, but he is putting his money on his horse to win according to the "language" of the betting rule.

In your example, in theory it's true, but it would be a rarity for this scenario to occur. We all know the Black Swan theory, so I won't say it could never happen.

I'd love to see a centralized exchange run by an industry organization that would maintain the integrity of the pools -- sort of like the NYSE. It would be an organization that would make sure there was always money for withdrawals.

[rrbauer]

Ah yes. CHAOS CHAOS CHAOS

It's great to see a player-friendly group with big bucks come on the scene. Maybe they will buy a tote company and give that part of the system a big enema as well.

[startngate]

OK, try this. How is the player booking the bet, when the house is taking the commission from whoever wins the bet?Well, that's easy ... the house taking a commission from the wager doesn't even factor into it.

The player is booking the bet because he selects the bet type, sets the terms of the bet (odds, and more importantly how much he is willing to match), and pays off any winners and collects money from any losers. The commission is nothing more than a fee that is charged to make it easier to book the bet.

So to turn the tables on you, how is this any different from me walking down the street to a corner bookie and betting on a race. The bookie is going to tell me how much I can bet, what pools he will accept wagers in, what the odds are and the terms. The bookie is also probably paying a commission to the guy he sends to collect from me when I lose ... does that make it legal?

[prospector]

I feel for a company like PTC

Those guys try so hard to give customers something, but in doing so get crapped by the tracks, horsemen groups

Along comes BF bucks and they have it ready made
i, for one, will not jump ship...loyalty counts with me..

[DeanT]

A brief analysis at this early stage:

Betfair & TVG - A Big Opportunity for Racing (http://pullthepocket.blogspot.com/2009/01/betfair-finally-expands-its-market-to.html)

http://www.activebet.net/advertpix/betfair.gif (http://www.activebet.net/advertpix/betfair.gif)Betfair finally expands its market to the US, by acquiring TVG, as was announced today. TVG has one of the biggest reaches as a television network, and is also an advance deposit wagering company, offering players avenues to bet their tracks over the phone and internet. Currently TVG is only offered to US citizens.

This deal is extremely interesting from a number of perspectives. Here are a few thoughts to chew on. My opinion only, off the top of my head at this early stage.

I expect some in racing and possibly TVG’s competitors to raise hell. They still have to pass muster in North America regulatorily (I believe), so there is time to try and discredit them. In any other business if a successful franchise wanted into your market, trumpets would blare and people will jump for joy, but this is racing. A new player in the space, especially one who has proven time and time again that their main focus lies not in the status quo, but in growing their customer base, will be met with resistance. We noted this when Betfair moved into Australia in a post about a year ago (http://pullthepocket.blogspot.com/2008/04/betfair-wins-in-high-court.html). Although this is somewhat different (Betfair’s exchange was entering the Aussie market, and it is not in North America).

I expect that Betfair will begin to work the US product on their betting exchanges for their 2 million world wide customers. The tracks they cover will be highlighted for exchange bettors. As well I predict that they will act as an ADW, just like they have in Australia with the TOTE. Betfair players will be able to login and bet via TVG right into the pools, with their Betfair bankrolls. The result of which is fairly obvious: It will increase handles almost immediately.

I believe that sometime within the next 12 to 24 months, TVG harness tracks will be offered for trade at Betfair. This means a track like the Meadowlands will be able to be exchange bet for their customer base overseas.

Next, I think the status quo is over. Protectionist laws that racing has lived by will be challenged, and challenged hard. In the US, state after state we see laws against internet betting which has handcuffed this business for a generation. Betfair is a 21st century company and they do not live by old-time racing laws without a fight. This might be the catalyst we’ve been waiting for - no matter what state you live in, you can bet racing.

Most obviously, behind the scenes lobbying for a US betting exchange will be initiated. I know myself and others have said that we should have done this long ago ourselves. But if all goes to Betfair’s grand plan, racing owning their own betting exchange will be a virtual impossibility. No doubt it will be a long road, but opening up betting markets is essential to our business and we should encourage it.

For Canada, we hear plenty about HPI and their virtual monopoly of wagering in Canada. Can companies like Youbet and TVG come to Canada and offer competition? I guarantee we will find out. Betfair challenged TOTE’s dominance in Australia and took that to the high court. If there is a crack open for them to enter Canada rest assured they will find it, come here through TVG, and offer choice to bettors for the first time.

For customers of TVG, I would fully expect that Betfair will offer rebates to their players. They have built their company from having no customers to two million customers in only eight years, and they have done so by offering low takeouts. In fact, one could argue it is the cornerstone of their business. Expect to receive a price break if you are a TVG customer, although perhaps this may be a ways off.

I believe that we will see Betfair continue to offer free handicapping tools to customers. In addition I would expect to see new acquisitions, possibly a data provider. Betfair has proven that they believe customers call the shots, no one else, and giving them the tools they need to play the game is paramount to their survival in a tough gambling world.

If you are a customer, I predict you will like this deal. If you are someone who wants to see handles grow and new ways to bet be offered, you will like this deal. If you are a protector of the status quo, and like things exactly as they are, then it is a completely different story.

[startngate]

Betfair will tell you exchange betting is not bookmaking, bookmakers however, will tell you it is

Betfair won the argument over here and they seem to have won the argument in Australia too

Can they win the argument in US ??Actually, in the UK, there is a special license for operating a betting exchange. It's called the Remote Betting Intermediary license.

So BetFair would not even have to make the argument. There is already a facility for it.

[Charlie D]

Well, that's easy ... the house taking a commission from the wager doesn't even factor into it.

The player is booking the bet because he selects the bet type, sets the terms of the bet (odds, and more importantly how much he is willing to match), and pays off any winners and collects money from any losers. The commission is nothing more than a fee that is charged to make it easier to book the bet.

So to turn the tables on you, how is this any different from me walking down the street to a corner bookie and betting on a race. The bookie is going to tell me how much I can bet, what pools he will accept wagers in, what the odds are and the terms. The bookie is also probably paying a commission to the guy he sends to collect from me when I lose ... does that make it legal?



Startngate

BF are not layers of bets like a bookmaker and there in lies the difference


The exchange model is modelled on the Stock market, we buy, sell, trade just like the guys on Wall Street

[chickenhead]

anything to shake things up, way to go Merry Olde!

[Pace Cap'n]

A player at Betfair has two choices--he can be the bookie, or he can be the gambler.

If he is laying the runner(s), then he's the bookie. If he is backing the runner(s), then his participation is the same as any pari-mutuel bettor.

Success on either endeavor will incur a service charge (takeout). In this instance, there is no doubt that winners pay the take.

[slew101]

I'd expect some major layoffs of the on-air talent at TVG. I doubt they will keep that many people on board once the deal goes through, especially with TVG's fewer track offerings.

[Charlie D]

A player at Betfair has two choices--he can be the bookie, or he can be the gambler.

If he is laying the runner(s), then he's the bookie. If he is backing the runner(s), then his participation is the same as any pari-mutuel bettor.

Success on either endeavor will incur a service charge (takeout). In this instance, there is no doubt that winners pay the take.


buying (backing) or selling (laying) are opposites of the same thing

[NoCal Boy]

Youbet is the only ADW left that has the scale that someone like Churchill needs to round out its ADW. The Illinois connections abound between Youbet and Churchill. Is it any coincidence that Youbet now has all of the Churchill and Magna content?

Let's face it. TVG and Youbet are the dominant ADW players, followed DISTANTLY by Twinspires and Xpressbet. The only way Twinspires can grow into a leader in ADW is through an acquisition that makes it a major player. An acquisition of Youbet immediately moves TS to the had of the class by a rather wide margin. It can then leverage this into broader coverage for HRTV.

Churchill can not stand still or it will be forever relegated to second tier ADW status behind TVG and Youbet.


I agree about future takeovers, the first thing I thought about was Youbet. Most of the others are either too small for anyone to be interested or are tied to racetrack ownership. Youbet is the obvious target.

[startngate]

Startngate

BF are not layers of bets like a bookmaker and there in lies the difference
Where in any of my posts did I even imply that BetFair was the bookie?

[startngate]

A player at Betfair has two choices--he can be the bookie, or he can be the gambler.

If he is laying the runner(s), then he's the bookie. If he is backing the runner(s), then his participation is the same as any pari-mutuel bettor.

Success on either endeavor will incur a service charge (takeout). In this instance, there is no doubt that winners pay the take.Not exactly ...

You are correct, a customer of BetFair's can be a bookie or a gambler. They are the bookie when they offer a bet, and the gambler when they accept a bet.

However, in the case of the gambler, it is not the same as being the gambler in a pari-mutuel bet, because the odds on a pari-mutuel bet are not fixed, and the amount of money that the gambler can wager is not restricted in any way.

[Charlie D]

Where in any of my posts did I even imply that BetFair was the bookie

You didn't, but i thought you were suggesting they were, apologies for the misunderstanding




You back A to win and your laying B, C, D, E to lose

You Lay A to lose and your backing B, C, D , E to win


You are doing the same, but opposite

[Pace Cap'n]

But not exactly the same.

If you back A, all the others have to lose.

If you lay A, only one of the others has to win.

Interesting concept, either way.

[Charlie D]

But not exactly the same.

If you back A, all the others have to lose.

If you lay A, only one of the others has to win.

Interesting concept, either way.




If i reckon horse A is a 2-1 shot and it offered at 4-1, - i'm backing the the overlay


If i reckon Horse A is a 2-1 shot and it is offered at evens - i'm laying the underlay



,I am doing the exact same, but opposite

[Light]

Let's face it. TVG and Youbet are the dominant ADW players, followed DISTANTLY by Twinspires and Xpressbet. The only way Twinspires can grow ....

The tide may be turning:

http://www.bloodhorse.com/horse-racing/articles/48053/big-four-yield-mixed-3q-handle-totals


Seeing gains on the plus side were TVG and Youbet’s business rivals, Twinspires and XpressBet, whose respective parent companies (Churchill Downs Inc. and Magna Entertainment Corp.) are partners in TrackNet Media Group. Twinspires and XpressBet processed $56,099,151 and $44,092,900 through the Oregon hub, yielding respective increases of 42.2% and 38.2%


Personally I resent having to pay Youbet or TVG a fee if I dont play as much as they think I should. What if I'm too busy or got better things to do? Oh no.There's a price to pay for that. So my business has been with TS and Xbet. But I lean to Xbet cause I dont have to play a certain amount TS's thinks I should just to keep my video "privilege".

Hopefully Betfair will remove those disgusting 25 cent per transaction fees,video fees,and other A-hole fees and stop hogging signals. Maybe they can transform TVG from a turn off to a turn on. I wont hold my breath.

[andicap]

I can't comment on the political upshot of this deal inside racing BUT I can contribute my experiences as a Betfair customer.

The company is excellent. I get calls from them about once every two months or so asking me how its going, how's the service, is there anything I'd like to see, etc. It's usually when they have a promotion going -- a free bet or something.
They pay you promptly, no shenanigans of any sort.

Just a real professional operation. Very happy to see this development.

[pandy]

I can't comment on the political upshot of this deal inside racing BUT I can contribute my experiences as a Betfair customer.

The company is excellent. I get calls from them about once every two months or so asking me how its going, how's the service, is there anything I'd like to see, etc. It's usually when they have a promotion going -- a free bet or something.
They pay you promptly, no shenanigans of any sort.

Just a real professional operation. Very happy to see this development.

That's one advantage Betfair has being a British operation. I had an account with William Hill years back before the US gov't stepped in, and they were a top class bookmaking operation, far ahead of the typical US hacks. Let's face it, racetracks and bookmakers in this country are not in the same class as the Brits when it comes to bookmaking.

[raybo]

Personally, I think the acquisition will transform the US racing industry, in a customer related way. I don't see any downside because for them to do what they obviously want to do in the US they will have to get the industry and the feds and state laws changed. These changes, if accomplished will open up things for everyone in the industry, including PTC.

[NoCal Boy]

The tide may be turning:

http://www.bloodhorse.com/horse-racing/articles/48053/big-four-yield-mixed-3q-handle-totals


Seeing gains on the plus side were TVG and Youbet’s business rivals, Twinspires and XpressBet, whose respective parent companies (Churchill Downs Inc. and Magna Entertainment Corp.) are partners in TrackNet Media Group. Twinspires and XpressBet processed $56,099,151 and $44,092,900 through the Oregon hub, yielding respective increases of 42.2% and 38.2%


Personally I resent having to pay Youbet or TVG a fee if I dont play as much as they think I should. What if I'm too busy or got better things to do? Oh no.There's a price to pay for that. So my business has been with TS and Xbet. But I lean to Xbet cause I dont have to play a certain amount TS's thinks I should just to keep my video "privilege".

Hopefully Betfair will remove those disgusting 25 cent per transaction fees,video fees,and other A-hole fees and stop hogging signals. Maybe they can transform TVG from a turn off to a turn on. I wont hold my breath.

Youbet did not have the Tracknet content that it has now. Expect the gap between Youbet and TS and XB to widen now. Also, Youbet does not charge fees if you wager at least $350 per month or $3000 or so per year. Months roll over as well. If you can not meet either of those handle figures, then I strongly recommend going somewhere else where there are no fees.

[Unome]

The biggest hurdle I see for any exchange becoming legal in the U.S. is the bookmaking aspect. As far as I know, the only place bookmaking is legal is in Nevada and you may have to have a license to be a bookmaker there.

If a player wants to book a bet on an exchange the law for the state in which the player bets from must allow bookmaking. If the state allows bookmaking will the state license every bettor who wants to book a bet?
TVG is licensed in Oregon which is one of four states that allows sportsbetting.

[strapper]

I hope the new management shows more of the horses in the warmups at the various tracks. I'm into body language and the way they show it now they usually switch off to other tracks after the post parade.

[ddog]

A brief analysis at this early stage:


If BF attempts or even hints at pulling taxable monies out of the US and they think the GVT is going to stand still for that , then they better have some really powerfull top level "friends".

I do not think the "goodness patrols" will let the ultimate model become legal.

I suspect they may rue the day they dipped into this deal.

I have not made any attempt to look behind the curtain, but it seems a no brainer to me.

BF must have another set of facts before them?

[Imriledup]

Another interesting situation is this.
If you are a customer of TVG, aren't you automatically now a customer of betfair?

And, as a customer of betfair, aren't you allowed to bet on anything betfair has to offer?

Can the US Govt tell you that you can be a customer of betfair but NOT be a customer of betfair at the same time?

Its just so confusing!

[DeanT]

Another interesting situation is this.
If you are a customer of TVG, aren't you automatically now a customer of betfair?

And, as a customer of betfair, aren't you allowed to bet on anything betfair has to offer?

Can the US Govt tell you that you can be a customer of betfair but NOT be a customer of betfair at the same time?

Its just so confusing!
Nope. TVG customers can not be betfair customers. UK Betfair customers will be able to bet with TVG tho, I imagine.

[startngate]

Nope. TVG customers can not be betfair customers. UK Betfair customers will be able to bet with TVG tho, I imagine.I would suspect that BetFair would move fairly quickly to make betting through the US tote via TVG an option for its foreign customers.

I would also hope that they begin to show the exchange odds to the US players on the TVG platform in some way that it makes it easy to spot overlays, and that the Timeform data becomes easily available for foreign runners/races.

They have a lot of cash, and some great developers, so it will be interesting to see what innovations they bring to the table.

As rrbauer put it ... chaos ... which is probably a good thing for the player ... :)

[DeanT]

Looking at the Aussie data and when BF was allowed into the tote there, I would submit that wagering through TVG will be up at least 20% or so. That would be new dollars into US pools.

[Cangamble]

Must read article. Especially for Dean:
http://www.horseracingbusiness.com/racings-response-to-betting-exchanges-703.htm

[DeanT]

Excellent stuff. So common-sense.

[ddog]

wagering will be up 20%.

I don't get it, why would a player with a better deal betting on BF now , in turn bet into pools with a massively worse deal and less options?

If that money comes into these pools they don't pay the rake? they don't then have "exposure" state side?

[Cangamble]

wagering will be up 20%.

I don't get it, why would a player with a better deal betting on BF now , in turn bet into pools with a massively worse deal and less options?

If that money comes into these pools they don't pay the rake? they don't then have "exposure" state side?
They will be inclined to play tri's exactors, etc.
They also may have booked a horse at 2-1 on Betfair, and end up betting it at 3-1 on track (this happens, but not that often obviously because of the takeout factor). I have seen horses bet down to 1-1 on Betfair go off at 8-5 or so a few times.

[DeanT]

wagering will be up 20%.

I don't get it, why would a player with a better deal betting on BF now , in turn bet into pools with a massively worse deal and less options?

If that money comes into these pools they don't pay the rake? they don't then have "exposure" state side?

Because when you dont get matched on something, or perhaps like two horses in a nice overlay exacta, you bet them into the pools. It generates eyeballs, and those eyeballs dont always bet only in BF.

Here is an example. This is from 2008, where handles are down everywhere. Betfair punters played directly into the pools as well as on BF.

http://www.themercury.com.au/article/2008/10/31/35645_tasmania-news.html

TOTE turnover up record 30%

TOTE Tasmania's annual report out yesterday showed a record 30 per cent increase in turnover for last financial year.

The report, tabled in Parliament, revealed the racing industry's income growth was generated from customers betting via their online and telephone accounts and from outside Australia.

Totalisator wagering totalled $478 million, up 27 per cent compared to last year. An estimated 70 per cent of this growth was from international customers.

TOTE's arrangement with Betfair that provides the company with access to Betfair's global customer base of more than one million punters substantially adds to the totalisator pools.

Chairman Michael Kent said TOTE Tasmania distributed a record $23.7 million to the Tasmanian Racing Industry in 2007-08, up from $20.4 million in 2006-07.

[ddog]

Because when you dont get matched on something, or perhaps like two horses in a nice overlay exacta, you bet them into the pools. It generates eyeballs, and those eyeballs dont always bet only in BF.

Here is an example. This is from 2008, where handles are down everywhere. Betfair punters played directly into the pools as well as on BF.

http://www.themercury.com.au/article/2008/10/31/35645_tasmania-news.html


Ok, i can see that.
Can't hurt to hope.

[gm10]

Excellent news imo.

I already bet American racing on a daily basis through Betfair. It is already one of their most popular "smaller" markets with a relatively small but very dedicated following. At smaller tracks like Penn National or Mountaineer, it's very common to see more money bet on Betfair than in the tote win pool (think about this - did you realize that your sport was so popular?).

I also hope that TGV customers will get better access to European racing. It's good to promote our sport.

It is certainly the case that US bettors would benefit massively from having an alternative to pool-betting. Not only is the take-out lower (only 5%), but it also give you more options to bet according to your opinion. For example, what if you strongly dislike the favourite, but can't make up your mind about who will actually win the race. What do you do? If you have access to BEtfair, it's very simple: you LAY that favourite.

Finally, there are a significant numbers of American trainers who are already using BEtfair to their own advantage. They lay their own horses and instruct the jockey not to win the race. You will often see this in races with low prize money. I hope that they won't be allowed to get away with this anymore once Betfair is properly monitored by American racing authorities.

[startngate]

Finally, there are a significant numbers of American trainers who are already using BEtfair to their own advantage. They lay their own horses and instruct the jockey not to win the race. You will often see this in races with low prize money. I hope that they won't be allowed to get away with this anymore once Betfair is properly monitored by American racing authorities.According to BetFair they do not allow US customers.

If it is proven that there are US customers currently playing through the exchange with BetFair, not only will they will not get licensed anywhere in the US, the principals will get arrested and prosecuted.

Seems illogical to me that this would be occurring. It would be far too dangerous for BetFair to buy into the US market if it was.

[highnote]

According to BetFair they do not allow US customers.

If it is proven that there are US customers currently playing through the exchange with BetFair, not only will they will not get licensed anywhere in the US, the principals will get arrested and prosecuted.

Seems illogical to me that this would be occurring. It would be far too dangerous for BetFair to buy into the US market if it was.

Or course there are Americans playing on BF.

[DeanT]

They just need to cheat to get in there (imo). You cant log in to an account with a US IP, nor can you get an account with a US address, as per the rules. However, since I have seen Americans smoking cuban cigars I am sure there is a way :)

[highnote]

They just need to cheat to get in there (imo). You cant log in to an account with a US IP, nor can you get an account with a US address, as per the rules.


That'll keep 'em out. :rolleyes: :D

[DeanT]

I brought a piece of fruit over the border once from Canada to the US. I thought the sniffing dogs were trained to sniff plums, but alas I escaped without incident.

So yes, I imagine there is a person or two from the US sneaking in there :)

[ddog]

yeh, but was that pre or post Homeland Security?

:D

[DeanT]

:D

It was definitely after. I am anal about bringing anything over. I forgot I brought a lunch for the trip. Man, I was afraid they were going to send me to Gitmo. But egg would have been on their face since it was a California plum.

[tholl]

Finally, there are a significant numbers of American trainers who are already using BEtfair to their own advantage. They lay their own horses and instruct the jockey not to win the race. You will often see this in races with low prize money. I hope that they won't be allowed to get away with this anymore once Betfair is properly monitored by American racing authorities.

You know this ?

[rokitman]

I brought a piece of fruit over the border once from Canada to the US. I thought the sniffing dogs were trained to sniff plums, but alas I escaped without incident.

So yes, I imagine there is a person or two from the US sneaking in there :)
Ahhaaaaa! There you are.

[gm10]

According to BetFair they do not allow US customers.

If it is proven that there are US customers currently playing through the exchange with BetFair, not only will they will not get licensed anywhere in the US, the principals will get arrested and prosecuted.

Seems illogical to me that this would be occurring. It would be far too dangerous for BetFair to buy into the US market if it was.

I have been approached myself by an owner. He did not want to access betfair himself, he wanted me to place bets for him. Nothing illegal about that is there.

Furthermore you can't prove it. When I was in Santa Anita, I used Betfair using remote desktop (PC was on in England) and my blackberry. No problem whatsoever. While people were qeueuing at the windows I was getting better odds and sitting in my seat.

[Cangamble]

I have been approached myself by an owner. He did not want to access betfair himself, he wanted me to place bets for him. Nothing illegal about that is there.

Furthermore you can't prove it. When I was in Santa Anita, I used Betfair using remote desktop (PC was on in England) and my blackberry. No problem whatsoever. While people were qeueuing at the windows I was getting better odds and sitting in my seat.
If you were making big hits in races where you bet heavily against the same trainer or outfit consistently, a red flag would come down from Betfair.

[rrbauer]

When I was in Santa Anita, I used Betfair using remote desktop (PC was on in England) and my blackberry. No problem whatsoever. While people were qeueuing at the windows I was getting better odds and sitting in my seat.

What's so unusual about that? PC in England with UK IP-address is good to go with Betfair if the account is kosher. Who cares?

[startngate]

Well, let's see .... it's a long list, starting with ...

Santa Anita certainly cares because the poster was on their property and playing through a site that pays nothing back to the US horse racing industry as a whole, much less Santa Anita itself.

Regulators in the States that will have to approve BetFair are going to have some concerns if people really are allowed to wager on the exchange from within the US. It's a bit of a lesser issue here since I'm assuming the OP is not a US resident. If GM10 is a resident of the US, then it's a big problem with regulators, even if he's not a citizen.

The Federal government is going to have serious issues if US residents are betting through the exchange ... especially if a third party intermediary is enabling the practice as the OP claims he was asked to do.

Yes, it would have to be proven of course, but if the establishment (ie the US racing industry) wants to derail the BetFair acquisition, then you can bet some (or many) will start digging and will try to prove issues like this any way they can.

Of course, the establishment may not have to. The DoJ has been looking for anything concrete to hammer home their point that the IHA does not trump the Wire Act. They might just start looking into it themselves. Which would not be a good thing, IMO.

Hopefully it all just gets approved without anyone 'looking under the rug' and BetFair provides a much needed breath of fresh air for the player. I'm just cynical because I know there are probably more than a few folks out there that are scared to death of this deal and will try to skuttle it.

[DeanT]

Santa Anita certainly cares because the poster was on their property and playing through a site that pays nothing back to the US horse racing industry as a whole, much less Santa Anita itself.


Relax. A guy from the UK bet a race with betfair. It is legal there. When the US stops people from other countries at the border while visiting and makes them swear not to bet through their own ADW; or throw them in Gitmo, it is time to never visit the US.

Santa Anita has a deal with Betfair as well, so whatever he bet, some of it went back to them.

When I go to the US I bet through HPI, because I am a member there, and it is where my money is.

[gm10]

If you were making big hits in races where you bet heavily against the same trainer or outfit consistently, a red flag would come down from Betfair.

This is not true, sadly.
There is one trainer who does it time and time again. His horses are bet heavy agst on Betfair to lose, and magically, they always finish with a lot of late energy to finsih second or third (= this way they get the prize money for being second). It's always in races with low prize money. Not winning races is easier, and is more profitable.

I'm not saying who it is, but he operates on the East Coast (his Philly horses are partciularly suspect) and wins a lot of races.

I have pointed this out to Betfair time and time again. They say they take it very seriously and then don't get back to me. I've notified Philadelphia Park, but they probably think I'm deluded.

[gm10]

What's so unusual about that? PC in England with UK IP-address is good to go with Betfair if the account is kosher. Who cares?

Exactly. That's how easy it is for Americans to bet on Betfair.

[gm10]

Well, let's see .... it's a long list, starting with ...

Santa Anita certainly cares because the poster was on their property and playing through a site that pays nothing back to the US horse racing industry as a whole, much less Santa Anita itself.

Regulators in the States that will have to approve BetFair are going to have some concerns if people really are allowed to wager on the exchange from within the US. It's a bit of a lesser issue here since I'm assuming the OP is not a US resident. If GM10 is a resident of the US, then it's a big problem with regulators, even if he's not a citizen.

The Federal government is going to have serious issues if US residents are betting through the exchange ... especially if a third party intermediary is enabling the practice as the OP claims he was asked to do.

Yes, it would have to be proven of course, but if the establishment (ie the US racing industry) wants to derail the BetFair acquisition, then you can bet some (or many) will start digging and will try to prove issues like this any way they can.

Of course, the establishment may not have to. The DoJ has been looking for anything concrete to hammer home their point that the IHA does not trump the Wire Act. They might just start looking into it themselves. Which would not be a good thing, IMO.

Hopefully it all just gets approved without anyone 'looking under the rug' and BetFair provides a much needed breath of fresh air for the player. I'm just cynical because I know there are probably more than a few folks out there that are scared to death of this deal and will try to skuttle it.

Betfair gives UK tracks 10% of net revenue for each race they get the signal for. I'm looking at the first race which comes on my screen and it is Philadelphia Park race 6. More than 60.000 dollar (Matched: GBP 40,159) has been bet on the win market on Betfair. The total amount in the win tote pool is 77.000 dollar of which the tracks will see get, say, 5%? You know what, I think the tracks may be fine with more than doubling their income. In fact, I suspect that the only ones who will oppose the deal are other ADW's who won't be able to compete with such margins.

[highnote]

In fact, I suspect that the only ones who will oppose the deal are other ADW's who won't be able to compete with such margins.


I don't think ADW's have much to worry about. Exchange betting is mainly for win and some on place. Exotic betting has much bigger pools and higher takeouts.

Also, I think a US exchange is going to be run by some group like Equibase or The Jockey Club and all tracks will share jointly in the revenue. With a central exchange all betting can be more closely scrutinized.

Also, the dollar amounts may look big on a betting exchange, but it's matched bets that you're seeing. The commission is based on the net win. There are some big bettors using computer bots that back and lay large amounts at different prices to lock in a miniscule profit. So if they're betting $100,000, for instance, and their profit is $100 then the commission is $5 on $200,000 matched bets. Or if the profit is $1,000 then the commission is $50 on $200,000 matched bets.

Now if the bettors are doing this on 50 races per day they're making OK money. The exchange might be pulling in $2500 per day off this bettor -- which can add up if enough bettors are playing.

I don't have time to do a simulation of the possible profits for an exchange, but I'd be interested in seeing what others come up with.

[gm10]

I don't think ADW's have much to worry about. Exchange betting is mainly for win and some on place. Exotic betting has much bigger pools and higher takeouts.

Also, I think a US exchange is going to be run by some group like Equibase or The Jockey Club and all tracks will share jointly in the revenue. With a central exchange all betting can be more closely scrutinized.

Also, the dollar amounts may look big on a betting exchange, but it's matched bets that you're seeing. The commission is based on the net win. There are some big bettors using computer bots that back and lay large amounts at different prices to lock in a miniscule profit. So if they're betting $100,000, for instance, and their profit is $100 then the commission is $5 on $200,000 matched bets. Or if the profit is $1,000 then the commission is $50 on $200,000 matched bets.

Now if the bettors are doing this on 50 races per day they're making OK money. The exchange might be pulling in $2500 per day off this bettor -- which can add up if enough bettors are playing.

I don't have time to do a simulation of the possible profits for an exchange, but I'd be interested in seeing what others come up with.

ah yes you're right, it's 10% on commision
still a nice extra income though!
(btw it sounds to me like you are very familiar with Betfair for someone who's not allowed to use it ;-))

the problem with a centralized betting exchange is that it doesn't stop other exchanges from legally offering the same wagers on the same events
there is nothing illegal about what betfair does, it offers a betting market on both domestic and foreign sporting events in the UK where it is a regulated company, and the UK is a recognized partner of the US

[highnote]

(btw it sounds to me like you are very familiar with Betfair for someone who's not allowed to use it ;-))

I'm very familiar with the exchange concept and I have used BF extensively.

Check out my blog piece about betting exchanges:

http://blog.horseplayersassociation.org/2008/07/racing-needs-paradigm-shift.html

And especially this link to my website where you can see the rejection letter from Richard Branson to my betting exchange pitch -- look closely at the date on the letter:

http://www.hypernormal.com/html/virgin.jpg


the problem with a centralized betting exchange is that it doesn't stop other exchanges from legally offering the same wagers on the same events


That actually benefits players because it gives them the opportunity to arbitrage across various exchanges.

there is nothing illegal about what betfair does, it offers a betting market on both domestic and foreign sporting events in the UK where it is a regulated company, and the UK is a recognized partner of the US

It may be legal in the UK, but if you don't think it is illegal in the U.S. then you should set one up here and see how long it lasts.

Most states have anti-bookmaking laws that are stronly enforced. That's why organized crime tends to be involved with bookmaking. They're willing to take the risk of running an illegal bookmaking operation.

[startngate]

there is nothing illegal about what betfair does, it offers a betting market on both domestic and foreign sporting events in the UK where it is a regulated company, and the UK is a recognized partner of the USWhat BetFair does is very much illegal in the US. If they tried to open up an exchange here, people would be going to jail.

Having siad that, whether or not a person located in the US is violating a law by betting with BetFair is another thing entirely. The US DoJ certainly thinks it is, as do some courts. Evidence of this is the arrest of the principals of some of the offshore casinos/bookmakers when they stepped foot in the US. Of course Antigua and the FTO disagree, and many people in the US still play through offshore entities ... especially on the poker sites. Non of the companies that are still taking US action are licenced to do anything in the US, whether or not it's legal activity here.

This is where BetFair has the potential to get in trouble. If it's proven that US residents are playing through the exchange, the regulators will not license them and the tracks will not want to do business with them.

If BetFair somehow does manage to gain approval to operate an exchange in the US, then it will be game over for the ADW's. They would all have to get into the exchange business to compete, but there will be no way they can compete with BetFair ... they are way too far ahead of the game. Even the Jockey Club or Equibase couldn't do it, it would be too late.

[highnote]

If BetFair somehow does manage to gain approval to operate an exchange in the US, then it will be game over for the ADW's. They would all have to get into the exchange business to compete, but there will be no way they can compete with BetFair ... they are way too far ahead of the game. Even the Jockey Club or Equibase couldn't do it, it would be too late.


Microsoft could compete with them.

[DeanT]

If it was legal and google or MSFT ever got into it, it would be the most amazing thing to happen to racing perhaps ever. And I bet racing would fight it until their last breath. They'd be too busy arguing how they could survive with less than 22% of every wager.

[BillW]

Microsoft could compete with them.


The security issues make me shudder just thinking about it! :eek:

[highnote]

If it was legal and google or MSFT ever got into it, it would be the most amazing thing to happen to racing perhaps ever. And I bet racing would fight it until their last breath.


It would depend on how much racing would benefit from it.

Guiliani Associates said the US needs a centralized betting platform. I think the betting exchange platform is perfect for centralizing -- much like the NYSE or NASDAQ.

[Indulto]

I'm very familiar with the exchange concept and I have used BF extensively.

Check out my blog piece about betting exchanges:

http://blog.horseplayersassociation.org/2008/07/racing-needs-paradigm-shift.html

And especially this link to my website where you can see the rejection letter from Richard Branson to my betting exchange pitch -- look closely at the date on the letter:

http://www.hypernormal.com/html/virgin.jpg

That actually benefits players because it gives them the opportunity to arbitrage across various exchanges.

It may be legal in the UK, but if you don't think it is illegal in the U.S. then you should set one up here and see how long it lasts.

Most states have anti-bookmaking laws that are stronly enforced. That's why organized crime tends to be involved with bookmaking. They're willing to take the risk of running an illegal bookmaking operation.SJ,
Do professional bookmakers in the UK use Betfair? How would BF know even if they care? As hard to beat as the game has become, can a player match against all starters like a bookmaker (and thus become one) so that they come out ahead no matter who wins, or is that impractical?

It also seems to me that if the tracks want a cut of exchange money, they're going to have to go after it directly themselves to keep middlemen out. Isn't the TOC talking about betting exchanges now? How likely is it that the CA tracks would partner with them? Would horsemen controlling an exchange be considered a conflict of interest?

[highnote]

SJ,
Do professional bookmakers in the UK use Betfair?

My understanding is that lots of bookmakers use bf to lay off some of their bets.



How would BF know even if they care?


bf shouldn't care -- they're not the bookmaker. They're just the exchange -- like ebay or nasdaq or a real estate broker. They facilitate the trade.




As hard to beat as the game has become, can a player match against all starters like a bookmaker (and thus become one) so that they come out ahead no matter who wins, or is that impractical?


Yes. A player can actually become a bookmaker and by laying the horses at the right prices they can lock in a profit no matter who wins -- or vice versa -- you bet all the horses to win in the right proportion and lock in a profit.

I first got the idea for a betting exchange in 1998 at the Breeders' Cup. I wanted to bet Skip Away to lose. Pittsburgh Phil had bookmaker friends who would lay horses for him. That's when the lightbulb went off and I got the idea of a betting exchange. I knew Skip Away wouldn't win, but I didn't know who would lose. I seem to recall Skip Away was the favorite -- maybe 9/5 odds. I would have gladly offered 2 or 3 to for him to lose and it would have been a huge overlay.

The best way to lock in a risk-free profit is to back a horse to win at high odds and then bet it to lose at lower odds. If you do it in the right proportion you can make a profit no matter what the outcome is. It's harder to do now that a couple of years ago, in my experience, because the market is becoming more mature. Plus, the people I've seen do have to bet quite a bit. For instance, I remember seeing an acquaintance bet around $6000 or $7000 (???) to lock in a $60 profit. He had layed all the horses. He really had to work it right up to post time by changing the amount of bets he was making and the odds at which he offered his bets. It was impressive, but a lot of work. Of course, he made $60 in about 10 minutes and he would do that all day long. He was (is?) quite successful. Haven't seen him in awhile.

I like to do it on futures bets -- like the KY Derby. You bet months in advance on some horses you like to win. Then some of them will shorten up in price. When they do, you lay them at lower odds and lock in a risk-free profit.




It also seems to me that if the tracks want a cut of exchange money, they're going to have to go after it directly themselves to keep middlemen out. Isn't the TOC talking about betting exchanges now? How likely is it that the CA tracks would partner with them? Would horsemen controlling an exchange be considered a conflict of interest?

Those are million (billion?) dollar questions. Because there are so many unknowns and so much money at stake these won't be resolved quickly. Look how long it took for NY State to award a slots license.

It makes the most sense to me to have one central exchange that all tracks are part owners of -- like Equibase. Then they share revenue and pool the liquidity. Small pools are the biggest problem for start up exchanges. An exchange needs lots of liquidity. If there was only one exchange run by the tracks it would guarantee liquidity.

There is still going to be a huge pari-mutuel market for exotic wagering. No one is going to lay odds on pick 6 wagers on a betting exchange. Actually, never say never. Someone might find a way to make money off of it. And if they do, then it will happen.

A lot of this stuff I'm just theorizing on. There could be other, just as valid, theories. I'm sure there is a wide array for opinions on exchanges. This 10 year old betting exchange paradigm has grown roots, but hasn't sprouted yet. Will it ever?

[gm10]

I'm very familiar with the exchange concept and I have used BF extensively.

Check out my blog piece about betting exchanges:

http://blog.horseplayersassociation.org/2008/07/racing-needs-paradigm-shift.html

And especially this link to my website where you can see the rejection letter from Richard Branson to my betting exchange pitch -- look closely at the date on the letter:

http://www.hypernormal.com/html/virgin.jpg




I will take a look later.



That actually benefits players because it gives them the opportunity to arbitrage across various exchanges.


True. It also gives them the opportunity to hedge between the pools and the exchanges. You can construct risk-free bets combining the two.


It may be legal in the UK, but if you don't think it is illegal in the U.S. then you should set one up here and see how long it lasts.


Yes but a legal British company is not illegal in the US. If an American asks me that he wants me to place for bets on Betfair, or set up an account for him which he access through Remote Desktop, there is nothing illegal that as far as I can see. It's my account, and I'm using my CC to make deposits.


Most states have anti-bookmaking laws that are stronly enforced. That's why organized crime tends to be involved with bookmaking. They're willing to take the risk of running an illegal bookmaking operation.

I didn't mean that they had to be American operations. I think they should be, because it is clear that you are missing the boat in a big way, and I think that's a shame. But they could be based anywhere.

[gm10]

What BetFair does is very much illegal in the US. If they tried to open up an exchange here, people would be going to jail.

Having siad that, whether or not a person located in the US is violating a law by betting with BetFair is another thing entirely. The US DoJ certainly thinks it is, as do some courts. Evidence of this is the arrest of the principals of some of the offshore casinos/bookmakers when they stepped foot in the US. Of course Antigua and the FTO disagree, and many people in the US still play through offshore entities ... especially on the poker sites. Non of the companies that are still taking US action are licenced to do anything in the US, whether or not it's legal activity here.

This is where BetFair has the potential to get in trouble. If it's proven that US residents are playing through the exchange, the regulators will not license them and the tracks will not want to do business with them.

If BetFair somehow does manage to gain approval to operate an exchange in the US, then it will be game over for the ADW's. They would all have to get into the exchange business to compete, but there will be no way they can compete with BetFair ... they are way too far ahead of the game. Even the Jockey Club or Equibase couldn't do it, it would be too late.

I think there is room for both ... in fact I'm 99% sure that there would be ... there would be a lot of trading and hedging going on. I've worked on that once, and came up with about 8 strategies where you can use the pools and the betfair markets to construct risk free bets. There would def. be people doing similar things as hedge funds do.

[gm10]

SJ,
Do professional bookmakers in the UK use Betfair? How would BF know even if they care? As hard to beat as the game has become, can a player match against all starters like a bookmaker (and thus become one) so that they come out ahead no matter who wins, or is that impractical?

It also seems to me that if the tracks want a cut of exchange money, they're going to have to go after it directly themselves to keep middlemen out. Isn't the TOC talking about betting exchanges now? How likely is it that the CA tracks would partner with them? Would horsemen controlling an exchange be considered a conflict of interest?

YES the bookmakers rely heavily on Betfair!!! They hedge the bets that they are making! There's a special API which you can use to place bets electronically and all the big ones do so.

[beertapper]

the betfair purchase seems especially interesting, in light of this:

"Barney Frank, the Massachusetts Democrat congressman and chairman of the House of Representatives’ powerful financial services committee, plans to resubmit a bill (http://www.ft.com/cms/s/0/650c5afa-f249-11dd-9678-0000779fd2ac.html) in the next few weeks that would unravel legislation passed under the administration of George W. Bush to keep online gambling out of the US."

http://www.ft.com/cms/s/0/6b97a268-f22a-11dd-9678-0000779fd2ac.html

[gm10]

the betfair purchase seems especially interesting, in light of this:

"Barney Frank, the Massachusetts Democrat congressman and chairman of the House of Representatives’ powerful financial services committee, plans to resubmit a bill (http://www.ft.com/cms/s/0/650c5afa-f249-11dd-9678-0000779fd2ac.html) in the next few weeks that would unravel legislation passed under the administration of George W. Bush to keep online gambling out of the US."

http://www.ft.com/cms/s/0/6b97a268-f22a-11dd-9678-0000779fd2ac.html

interesting article