Imagine being able to bet on a horse race even while the horses are on the backstretch — or being able to wager on a photo finish while it's being reviewed.
Such options already exist in Europe, and some of them may be coming to New Jersey next year. State officials aren't quite ready to make the full leap, but facing the potential collapse of its horse racing industry, New Jersey is likely to become the first state to take a dramatic step in that direction.
The new form of betting is called "exchange wagering," which is appropriate, because the concept is reminiscent of the stock market — with many bettors acting like traders.
Among at least a half-dozen initiatives being discussed in Trenton as ways to save the horse racing industry, exchange wagering may generate the least controversy. In fact, the measure passed the Assembly by a 78-0 vote in July and now awaits a hearing by a state Senate committee.
The chairman of that committee, Sen. James Whelan, D-Atlantic, said Friday that while he is "not exactly sure how it all works, if it is something that can help the tracks, I am prepared to support it." That could mean that New Jersey will offer exchange wagering by mid-2011 — a year before California is expected to introduce the same form of betting at its tracks.
New type of betting
The differences between parimutuel betting and exchange wagering being proposed for New Jersey:
Parimutuel betting
All bets are pooled to create odds on each horse
Odds keep changing as more money is being bet
Bets are that a specific horse will win
Exchange wagering
One bettor paired with another with opposing opinion at those odds
Odds fixed at moment wager is made
Bets are that a specific horse will win OR will not win
Rescue Plan
Exchange wagering is just one of the proposals on the table as Governor Christie and leading state Democrats try to revive the state’s horse racing industry and expand gambling options. Others include:
* Turn The Meadowlands Racetrack harness season into an "elite" meet, with a greatly reduced schedule but much higher purses, as was done this summer with thoroughbred racing at Monmouth Park.
* Revamp off-track wagering laws to enable construction of betting parlors in five to 10 more towns statewide.
* Enhance current breeding development programs to encourage horse breeders to stay in New Jersey.
"This seems like the one option that we all agree on," said Assemblywoman Connie Wagner, D-Paramus, who sponsored the Assembly bill. "I would hope that this is the easy part, and we would like to see it available next racing season."
'Silver lining'
Betfair executive Stephen Burn, whose British company is considered the front-runner to run exchange wagering in New Jersey, told state lawmakers at a gaming summit last month that exchange betting "isn't a silver bullet for New Jersey, but it is a silver lining."
The details are still being worked out, but thoroughbred horse-racing lobbyist Barbara DeMarco said that initially the state likely would offer only win-place- or-show exchange betting.
In parimutuel betting, the standard wagering form at U.S. tracks, bettors compete in a pool against all other bettors, and the odds change, minute by minute, depending on how much money is wagered on each horse up to the start of a race.
But with exchange wagering, one person — the "backer" — seeks to wager a certain amount on a horse winning and seeks someone willing to wager the same amount that the horse will not win the race, called a "lay" bet. Computer technology allows the first bettor to instantly check the "market" to find out if a match exists in the electronic marketplace. Thus, it's no wonder Betfair calls itself "the eBay of betting."
DeMarco and Wagner both said the motivation for adding a new form of betting is to attract a fresh audience to a sport that lost $20 million at the tracks in 2009.
"I don't think a lot of younger people are even aware of horse racing here," Wagner said.
DeMarco said that the exchange wagering model attracts "a demographic under age 50, which is one that we haven't really been able to get interested in our industry." Burn said 10 years of experience with exchange wagering in Britain has shown that "the demographic we attract is massively younger than we see bet on traditional horse racing."
Exchange wagers can be made at the tracks, by phone or on the Internet — the same options available to traditional horse players.
Betfair increased its presence in the United States last year by spending $50 million to acquire TVG, a horse racing television station that shows races nationwide. U.S. horse racing groups also have met with Betfair to discuss adding exchange wagering at tracks, and Betfair reportedly spent a six-figure amount to gain title sponsorship to the $750,000 United Nations Stakes, a major turf race held at Monmouth Park in July.
There have been isolated incidents in Britain of horse owners betting against their own horses. DeMarco said she thinks this can be avoided by "hiring the right vendor, because some have better integrity systems than others." The vendor — whether Betfair or another entity — probably would receive about 5 percent of a winner's bet, with another not-yet-determined sliver removed to supplement horse racing purses. The rest of the money would be deposited in the winner's online account, while a withdrawal would be made from the loser's account.
Not for amateurs
Jay Privman, a national correspondent for The Daily Racing Form, said that some racetrack officials fear that the lower takeout offered by exchange wagering could cannibalize some parimutuel wagering, which is more profitable for the track. He also said that the complexity of this new form of betting means that "it's probably not something that an amateur should just wade into, if they don't really know the horses."
Britons, meanwhile, have become accustomed to betting on almost any sport, including American baseball, football, golf and even mixed martial arts. On Ladbrokes, a prominent British bookmaker, one can even bet "over" or "under" whether Republicans will possess more than 50 seats in the U.S. Senate after the November elections.
Bringing exchange wagering to New Jersey doesn't automatically mean a major expansion of gambling, however — it's simply another way to bet on a horse race.
Still, some legislators are seeking to add more gambling options, especially sports betting at Atlantic City casinos — with some politicians, including Whelan, even willing to allow the state's racetracks to offer such betting. That initiative, however, is more controversial.
Wagner and state Sen. Bob Gordon, D-Fair Lawn, both said they appreciate concerns of constituents about any new forms of gambling.
"I generally have not been supportive of sports betting and taking advantage of human weaknesses to raise revenues," Gordon said. "And we'd have to have controls in place to prevent underage gambling."
Still, Gordon said exchange wagering "does not seem to be that controversial."
Jon F. Hanson, who in July authored a report for Governor Christie about horse racing and Atlantic City casinos that even Democratic critics have said has jump-started attempts to save those industries, said that he has not been hearing opposition to exchange wagering.
"If it's permitted under the law and it can help the horse racing industry, then it might well happen," Hanson said.
E-mail: brennan@northjersey.com Blog: northjersey.com/brennanTwitter: @BergenBrennan
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