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Exchange Wagering on Its Way in California Amidst Opposition

Posted on August 27th, 2010

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With the horse racing industry and the entire gambling business in a downturn, there is a legislation that is receiving a lot of talk because an amendment was added into it, where California will be the first state in the US that will let race betters bet on a losing horse. This bill, authored by Assembly Speaker John Perez (D-Los Angeles) is set for deliberation as soon as possible as the 2009-2010 session of the legislature is set to end this coming Tuesday. The bill would also try to woo the Breeder’s Cup championship, which will be held held yearly in California from this year on, by assuring the organizers that $2 million will be set aside just for the race’s promotion. The Cup used to be held annually in different locations around the United States.

If the bill will be passed, the legislation would also get a bigger percentage from bets to make the purse offered to the winning horse’s owners of any race more substantial. The bill aims to generate more income, as it should attract more bets (not only to winning horses but to losing ones) if approved. This should give a jolt to the horse racing industry of the state, which, like other horse racing businesses across the country, has been experiencing a decline in the number of attendees, which has also meant a decline in betting, further worsened by recession blues. According to the Horse Racing Board of California, from the years 2004 to 2009, revenue gotten by operators of race tracks and purses for winning of horse owners and breeder have taken a dip by around 12 percent. From those years as well, the number of people attending race track and simulcast facilities have also decreased by as much as 25 percent.

The amendment, added only last week, will give the bill more excitement and perhaps more revenues to the ailing industry, and in turn may spark more debate. The bill, with the amendment, should now allow an “exchange wagering” system. This will make two or more people betting place wagers that oppose on the same race. Thus, betting exchange businesses will be allowed to accept bets for or against a particular horse. The odds with will be set by the bettors themselves. The act of exchange wagering is prompting fears that this may be a cause for corruption, as gamblers may be tempted to sabotage either a horse or a jockey, or both, if they bet against it or him. The legislation has supporters though, that have been quick to call these worries as unfounded. They are further noting that the bill would have the California Horse Racing Board be required to institute rules for placing bets with businesses that allow exchange wagering. An aide to the author of the bill, George Wiley, has remarked that essentially, with the status quo, people already bet against a horse. When a bettor bets for a horse, he or she is essentially betting against the other horses in the race with that horse he or she has bet for. The difference is just that the bettor can now place money on a horse to lose as well.

The practice of exchange wagering is already allowed in other countries like Australia and England. Supporters of the bill have pointed out that in England, exchange wagering has sparked a renewed interest in hose race gambling, resulting in an increase in the amount and number of bet, as well as increasing attendance by attracting a younger set of horse racing bettors. Wiley said that it may be essential for the US to adapt these practices if they want the horse racing industry to come out from its rut. As with any other proposal, this one also has its share of opponents and critics. One group opposing are companies with operations that involve online betting. They think that the whole proposal is risky and crafted hastily. Gambling critics also lambast the idea, saying that the practice of exchange wagering is just another manner for gambling operators to scam money off addicted bettors. In other parts of the US, lawmakers in the state of New Jersey are also toying on the idea to have the practice allowed in their state.