NJ Exchange Wagering set for launch; UPDATE: Handle growing steadily

[jms62]

Keep an eye open for seminars. They ran one 2 weeks ago. I didnt attend. If I receive any emails on future seminars I will post here.

[Kasept]

Handle on N.J. exchange wagers doubles from first-year average
By Matt Hegarty

Wagering on Thoroughbred races on the betting exchange launched by Betfair US in New Jersey in 2016 has nearly doubled since last year on a per-month basis, according to records obtained from the state’s racing commission.

Average monthly handle, measured in matched bets on the exchange, has been $1.11 million in April, May, and June this year, according to the records, up from an average of $613,524 for the 12 months running from April of last year, when the exchange was launched, through March of this year. The records were heavily redacted by Betfair prior to the release, and some small amounts of matched bets on races in the United Kingdom do not appear to be reflected in the unredacted portions, according to officials of the state racing commission.

Kip Levin, the chief executive of Betfair US, said on Tuesday that the company is not currently focusing on handle numbers but rather on the behavior and participation rates of the exchange’s customers, which is limited to residents of New Jersey who are physically located in the state and customers of Betfair’s service in the United Kingdom (provided those U.K. customers are betting with a New Jersey customer).

“It’s less about the growth and more about what the data says,” Levin said. “That has exceeded our expectations.”

According to Betfair, 70 percent of the handle on the New Jersey exchange has come from customers who signed up for the exchange or the company’s account-wagering operation, 4NJBets.com, after the exchange was launched last year. The other 30 percent has come from players who were already customers of 4NJBets.com, which is owned by Betfair through its TVG subsidiary and is the only account-wagering operation authorized to operate in the state.

Customers of both 4NJBets and the exchange must maintain separate deposit accounts but can transfer funds between the accounts. Levin said that 4NJBets customers who have not opened accounts at the exchange have bet less in a four-month period in 2017 than what they handled during the same period in 2015, while 4NJBets customers who are also customers of the exchange have handled more when comparing the same time periods. In addition, those dual customers place wagers on more days than the customers who only have accounts at 4NJBets.

Levin also said that, according to the company’s data, a $100 deposit on Betfair is churned, or re-bet, at a much higher rate than a $100 deposit on 4NJBets. The exchange allows customers to post prices on horses and accept bets from other customers, and vice versa.

The handle numbers being generated this year by customers of the exchange would translate to approximately $13.3 million on an annualized basis. Total parimutuel handle on all U.S. races last year was $10.74 billion, according to The Jockey Club.

Levin said that the New Jersey exchange is not yet profitable, but that the company was solidly behind the operation.

“We’re not making money off this,” he said. “We’ll keep pushing even if it takes five years to break even. The point of all this is to bring innovation to this industry.”

According to the records, the most popular signal on the exchange for the April-June period has been Woodbine, slightly edging out the home-state Monmouth Park, which opened its meet in mid-May. Other popular signals include Evangeline Downs and Louisiana Downs in Louisiana, Charles Town in West Virginia, and Penn National in Pennsylvania.

A number of large racetrack companies have yet to allow their signals to appear on the service, including the tracks owned by The Stronach Group – which includes Santa Anita Park in Southern California and Gulfstream Park in Florida – and the tracks operated by the New York Racing Association. Other tracks that are not available include Del Mar, Churchill Downs, and Keeneland.

Two weeks ago, Kentucky Downs, which is scheduled to run five days this September, asked the Kentucky Horse Racing Commission to approve a request to add its races to the exchange. Although a committee of the commission initially recommended approval of the request, it was removed from the agenda for a full commission meeting after a review of the conditions attached to the approval took longer than expected, according to KHRC officials.

Levin said that the lack of premium content on the exchange remains the largest impediment to growth. Some racetrack companies, such as The Stronach Group, have said they do not support the concept because of multiple concerns, while in some jurisdictions, horsemen have raised concern about the amount of revenue flowing to the industry compared to the traditional parimutuel model.

Betfair charges a commission of 12 percent on each winning wager. Marty Maline, the executive director of the Kentucky Horsemen’s Benevolent and Protective Association, said recently that he “believed” the Kentucky Downs contract would have awarded the track and horsemen 2 percent of every winning bet to split.

Levin said that Betfair officials remain in conversations with racing constituencies across the United States in an attempt to address their concerns. He contended that the recent data generated by the New Jersey exchange was having a positive influence, and noted that officials of The Jockeys’ Guild said their concerns about jockeys being targeted for criticism have abated based on their experience with the New Jersey exchange.

“It’s hard for me to say [the concerns] are softening or not,” Levin said. “But having everyone on board is what we want to do before we go forward anywhere.”