05/27/2016 4:18PM

Betfair encouraged by initial response to exchange wagering in New Jersey

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An official for Betfair U.S., which launched the first exchange-wagering platform in the U.S. two weeks ago, said in a statement on Friday that the company has been pleased with “several positive indicators” for the operation, but the company declined to provide detailed figures for betting or for the number of accounts opened on the platform.

In a statement in response to questions, Kip Levin, the chief executive officer of the subsidiary that owns the platform, said that the company has been encouraged by the amount of “liquidity” on the platform – a measure of the number of bets being offered on the site for each race – and by the volume of betting from players who were not previously involved in account-wagering in the state of New Jersey.

“The liquidity on the races offered to New Jersey players has been strong – that’s a good sign of the level of interest and, as people get more comfortable on the exchange, we expect it to grow,” Levin said in the statement.

Exchange wagering was pioneered by Betfair in the United Kingdom 15 years ago. The practice allows customers to establish odds on horses and bet amongst each other at those prices. The launch of the New Jersey platform is being closely watched by a variety of U.S. racing constituents, many of whom have been reluctant to strike deals with Betfair because of uncertainty over how the operation will affect the U.S. product.

Betting in the U.S. on the platform is limited to residents of New Jersey wagering while they are physically in the state, but customers of Betfair’s platform in the United Kingdom can lay and place bets with the New Jersey players. To date, exchange wagering is being offered on a handful of Thoroughbred tracks, including Monmouth Park, Woodbine, and the tracks running live in Louisiana and West Virginia.

It is unclear whether the majority of bets are coming from New Jersey players or British players. A portion of the British money is almost certainly coming from robotic wagering programs that seek to place and lay a multitude of bets to capture spreads between wagers on a single horse and grind out other small advantages that can be exploited on the platform using sophisticated risk-management strategies.

In his statement, Levin said that about two-thirds of the betting volume on the platform has come from people who were not previously customers of 4NJBets, the New Jersey account-wagering platform owned and operated by Television Games Network, which is owned by Betfair. TVG’s operation is the only licensed account-wagering platform in the state.

“That’s an area where we continue to focus, bringing new users to racing,” Levin said.

Over the past two weeks, many horseplayers have expressed curiosity over how the platform works and have indicated that they have successfully placed bets on horses at higher odds on the exchange than the odds through the parimutuel system, leading to significant price advantages. But others have also expressed trepidation with the prospect of laying odds on a horse, in large part because the practice is unfamiliar, but also because the liability of laying a horse generally exceeds the return.

“When it comes down to laying $500 to win $100 it’s not easy to pull the trigger when your whole life you’re doing the opposite,” said one gambler who has been using the system since the launch.

Dennis Drazin, the president of the horsemen-led company that operates Monmouth Park, said that he has been pleased with the rollout, but he said that many bettors have yet to fully embrace the platform because of their unfamiliarity with how it works. Monmouth Park is a partner in the platform, and receives an undisclosed portion of the revenue from wagering.

“It’s going to take time because as we’ve seen there’s a pretty big learning curve,” Drazin said. “There are a lot of people out there who are using it, but it’s more that they are fiddling with it.”

Frank Zanzuccki, the executive director of the New Jersey Racing Commission, said that the commission has not received any correspondence related to the site since it launched. The commission spent several years writing regulations governing the operation of the site.