06/18/2010 12:00AM

Exchange betting advances in New Jersey

Email

A New Jersey legislative committee on Thursday approved a measure that would allow exchange betting on horse racing by customers in the state, sending the legislation on to the Assembly and possibly the Senate.

The legislation is the first of its kind to be introduced in any U.S. legislature, according to officials. It would restrict exchange wagering to residents of New Jersey, and it designates the New Jersey Sports and Exposition Authority as the only entity in the state that could hold an exchange-wagering license, although the bill also allows the authority to contract with an outside company to operate the exchange. The Sports and Exposition Authority owns and operates Monmouth Park and the Meadowlands.

Though support for the legislation is unclear outside of the Assembly's Regulatory Oversight and Gaming Committee, which passed the bill unanimously, the bill could make New Jersey the first state to authorize a type of wagering that has exploded in popularity in other horse-racing nations such as the United Kingdom, where the dominant betting exchange, Betfair, was launched in 2000.

Betfair purchased a U.S.-based account-wagering company, Television Games Network, in 2009, in part to allow the company to lobby state and federal officials on the legalization of exchange betting. John Hindman, the legal counsel for TVG, would not comment on whether Betfair had lobbied in New Jersey in support of the legislation.

"We're monitoring it closely, and we're encouraged by the New Jersey state legislature's consideration of exchange betting," Hindman said.

Robert Kulina, the general manager of Monmouth Park, said that the introduction of the bill caught him by surprise. The legislation was introduced along with a handful of other gambling bills that would legalize other types of gambling on the internet, for example, or authorize video-lottery terminals at the Meadowlands.

"We're obviously not against it," Kulina said, "otherwise it wouldn't have cleared the committee. But I don't know that much about it."

Assemblywoman Connie Wagner, one of the sponsors of the legislation, said that though she had introduced the bill on behalf "of the entire racing industry," she had discussed the issue of exchange wagering with representatives of Betfair prior to filing the legislation.

"This is something that has been going on in the United Kingdom for years," Wagner said. "It's enjoying a phenomenal success there. We have all those statistics."

Exchange betting allows customers to bet against each other, with the customers setting the prices at which they will accept wagers. Although several U.S. racetracks have reached deals with Betfair providing compensation for bets offered by Betfair's customers on their races, many other racing officials remain wary of the company and exchange wagering in general because the bets typically return far less of the wagering handle to the racing industry than parimutuel bets.