03/05/2004 1:00AM

A new way to bet - or cheat


NEW YORK - A controversial race Tuesday at tiny Lingfield Park in the English countryside is making headlines in Britain and turning a harsh spotlight on an intriguing new form of wagering on horses: betting exchanges, which have been alternately heralded as a revolutionary convenience for customers or denounced as an invitation to larceny.

The race in question was the $2,748 Median Auction Maiden Stakes, which drew a field of 10 and was widely regarded as a showdown between two chronic maidens named Ballinger Ridge and Rye. According to published reports, Ballinger Ridge was even-money during most of the betting, then drifted late to 9-5 while Rye was whacked from 3-2 to 4-5. Yet the real action on the race was not with the bookmakers or through the tote, but at a British website called betfair.com, which handled an astonishing $2.5 million on the race.

At Betfair, bettors can either offer a price to other customers or accept odds posted by someone else, cutting out the middleman and effectively allowing them to bet on a horse either to win or to lose. And on Tuesday on the 3:30 race at Lingfield, the offers were flying. Someone kept offering Ballinger Ridge at higher and higher prices, representing a strong conviction that the early favorite would not win. There was three times as much action on the race as Betfair usually handles, most of it on and against Ballinger Ridge.

Betfair informed the Jockey Club and Lingfield officials of the unusual action, not only because of the volume but also because the account-holders betting against Ballinger Ridge had reportedly been involved in other races being scrutinized. The stewards dutifully took the information and let the race go on. Ballinger Ridge, ridden by the prominent jockey Kieran Fallon, opened a lead estimated at 10 lengths halfway through the race, but squandered it all late and was nailed on the wire by Rye. The stewards referred the race to the Jockey Club for possible disciplinary action against Fallon for failing to ride out his mount.

The English tabloids and Ballinger Ridge's backers have not stopped howling. The Sun said flatly that Fallon "eased up" and called it "the biggest betting stink to rock horse racing in years." Even the sober and respected Telegraph reported that Fallon "appeared to take things easy over a furlong out."

No one has been charged with any crime, and perhaps this was just a routine case of late money getting lucky in the shadow of the wire. What makes the incident unusually interesting is that if a betting coup did take place, it probably could not have happened without the existence of a betting exchange such as betfair.com.

As Betfair's home page puts it, "If you can't pick a winning horse/team, offer odds to others against an outcome."

In conventional wagering, it's hard to make a fortune by betting millions on a 4-5 shot because your price would plummet. It would be similarly difficult to make a big score simply by knowing that a 5-2 second choice was not going to win. In a betting exchange, however, a bettor can choose to play the role of the house, booking bets on a loser.

Let's say you simply hate a moderate favorite but find a race otherwise inscrutable. How do you monetize that single opinion? If you throw him out and bet proportionally on everyone else in the race to win, you're barely beating the takeout. If you duck him in multiple bets, you still have to be right or lucky about the others in the race. If you can simply wager against him by offering to take anyone's bet, however, it's like putting a piece of the tote board in your pocket.

Combine that flexibility with only a tiny commission to the website instead of a big tote takeout or a bookmaker's unbalanced line, and it's easy to see why British horseplayers have embraced exchanges and why racing authorities fear they could wreck the economics and integrity of the game.

Some sophisticated American horseplayers have been clamoring for a stateside version of Betfair, and the concept is being studied by several industry groups. The Ballinger Ridge investigation may end up weighing heavily on whether racing embraces or rejects the whole concept of betting exchanges.

In the meantime, don't try getting in on the action from this side of the Atlantic: Betfair will not open accounts for residents of the United States.