12/08/2004 12:00AM

Online betting debate

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TUCSON, Ariz. - Representatives of Australia and the International Federation of Horseracing Authori-ties called on the U.S. racing industry to make its position clear on Internet betting exchanges during two well-attended panel discussions Wednesday at the Symposium on Racing.

The representatives, including Andrew Harding, the chief executive of the Australian Racing Board, and Maurits Bruggink, the executive director of the international federation, called the exchanges threats to the integrity of horseracing and to the revenue streams that finance racetracks and purses.

The U.S. reaction has so far been ambivalent. In fact, on a separate panel examining the exchanges, Chris Scherf, the executive vice president of the racetrack trade group Thoroughbred Racing Associations, said he would ask his board at a meeting on Thursday to examine whether the industry should create its own betting exchange to meet customer demand.

Betting exchanges have grown in the United Kingdom ever since BetFair, the most popular Internet site, was launched in 2000. Betting exchanges are not specifically outlawed in the U.S. but are generally considered to be illegal bookmaking operations. The exchanges allow account holders to post a price on a horse and accept bets, allowing one side of the bet to wager on a horse to lose. The exchanges typically charge customers 3 to 5 percent of their winning bets as a commission.

Alan Marzelli, the president of the Jockey Club and a member of an IFHA committee on international betting, said that the U.S. racing industry needs to issue some response to the international world on betting exchanges, and soon.

"The rest of the world does view this as a problem, and the rest of the world is doing something about it, and the rest of the world is looking to the U.S. for support and guidance," Marzelli said.

Harding, whose organization has asked legislators to ban betting exchanges, called the ability to bet on a horse to lose a critical threat to racing's integrity, which makes all other arguments about the exchanges moot.

"We are not alone," Harding said. "Many countries share our view, that betting exchanges are incompatible with the integrity of our sport. . . . If you encourage people to make money by losing, then you strip [integrity] away."

Several investigations have been launched in the United Kingdom over whether some jockeys have been involved in schemes to deliberately make horses lose.

BetFair, whose director of marketing, Niall Wass, was invited to respond to criticisms during the panels, has said that the company has assisted in identifying possible suspects by examining betting records of its customers.

Scherf's call for the racing industry to create its own betting exchange has been controversial. He said an industry-owned betting exchange could create a business model that would protect racing's revenue. The betting exchange would hold a monopoly on American racing and actively seek to shut out other exchanges on the U.S. market, he said. Scherf had called for the industry to investigate the exchange at a conference in September.

"I've received all kinds of responses from betting exchanges all over the world in support," Scherf said. "But I'm not sure why. I'm talking about completely shutting those people out."

Andrew MacDonald, an official with Woodbine Entertainment Group in Canada, was applauded after he confronted Wass during the second panel and accused the company of taking bets from Canadian residents on Woodbine's races despite clear protestations from the track. Wass responded that BetFair believes that its operation is legal in Canada.

Eugene Christiansen, the chairman of the economic consulting company Christiansen Capital Advisers, said racing would turn its back on a major opportunity if it declined to create its own betting exchange. Christiansen used an analogy to the music industry's reaction to file-sharing to make his point, claiming that the industry has not recovered from its strategy of fighting the legality of the practices by filing lawsuits against individuals and websites that trade music for free.

"You are going to have to do something," Christiansen said. "Betting exchanges and the Internet are not going to go away."

Bruggink said that at the very least, racing needs to put in place an "action plan" that would force betting exchanges to pay racetracks for offering their races. The IFHA has already approved language calling for any bet-taker to receive "expressed permission" to offer races.

"The key is the protection of our intellectual property rights, the data, and our images," Bruggink said.

He also said that as U.S. racetracks expand the distribution of their simulcast signals to Europe, more and more illegal bet-takers will begin offering their customers the ability to bet on U.S. races