Updated on 03/25/2011 11:29AM

XpressBet policy prompts review in California


The California Horse Racing Board is reviewing its licensing requirements for account-wagering companies that operate in the state after XpressBet notified several of its customers that their accounts could be terminated because of winning show wagers that resulted in financial liability to the company.

Mike Marten, a spokesman for the board, said that XpressBet officials confirmed on Thursday that the company's policy was to terminate accounts of customers who consistently make winning show bets that result in liabilities to the company. The board's executive director, Kirk Breed, has launched an inquiry into whether the policy is in line with California's requirements for licensing.

The inquiry started after Barry Meadow, a gambling writer and horseplayer, forwarded to the board a notice he received from XpressBet on March 17 citing two recent winning show bets of $2,600 and $2,400 as examples of "unusual wagering activity that has created 'negative breakage' in certain pari-mutuel pools." The notice went on to say that "if such irregular and improper wagering activity continues, your account will be subject to closure," citing the company's terms and conditions of service.

Meadow said on Thursday that the bets were placed on races at Santa Anita and Golden Gate, two tracks that are owned by XpressBet's parent company, MI Developments. XpressBet officials did not return phone calls on Thursday.

In its conditions of service, XpressBet says that it "reserves the right, at its sole discretion, to terminate and close an account for whatever reason and without explanation." Similar language is used by all the other large account-wagering providers in the country.

Twinspires.com, the largest account-wagering company in the United States, has a similar policy on winning show wagers, according to Darren Rogers, a spokesman for Churchill Downs Inc., the owner of the company.

“Our approach is to engage in discussions with any player who repeatedly contributes to the creation of negative show pools, whether it’s intentional or not, and let them know that this type of wagering isn’t welcome at twinspires.com,” Rogers said. “In the past, we’ve had players who chose to repeatedly abuse the system and had to close some accounts, but we would never do so without discussing the matter with the customer first.”

Large show wagers - and in rare circumstances, large win bets and place bets - can cause a minus pool, where more money is distributed to winning bettors than the amount left over after the takeout is deducted, principally because of statutory requirements that wagers must return at least $2.10 for every winning $2 bet.

A minus pool used to be the sole liability of the racetrack that carded the race. In recent years, however, according to Chris Scherf, the executive vice president of the Thoroughbred Racing Associations, most racetracks have added terms to their simulcasting contracts that allocate the liability for minus pools to the sites that took the wagers.

"It's now fairly common to apportion negative breakage," Scherf said. "Basically, the host tracks are saying, if you're bringing a bridge-jumper into the pool, then it's your responsibility."