Betfair to shut down exchange-wagering platform in New Jersey

Betfair, the exchange-wagering platform that became incredibly popular in multiple racing jurisdictions worldwide over the past 20 years, is shutting down its only U.S. operation in New Jersey after handle numbers failed to post any substantial growth since it was launched in 2016, according to New Jersey racing officials.

Betfair will close the New Jersey platform as of Oct. 1, the officials said. Although recent handle numbers are not available, New Jersey Racing Commission records show that the operation took in $12.4 million in bets in 2018, about the amount bet on a single weekend card at Belmont Park.

The shutdown of the platform was first reported by Thoroughbred Daily News.

Dennis Drazin, president of the company that operates Monmouth Park in New Jersey, said that he regretted to see that the operation was shutting down. Monmouth Park reached an agreement with Betfair to offer exchange wagering on its races in 2016, leading to its launch in the state, but state rules limited customers to residents of New Jersey and customers of Betfair’s platforms in other foreign jurisdictions.

“We just couldn’t get the numbers we needed,” Drazin said. “I really do think exchange wagering is something we all should be doing. It still has a lot of potential.”

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Although Betfair is now owned by a multinational betting conglomerate, the company purchased TVG, the horse racing broadcasting and account-wagering company, in 2009 in order to gain a foothold in the U.S. market and legally lobby legislatures for the ability to conduct business in the United States. The company succeeded in getting legislation passed in New Jersey and California that allowed for exchange wagering, but only New Jersey wrote regulations that enabled the company to offer its platform in the state.

Exchange wagering allows customers to offer prices on horses and accept bets from other customers, in effect making each customer a bookmaker. The service has proved highly popular in many foreign countries, but many of those countries have established bookmaking industries, unlike the United States, where wagering on horse racing has been almost exclusively parimutuel for a century (at least through legal channels). Bookmakers in those foreign jurisdictions also accounted for a significant amount of play on the platform, as they sought to lay off liability from their own books.

The New Jersey platform was limited to the signals from Monmouth Park, Woodbine, and several other minor tracks. Under the structure, bettors paid a 12 percent commission on winning bets.

Kip Levin, the chief operating officer of a division of Betfair’s parent company and the chief executive of TVG, said in a statement that the launch of the Betfair platform in New Jersey was “worth trying” in 2016 but that the expense of operating the platform did not justify continuing the operation.

“For a variety of reasons, including a customer base used to exotic wagering and a reluctance by major U.S. racing associations to embrace the different business model, it never hit the critical mass to be viable,” Levin said.

Drazin said that the exchange could have been more successful if Monmouth was able to secure agreements with major racetracks and horsemen’s groups. But many tracks have expressed concerns over handle cannibalization due to the exchange, and other industry constituencies remained philosophically opposed to the concept, due to concerns that industry participants might attempt to use the platform to cash bets on losing horses.

“I just don’t think other tracks were ready to pull the trigger,” Drazin said. “Had we had New York, California, Kentucky, the Stronach tracks, things might have been different.”

Drazin added that New Jersey’s laws do not require Betfair to run an exchange in the state.

“We might do something down the road with a different operator,” he said.