Hong Kong Jockey Club tries to block Betfair Australia from using its races

The Hong Kong Jockey Club has sent a letter to Betfair Australia demanding that the company stop offering the Jockey Club’s races on its betting exchange, claiming that the company has violated its intellectual property rights and ignored its “grave concerns and opposition” to exchange wagering.

The letter, sent on Sept. 4 and distributed publicly the same day, said that Betfair Australia began offering exchange wagering on the HKJC’s races at its Sha Tin racecourse on Sept. 1, without authorization from the HKJC and with the knowledge that the HKJC was opposed to the practice.

“It is apparent to us that Betfair’s conduct confirms that it intends to ‘free-ride’ on Hong Kong racing by exploiting the Club’s racing product in the absence of any commercial or integrity agreement with the Club,” the HKJC’s company secretary, Philana Poon, wrote in the letter. “We consider that such conduct can fairly be described as cavalier, unconscionable and in reckless disregard for the economic value of a premium international racing product. It is plainly inconsistent with Betfair’s apparent focus on integrity and transparency, and good corporate citizenship.”

Betfair Australia received a license from the Tasmanian government to offer exchange-wagering in the country beginning in 2006. The company, once a subsidiary of the larger British-based company launched in 2000, has been solely owned by Crown Resorts since 2014. (As a result of that transaction, Betfair Australia is not related to FanDuel Group, the international betting conglomerate created by the mergers of the British bookmaker Paddy Power, Betfair, and the daily fantasy-sports operator FanDuel. FanDuel group owns TVG, the U.S.-operated racing broadcaster and account-wagering company.)

The dust-up between the HKJC and Betfair Australia underlines the tensions in the international simulcasting market, an increasingly important revenue source for racing businesses. The HKJC, a government entity that has a monopoly on offering betting in the Chinese “special administrative region,” allows only pari-mutuel wagering on its racing product, either through its own pools or pools administered with its agreement in overseas jurisdictions.

Betfair Australia offers betting on a wide range of horse racing and sports contests, including American football and basketball. It is not clear what recourse the HKJC would have if the service continues to offer betting on its contests.

Betfair Australia had not publicly responded to the HKJC’s letter by Wednesday morning U.S. time.

Betting exchanges allow customers to offer prices on contests and accept wagers from other customers. The practice is viewed as controversial in some horse racing circles, including in the U.S., due to the fact that one side of the bet is gambling that a horse will lose.

The HKJC said in its letter that it had precisely that concern about exchange betting.

“The Club considers that betting exchange platforms pose unique and fundamental threats to the integrity of racing,” the letter said. “In the Club’s view, the ability for people to lay a horse and profit from it not winning is intrinsically at odds with the principles of the sport.”

FanDuel group currently offers exchange wagering in New Jersey, under regulations devised several years ago. The service is restricted to New Jersey residents who are physically within the state’s borders at the time any wagers are made, and it has failed to generate strong wagering numbers so far.

Betting exchanges have been most successful in jurisdictions with a long tradition of bookmaking, a practice that is nominally illegal in the U.S. Bettors in jurisdictions with legal bookmaking are more familiar with fixed-odds wagering and hedging strategies related to that type of betting, and the legality of bookmaking in jurisdictions where exchange betting is also legal allows bookmakers to lay off risk by participating in the exchange.