TVG says exchange wagering will stimulate U.S. racing

TVG has released what it calls an “independent study” of the U.S. horse racing industry, and the study's conclusion is that exchange wagering would “provide an important option to grow the audience and participation in the sport in the U.S.”

TVG, the racing network and advance-deposit wagering provider based in Southern California, is owned by Betfair, the world's largest exchange wagering company. The study was commissioned by TVG and conducted by Christiansen Capital Advisers, whose principal, Eugene Christiansen, is a well-known consultant to the racing and gambling industry. Exchange wagering facilitates person-to-person betting on events including horse racing, through a technological platform that permits an individual to shop for odds and either wager for or against the outcome of a horse race or other contest. It also permits wagering to transpire during a horse race, with odds fluctuating as gamblers assess a horse's chances of winning or losing.

The Paulick Report has not had an opportunity to review the 150-page study released Monday morning (it can be viewed here), but following is the press release from TVG summarizing its findings:

INDEPENDENT STUDY EXAMINES
U.S. HORSERACING INDUSTRY;
CONCLUDES EXCHANGE WAGERING
COULD HOLD KEY TO FUTURE GROWTH

Cites appeal to young, tech savvy audience and creation of new wagering options;
Pricing competitive with other forms of gambling

NEW YORK, April 25 – A comprehensive report conducted by Christiansen Capital Advisors, LLC, examining business trends and forecasts for the U.S. horseracing industry supports the introduction of exchange wagering. The crux of the report's findings is that exchange wagering provides an important option to grow the audience and participation in the sport in the U.S.

The study, entitled “Exchange Betting and the United States Thoroughbred Racing Industry,” was commissioned by TVG, the U.S.'s leading interactive horseracing network and advanced deposit wagering company, a subsidiary of Betfair Group Ltd, the premier e-gaming betting community.

As horseracing adapts to the digital age, introducing new, more competitive wagering options, such as exchange wagering, for tech savvy consumers, should provide a positive impact for horseracing in the U.S., the report concludes. The conclusion was reached through the analysis of two decades of trends in pari-mutuel wagering in the U.S. against the backdrop of increasing competition along with analysis of the introduction of exchange wagering in other international wagering markets.  

“By introducing a proven new technology, exchange wagering will offer the American horseracing industry a way to ignite new interest in the sport and develop new horseplayers, which many see as priority one,” said Eugene Christiansen, the noted gambling and horseracing expert. “Exchange wagering has been widely accepted by consumers in the U.K. and Australia where it has served as a successful addition to the existing wagering platforms.”

Among the study's major conclusions about exchange wagering in the U.S. is that it would:

•    Attract new people into the consumer base of Thoroughbred racing, in particular people who are younger and tech savvy;
•    Stimulate patterns of horserace betting not permitted in the traditional tote system, including in-play betting (betting while a live race is in progress) and propositions between wagering parties;
•    Restore a measure of price competitiveness to licensed U.S. Thoroughbred betting operations and recapture a portion of the handle lost to offshore rebate shops;
•    Compliment, rather than cannibalize, the traditional U.S tote system.
 
Exchange wagering, widely available in the United Kingdom and Australia, and an alternative to the traditional tote wagering system that is used for horseracing in the U.S., involves a form of person-to-person pari-mutuel betting facilitated by an operator. The operator receives a commission from winning bettors for processing the wagers. A portion of that commission is returned to racetracks, horsemen and government jurisdictions.

The Christiansen study based its findings on key U.S., UK and Australian racing and betting indicators from the past two decades. It took into account factors such as business cycles; the maturation of wagering initiatives like off-track betting and full-card simulcasting; the introduction and expansion of alternative gambling options, including state-run lotteries, casino games, internet gambling and offshore rebate shops; and the demographics of the wagering public.

The study concluded that handle and consumer spending on horseracing and purses in the UK and Australia increased since Betfair's exchange began operating in these countries, while during the same period handle and purses in the U.S. declined.

The study cites this disparity and comes to the conclusion that the cost of pari-mutuel betting in the U.S. (average effective takeout, which has fluctuated around 21 percent over the past two decades) is too high to be competitive with alternative forms of gambling.

In the traditional tote system, wagers are pooled and a statutory percentage, or takeout, is deducted and distributed to purses, operators including racetracks, and government. The remainder is divided among holders of winning tickets.

In comparison, the typical cost of placing a bet through an exchange in the UK and Australia is a small percent of winnings, which is price-competitive with other forms of gambling. Partly because exchange wagering is price-competitive with other forms of gambling the Christiansen study found that exchange wagering has been successful in expanding the horseracing customer base, including, most importantly, younger people.
 
“Betfair's significant growth in the UK and Australia proves that if an attractively presented, appropriately priced horseracing betting service is available, substantial numbers of consumers will use it,” said Christiansen.

The entire Christiansen report is available at the following web address, http://ccaexchangereport.com/.