Betfair, which revolutionized betting nearly a decade ago through the creation of exchanges pitting one person against another, has reached a breakthrough agreement with the Breeders' Cup, providing Betfair's two million-plus worldwide customers access to commingled pari-mutuel pools and allowing the company to offer live video streaming of the Nov. 6-7 world championships to its exchange betting players. The deal was announced in London Thursday by Breeders' Cup president and CEO Greg Avioli and Betfair director of horseracing Stephen Burn.
The Breeders' Cup will receive an undisclosed fee from Betfair as a result of the agreement, and the deal promises to bring international wagering on the event to a new level. Betfair, along with other exchange betting companies and overseas bookmakers, has previously offered wagering on Breeders' Cup and other American races of interest (though supposedly not to residents of the U.S.), but the wagering or live video streaming has never been officially sanctioned by the host racetrack or association, and no revenue has ever flowed back to America.
This agreement also permits Betfair to use Breeders' Cup logos and marks and to advertise and promote the championships to its customers.
Betfair already had a relationship with Breeders' Cup through TVG, the American-based racing network and wagering company itbought for $50 million in January 2009, but that agreement did not permit live video streaming to Betfair's customers, sanction exchange wagering or allow Betfair's international customers access to commingled Breeders' Cup pools.
Betfair recently signed a deal with many American tracks, permitting the company to offer commingled pari-mutuel wagering to its exchange betting customers and paying a fee to tracks from Betfair revenue on exchange betting.
“Our agreement with Betfair is an important milestone in our ongoing effort to grow the international simulcast wagering market for the Breeders' Cup World Championships,” Avioli said in a statement. “As more and more international horses participate in our championships, interest levels and wagering handle from around the world continue to increase, allowing us to maintain the highest possible purse levels for the event.”
“Our partnership with the Breeders' Cup is the beginning of what we intend to be a mutually beneficial partnership with U.S. racing,” said Betfair's Burn.
According to a press release, international handle bet directly into the Breeders' Cup pools on the 2008 Breeders' Cup World Championships was $17.6 million, up 16% from 2007 and 34% from 2006 (the last year the event was held on one day). The Breeders' Cup has targeted international wagering as an important revenue stream for future growth.
Betfair has revolutionized wagering through cutting-edge technology that enables players to choose their own odds and even make a bet after a race has started (those bets would not go into the commingled pari-mutuel pools). A press release said the company processes over six million transactions per day on a variety of sports and other events and games.
Typically, deals between horse racing associations and Betfair pay 10% to the racing industry from the company's profits on horse racing bets. That's a far cry from the percentage of betting horsemen and tracks get from the traditional pari-mutuel division of revenue, but Betfair offers the hope of dramatically increasing the amount of money wagered, thereby significantly lowering the effective takeout. It's a balancing act, and only time will tell if a deal with betting exchanges like Betfair are a net win for the racing industry.
The Paulick Report took an in-depth at Betfair in January when the company acquired TVG. Click here for that article.
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