CALIFORNIA: PUTTING THE CART AHEAD OF THE HORSE

by | 11.17.2010 | 12:48am

By Ray Paulick

The California Horse Racing Board's process of licensing betting exchanges in California will be lengthy, so I am very skeptical why the amendment to Assembly Bill 2414—authorizing exchange wagering–was furtively inserted as the clock was ticking down to midnight on the 2010 legislative session, which ends Aug. 31. Exchange betting is a game changer—some say it will lead to the demise of racing and others insist it will be a savior—and it deserves to be fully researched, debated and given a full public hearing before California legislators give it a thumbs up or thumbs down vote.


This bill is too important to the racing industry to be ram-rodded through at the 11th hour when state legislators are rightfully more concerned with trying to reach a compromise on a state budget, put furloughed employees back to work, and avoid sending IOUs to taxpayers and others because California's money cupboard is bare.


Whenever this kind of legislative maneuvering takes place, be wary of the motives. Be extremely wary.


AB-2414 began as a feel-good piece of legislation designed to offer incentives to the Breeders' Cup in hopes it would name California permanent site of its annual championships. Then, as CHRB chairman Keith Brackpool and others recognized the need to reverse the decline in the number of California horse owners by increasing purses, AB-2414 was targeted as the vehicle to increase takeout on exotic wagers. A proposed 2% takeout hike on exactas and 3% increase on trifectas and superfectas would all go toward purses.


That move, which horseplayers opposed is supported by the Thoroughbred Owners of California and the state's racetracks.


But the insertion of the exchange wagering language has caused MI Developments, which owns Santa Anita Park, Golden Gate Fields, and Xpressbet.com, and Churchill Downs Inc., owner of TwinSPires.com, to strongly oppose AB-2414. The Del Mar Thoroughbred Club still supports the bill, based on AB-2414's language saying exchange wagering can not go forward without written contracts with tracks and horsemen's associations. TOC also supports the amended AB-2414, though TOC chairman Arnold Zetcher said the organization is neutral on the exchange wagering portion of the bill. “We are very supportive of the takeout increase because of what it will mean to purses,” Zetcher told the Paulick Report. “We are neutral on (exchange wagering) but it is written to our satisfaction that there are enough checks and balances and with veto rights by horsemen.”

 

Betfair, the massively successful British company that created betting exchanges in 2000, wrote the language for the bill, and stands to gain the most as the owner of the television racing network and ADW company TVG. The addition of exchange wagering to the United States has been an important component of Betfair's growth strategy, and it would provide a platform for the creation of a global online wagering hub.


But what's in it for the racing industry? Based on comments from people like Peter Savill–the respected former head of the British Horseracing Board who said betting exchanges put the future of horse racing in jeopardy—not enough.


This is not the place to list the pluses and minuses of betting exchanges. If a reasonable model can be developed that benefits the betting exchange operator and the racetracks and horsemen who put on the show, then we have a win-win. But authorizing the exchanges under the premise that “we'll work out the details later” is not a good plan.


Let's have an open dialogue on the subject, and then decide whether or not it's legislation that should move forward. Allowing this bill to pass puts the cart ahead of the horse. And I think the horse is pretty damned important.

Click here to read the entire bill


If you believe like I do that this action is happening too quickly and without the necessary substantive discussion or plan put into place, I would ask that you put a call or email into the office of Assembly Speaker John Perez, the sponsor of the bill. His office information is below:


John A. Perez

916-319-2046
[email protected]

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