Betfair finally expands its market to the US, by acquiring TVG, as was announced today. TVG has one of the biggest reaches as a television network, and is also an advance deposit wagering company, offering players avenues to bet their tracks over the phone and internet. Currently TVG is only offered to US citizens.
This deal is extremely interesting from a number of perspectives. Here are a few thoughts to chew on. My opinion only, off the top of my head at this early stage.
I expect some in racing and possibly TVG’s competitors to raise hell. They still have to pass muster in North America regulatorily (I believe), so there is time to try and discredit them. In any other business if a successful franchise wanted into your market, trumpets would blare and people will jump for joy, but this is racing. A new player in the space, especially one who has proven time and time again that their main focus lies not in the status quo, but in growing their customer base, will be met with resistance. We noted this when Betfair moved into Australia in a post about a year ago. Although this is somewhat different (Betfair’s exchange was entering the Aussie market, and it is not in North America).
I expect that Betfair will begin to work the US product on their betting exchanges for their 2 million world wide customers. The tracks they cover will be highlighted for exchange bettors. As well I predict that they will act as an ADW, just like they have in Australia with the TOTE. Betfair players will be able to login and bet via TVG right into the pools, with their Betfair bankrolls. The result of which is fairly obvious: It will increase handles almost immediately.
I believe that sometime within the next 12 to 24 months, TVG harness tracks will be offered for trade at Betfair. This means a track like the Meadowlands will be able to be exchange bet for their customer base overseas.
Next, I think the status quo is over. Protectionist laws that racing has lived by will be challenged, and challenged hard. In the US, state after state we see laws against internet betting which has handcuffed this business for a generation. Betfair is a 21st century company and they do not live by old-time racing laws without a fight. This might be the catalyst we’ve been waiting for - no matter what state you live in, you can bet racing.
Most obviously, behind the scenes lobbying for a US betting exchange will be initiated. I know myself and others have said that we should have done this long ago ourselves. But if all goes to Betfair’s grand plan, racing owning their own betting exchange will be a virtual impossibility. No doubt it will be a long road, but opening up betting markets is essential to our business and we should encourage it.
I think we will see cash spent on marketing, perhaps unprecedented amounts. Betfair puts their money where their mouth is in this regard. They are sponsoring the Royal Ascot meet and juicing up the purses. In addition, they advertise racing in all parts of the world via TV commercials and otherwise. Also, in Australia, they have bought a racetrack.
For Canada, we hear plenty about HPI and their virtual monopoly of wagering in Canada. Can companies like Youbet and TVG come to Canada and offer competition? I guarantee we will find out. Betfair challenged TOTE’s dominance in Australia and took that to the high court. If there is a crack open for them to enter Canada rest assured they will find it, come here through TVG, and offer choice to bettors for the first time.
For customers of TVG, I would fully expect that Betfair will offer rebates to their players. They have built their company from having no customers to two million customers in only eight years, and they have done so by offering low takeouts. In fact, one could argue it is the cornerstone of their business. Expect to receive a price break if you are a TVG customer, although perhaps this may be a ways off.
I believe that we will see Betfair continue to offer free handicapping tools to customers. In addition I would expect to see new acquisitions, possibly a data provider. Betfair has proven that they believe customers call the shots, no one else, and giving them the tools they need to play the game is paramount to their survival in a tough gambling world.
If you are a customer, I predict you will like this deal. If you are someone who wants to see handles grow and new ways to bet be offered, you will like this deal. If you are a protector of the status quo, and like things exactly as they are, then it is a completely different story.