The Dichotomy of Gambling Pricing

Good morning everyone.

I caught a tweet this morning which says:

.@WilliamHillUS plans to offer same lines, odds and betting menu in New Jersey as they do in Nevada. Betting will begin over the counter only, until gaming enforcement and legislature sets regulations for mobile wagering.

— David Payne Purdum (@DavidPurdum) May 16, 2018

So, that seems to tell us New Jersey means business. Unlike jurisdictions with government run sports lotteries, like y'all from Ontario know all too well, there's no funny business with double the juice. William Hill and Monmouth are saying, "the odds you are used to - the odds which have been set by markets in the private (underground) economy for over a century -  are the prices we're setting."

Let's contrast this to Betfair when the betting exchange was made legal in Jersey.

There, after consultation with racing, the juice was set at 12%, or about double what the market said.

Even in Australia, where Betfair is licensed and contributes to racing, the pricing was set mostly near historical.

Think about it - William Hill and Monmouth have a virtual monopoly outside Vegas right now. They're near 15 million or more people. They could set virtually any price they want. But they're going with -110 games.

They clearly want to make it work.

The argument against Betfair doing the same thing was the one we always hear, "horse racing is expensive". It is expensive, but the market doesn't care about how much hay costs, and because revenue is derived from optimal pricing it should not matter one bit. If Betfair makes the most money from 5% juice, racing makes the most money from 5% juice. That's what William Hill is doing, and that's how racing, in my view, must think if it wants to compete as a modern skill gambling game.