Jersey Exchange Thoughts

In HRU this weekend, Bill Finley had some information on exchange wagering in Jersey, due out sometime this spring.

A few items:

It looks like it will start with in-running betting only. Curious move, but that's the plan.

There's no word from Finley on what tracks will be offered, or if it will be commingled with current tracks trading on betfair. The latter is obviously preferred.

The takeout is reported to be 12%.

The last point kinda sticks in the craw. I remember writing a white paper for exchange wagering in Canada back in '08 and one line was "as long as you do not try to price it at 10%, it has a good chance to help horse racing long-term." 10% leaves money on the table; 12% leaves even more.

I guess they didn't like my white paper.

The 12% want is, of course, linked to the current 15%+ takeout in win pools. If the takeout is too low on the excahnge, then people might leave the win pools, so the story goes.

Racing's obsession with not wanting to cannibalize the wagering pools borders on the absurd. No one thinks like this.

Kraft execs:

Corp Dev: "We want to sell sliced, processed cheese"

Old dude: "What will that do to the sales of our one quarter pound block cheese?"

Corp Dev: "It could go down 5% or 10%, but we hope to make up the sales by selling more cheese overall. People love grilled cheese sandwiches and we are not offering them anything they want, so this could sell well"

Old dude: "Too risky, we can't jeopardize our block cheese sales."

This is why, today, there's only one kind of cheese.

Products have features and benefits. The number one benefit of an exchange is it allows a high takeout game a chance to appeal to price-sensitive customers it has lost, or new ones it hopes to attract. So, what does racing do? It destroys its main selling benefit before it leaves the station.

This isn't Betfair's doing. As I wrote last week, when Australia tried to price up exchanges, volume took a bath and Victorian racing had to acquiesce; prices went lower again. This is old hat. This is just North American racing leaning back onto what it always leans on - protecting a made-up price, and the status-quo. It knows no other way.

It will be interesting to see where this goes from here, but right now, I am not confident an exchange will do anything at all to help New Jersey horse racing.


Ron said...

I'm surprised they didn't make it higher than 12%. Players lost the takeout battle when they continued to bet the Derby, last years Churchill fall meet and last years Santa Anita winter meet. All this despite contempt by Magna and Churchill towards the bettors. This 12% exchange take proves once again nobody cares about the betting public.

dinque said...

i agree with Ron except for the last sentence ...i just think they're morons

Scott said...

but how is the 12% calculated? An exchange isn't a pari-mutuel so it's not as simple as clipping each ticket or deducting it from a pool. Exchange betting is about the net win through having many bets backing/laying/trading during an event - in-running or pre-post. That's the big reason why it is different - at least to us, where fixed-odds betting is the norm.

Standard Betfair commission is 5% with discount for volume (as low as 2% for the massive players), but in jurisdictions like Australia, there is a variable commission rate depending on the tax (race fields fees) imposed by each state. NSW is 8% and that substantially affects liquidity.

12% takeout, however that may be calculated, is like throwing Betfair into the deep end of the swimming pool with wrists and ankles shackled. No hope whatsoever of it succeeding.

Anonymous said...

Could someone explain how in-running bets work? What happens if a person proposes a bet at the halfway point and, before the finish, the horse falls, breaks, throws jockey/driver or otherwise loses all chance? If no one accepted the bet, can the person cancel it before the finish? Can someone accept it after the mishap and prior to a cancellation, assuring themselves of a sure thing?

Thank you for any assistance.

Pull the Pocket said...

Hi Anon,

In-running is talked about here

Yes, if you wanted to bet say a trotter at 10-1 who was sitting okay at the half and he broke stride, you'd have to cancel your bet or someone would match you. If you weren't quick enough and they were quicker you'd have dead money. It's a game for the nimble!


Anonymous said...

Anonymous from 1:30pm thanks PTP

Scott said...

Or on other side (remember there are always two sides to an exchange bet), if you were trying to lay (oppose) the horse, if nobody wanted the bet, it would remain unmatched and be cancelled when the market suspended. There will always be plenty of bets left unmatched at the end of an event.

Tinky said...

They're going to start with in-running only?!! That's absurd!

That is the most complex, difficult to implement, technologically problematic of all exchange wagers. Have they even considered that the playing field won't be level, and that anyone without a real-time feed, or very close to it, will quickly be screwed and probably not come back?

Breathtakingly stupid.


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