By John Piassek
Thursday, May 12, 2016
Exchange Wagering Marks Emergence into Brave New World for NJ Racing
One of the great bet-against opportunities of the Laurel fall meet came in the third race on November 21, when Dreamsgonewild was entered in a $7,500 claiming grass sprint. His speed figures were superior to the rest, and he had the expert training of Jamie Ness. He was sent off at 2/5 in the pari-mutuel system based off those merits, but something wasn’t quite right about him. Namely, he had been claimed out of his last race for $30,000, after running in stakes company most of the year, and now was being dropped in for $7,500. Who would give up a sound horse for $22,500 less than they paid for him? I denounced him in print before the race, and as it turned out, I was right. He finished dead last.
The only problem was that I had no idea who among the rest was going to win the race. Therefore, I made no profit on it. Now, had there been a betting exchange, in which I could offer an exorbitantly large price on Dreamsgonewild, and taken money from people who thought he was going to win, I would have cleaned up. Now, such scenarios are possible, thanks to the rise of exchange wagering in New Jersey.
This week, New Jersey will become the first state in the country to offer exchange wagering. A common concept in the United Kingdom, where it has been around for more than fifteen years, its arrival in the United States seeks to turn the concept of pari-mutuel wagering on its head.
Exchange wagering, for those that don’t know, is a betting stock market of sorts, in which people can lock in odds on horses and keep them, long before the wagering closes. If you see that a horse you like is, say, 4/1, you can place a bet on that horse and guarantee yourself 4/1 odds no matter what the final price is. Even if his odds as the gates open are 2/1, you’ll still get 4/1.
Of course, the betting doesn’t stop when the race begins. You can bet on the race as it progresses, with the odds constantly fluctuating. Let’s say that you bet against Nyquist originally in the Kentucky Derby, but as the race went on, you thought that he was going to win. You could place a bet on Nyquist during the race, and your payout would be based on whatever the “in-running” odds were.
Perhaps the most interesting part about all of this is that, as hinted at earlier, you can take action against a horse in any race. If you didn’t like Exaggerator in the Derby, for instance, you could take action on him, and you’d keep the money on the exchange if he lost. If he had won, however, you’d have to pay out the winning to whoever’s bet you took.
There is a simulation site up and running (CLICK HERE TO TRY IT) in which players can place and lay bets on simulated races, and understand the concept behind exchange betting. During one of these imaginary races, I watched the odds on the six runners constantly change. One minute, your pick might be 4/1, and five seconds later, he would be 5/1 (the odds updated once per second on the exchange). The board showed the odds I could get to win, the odds I could get taking bets against a horse, and the profit I would show based on each outcome of the race.
Once the race started, I could see the odds I could get while it was going on. They, too, were a whirlwind, changing based on where the running positions of each horse were. I could also see how much I’d win or lose if I “cashed out” and cancelled all my wagers. Late in the race, I decided to place an “in-running” wager on a horse who began moving up on the outside and was gaining ground.
Of course, I placed a bet on the 4 horse very late in the race, as he was opening up a big lead and looked home free. I bet enough to cover my wagers on the rest of the field, and of course got beat at the wire. So that part does not differ from pari-mutuel wagering.
However, the whole concept of exchange betting is exciting news for racing in New Jersey. Dennis Drazin, one of the owners of Monmouth Park, commented “We believe exchange wagering is huge for our future. We want the fan who wants to come in and have a different, fun experience. That’s the goal here, to try to offer customers other opportunities besides the traditional pari-mutuel bet. This is entertainment”.
There’s a few other differences between exchange wagering and normal pari-mutuel betting. As of now, exchange wagering is only available in the win, place and show pools, not the exotics. In addition, the commission on every wager placed will be 12%: lower than the takeout in the pari-mutuel pools, but higher than it is on exchange wagering in the UK. The commission money will be returned to the track, something not done over there.
When exchange wagering starts off, this may be a major game-changer for racing not just in New Jersey, but in the United States. If New Jersey has major success with this, other states are likely to adopt it. And if they have success, and people realize just how much fun exchange wagering can be, it may radically alter American horse racing wagering as we know it.
In the meantime, if you’re a New Jersey resident, get in on the exchange action. If you’re not, then root for its success here, because if it works, it’ll be coming to you soon.
John Piassek is a student at Loyola University in Maryland. He prides himself as a supporter of racing in New Jersey and Maryland. John is an aspiring race track announcer, marketer and writer. His “Mid-Atlantic Musings” column on DanonymousRacing.com focuses mostly on NJ and MD racing, ways to market them, how the states can improve their racing, and how racing should start focusing on bettor-centric marketing.
You can follow John on Twitter @Theyreoff.