The California Legislature is currently considering a bill (AB 2414) that would raise the takeout level in the state and would also permit the development of exchange betting (no earlier than May of 2012). If passed, California would become the first U.S. state to allow exchange wagering, which is legal in many other countries around the world. However, there is a great deal of controversy about whether exchange wagering can draw new fans and bettors to the sport and/or whether it could lead to harmful cheating and erode the already shaky public confidence in the integrity of horse racing in this country.
Conducted on the Internet, exchange betting allows bettors to post odds on a horse and take bets directly from other players. Bets include wagering for or against horses, and they can be accepted even during a race that is already being run.
As originally introduced, AB 2414 would have increased takeouts, with a side benefit of that it would have permitted any California racetrack hosting the Breeder's Cup to spend the extra takeout money on promotion of the event - a move aimed at convincing the Breeders' Cup to make a track in California (likely Santa Anita) the permanent home for the annual event.
The bill, sponsored by Assembly speaker John Perez, a Democrat from Los Angeles, was amended on August 20 to include language that would pave the way for exchange wagering in California.
According to a report in the Pasadena Star-News (click here to read the full report):
"Supporters say the proposal, AB 2414, would breathe new life into a dying and listless industry that has to keep up with competition from Indian casinos and offshore sports betting.
"Opponents say the legislation, sponsored by Betfair, a multi-national gambling corporation, and carried by Assembly Speaker John Perez, would wreck the game and harbors the potential to introduce a new form of cheating to California horse racing - playing to lose.
"Both sides agree their fight has brought controversy to the final days of the 2009-2010 legislative session, which is scheduled to end Tuesday."
The legislation would raise the takeout on two-horse exotic bets by two percent, from the current 20.68 percent to 22.68 percent. It would also increase the takeout on bets requiring three or more horses by three percent, from 20.68 to 23.68 percent.
Proponents of the bill say the takeout increase would add $25 million to $30 million in purses annually.
The bill is supported by the California Horse Racing Board, Hollywood Park, Del Mar, the Oak Tree Racing Association, the Jockey’s Guild, the Thoroughbred Owners of California, and the California Authority of Racing Fairs. Santa Anita, Churchill Downs, Inc., and Golden Gate Fields oppose the bill specifically because of the exchange wagering portion.
According to the Daily Racing Form:
"The [California] state legislative session is scheduled to end on Tuesday, but the legislature has yet to produce a state budget and is not expected to adjourn on that date. That could give the bill more time to pass through the State Senate and Assembly. It could even be divided into a takeout bill and an exchange betting bill, said one legislative analyst."
If exchange wagering is indeed legalized in California, the initial stages of its implementation will be closely watched around the country. Moreover, it will likely have a significant impact on the future of wagering on horse racing in the U.S. and could result in similar legislation in many racing states. If it is not passed in California, you can bet you will see similar bills filed in other racing states in the next few years.
Would legalizing exchange wagering be a good thing for horse racing in the United States? Let us know what you think and why.