Study: Exchange Betting Opens New Markets

Eugene Christiansen, the founding partner of New York-based firm Christiansen Capital Advisors, LLC presented the findings of a major study entitled “Exchange Betting and the United States Thoroughbred Racing Industry”.

The report, available in its entirety at, was commissioned by Betfair subsidiary TVG. It examined two decades of trends in parimutuel wagering in the U.S., alongside handle and purse trends in the U.K. and Australia, where Betfair’s exchange wagering platform has been implemented.

“The bottom line is that there is good news here”, Christiansen said. “In all three jurisdictions [studied]–the United Kingdom, Australia and the Australian states–handle, or consumer spending on horse races, and purses have all increased since Betfair’s exchange began operating in these jurisdictions.”

“The conclusions are fairly clear. One, people like exchange betting—exchange betting appeals to people who were not currently involved in either fixed odds betting or pari-mutuel betting. The introduction of exchange wagering seems to have revitalized or reinvigorated betting in the United Kingdom and in Australia. We have no reason to suppose, from the data we examined, that it would have any different effect in the United States.”

Christiansen explained that the bettor–or consumer– has been asking for lower prices (i.e. a lower takeout) for years, and that the pricing model for exchange wagering directly addresses consumer concerns. “The outlook for racing in the United States is not very good” warned Christiansen. “I was looking at the month-over-month handle and purse trends in the United States for the first quarter of 2011, and I noticed that through the first quarter parimutuel handle is down about 8.5% while purses are up 5.3%. Purses, as it is discussed in this study, are heavily supported or subsidized by casino games…which contributed in 2009 almost 30% of the U.S. Thoroughbred purse structure.”

“What these numbers say is that consumer spending on VLTs and slot machines at racetracks has recovered from the financial crisis and recession, but parimutuel betting has not.”

Christiansen warned that something must be done to reverse these trends, and said that, since consumers in other countries have responded positively to exchange wagering, it should be considered an option to revitalize the Thoroughbred industry in America.

Stephen Burn, CEO of TVG and Betfair, said in a statement “The Christiansen study confirms through empirical evidence what we have observed over the last several years—that the introduction of exchange wagering has been an engine for horse racing growth in the UK and Australia, and would have a similar effect in the U.S.”

(from Thorougbred Daily News)

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