Betfair, the largest online betting exchange, has been licensed for betting in New Jersey. Betfair's gaming license allows to provide wagers on horse racing, but no other sports. It will partner with Monmouth Park on the services it offers.
Waited Four Years for a License
The UK gaming company has been waiting for four years for licensing approval. Betfair applied for a license in 2011, shortly after New Jersey voters had approved sports betting in a statewide referendum. At the time, it was thought the company might be able to provide legal sports bets, but those ambitions have been frustrated by the US sports leagues.
When New Jersey legalized sports betting, it led to a lawsuit by the NFL, NHL, NBA, MLB, and NCAA. Those lawsuits wound through the district and appellate court system from 2012 to 2014, with New Jersey losing each time. Then New Jersey did away with its regulations and was going to look the other way while Monmouth Park took bets, which led to a new lawsuit. New Jersey has lost decisions in two separate courts, but the issue remains in the air. Bets on horse racing remain legal.
What Betting Exchanges Do
Betfair's product is much different than traditional horse betting. When it launched its betting exchange in 1999, Betfair created a whole new way to gamble on sports. Traditional sportsbooks offers point spreads and moneyline bets, in which a gambler is essentially wagering against the house.
In a betting exchange, players do not wager against the house. Instead, wagering is done in a player-versus-player mode. An exchange like Betfair is there to assure fairness and ensure payments. Otherwise, they act as a third-party organizer, taking a fee for each wager. The players themselves set the terms of a bet, though such wagers only go into effect if another gambler agrees to those terms. In many ways, a betting exchange takes the role a casino would in poker games--except it applies the concept to sports bets.
Why Sports Bettors Prefer Betfair
It has proven a popular concept in the United Kingdom and continental Europe. Sports gamblers are not frustrated by the idea they are playing against the house, which sets up impossibly difficult terms of engagement. Instead, they wager against other players, whom they feel they have a better chance of beating. Smart plays can lead to consistent wins, at least in theory.
Like poker sites, online betting exchanges require customer liquidity, meaning they need plenty of gamblers to be competing to make the business model work. If bettors are not active enough, then betting propositions are not matched by a willing gambler and loyal customers get frustrated. Thus, having a large population to participate is key.
New Jersey's 1st Betting Exchange
With over 9 million people in New Jersey, the state should have the population to support a betting exchange. Whether enough gamblers are interested in betting the horses is another matter. If other U.S. sports were included, it would be a cinch. Gaming trends over the years indicate greater interest in sports betting, but less in the horse races.
That is one reason Monmouth Park took the lead in trying to legalize sports betting. Being able to operate a sportsbook would take an industry which has struggled in recent years (racetracks) and turn it into a lucrative operation. Having the betting exchange should help by providing non-traditional ways residents can bet the horses. Betfair usually takes a smaller cut of the action than a traditional sportsbook does, which explains its popularity.
Sports Betting Could Become Legal
Betfair and Monmouth Park themselves might be speculating on an emerging market. A Philadelphia appeals court soon will rule on Monmouth Park's right to host a sportsbook or not, and some indications are that New Jersey and Monmouth Park have a chance to win this round of legal arguments. If so, then the PASPA would be struck down overnight (pending appeals).
The UK betting exchange might be anticipating such an outcome. If so, it would be well-placed to begin offering real money sports bets in a legal and licensed setting in New Jersey. Monmouth Park might also be in the same situation. If so, the partnership could be a major boon for both companies, especially Monmouth Park. For Betfair, New Jersey gambling represents a boost in profits; for Monmouth Park, sports betting could be a necessity.
Whatever the case, the companies believe their New Jersey horse race betting exchange could be ready to go by March 2016. With the seasonal nature of horse racing, that would be perfect timing for the beginning of a new season.
