Racing: Clubs unite against exchange betting

By MIKE DILLON

Fifty million pounds turnover a week and growing by five per cent a week. Outside of oil wells, it's got to be the best business in the world.

That's English-based Betfair, an on-line exchange betting mode not aligned to traditional racing bodies and tipped to completely eclipse race gambling worldwide if left unchecked.

Which is why it's co-founder and CEO Edward Wray stood up very tentatively when he spoke from the floor at the gaming session of yesterday's Asian Racing Federation conference in Auckland.

Few knew he was there.

Ringing in his ears were two hours of declarations from Asian Racing Federation delegates stating that exchange betting was the worst disaster since Gallipoli.

It's only a handful of years since two mates, one based in the United States, the other in England, starting exchanging bets on the internet.

Astonishingly, that formed flutter.com, which mushroomed into Betfair, which exploded into a business worth, conservatively, £50 million ($141 million) a week.

There are two issues: how to get such agencies to pay the taxes and returns to racing all other gambling companies are committed to - and the vexed question of integrity.

In exchange betting, one party backs the horse, the dog or team to win, the other party backs it to be beaten, or in racing parlance, lays it. When someone lays a horse, racing's bosses are always keen to know why.

There could be something dodgy, or as Hong Kong Jockey Club director John Schreck put it yesterday: "There is something inherently wrong to back a favoured horse to lose."

You could argue that every bookmaker lays every horse in every race, but bookies are subject to the stringent rules of racing.

Not so internet operators who, in their defence, argue they are not the bookmakers, merely the conduit to two parties betting between themselves.

A major problem facing racing's judiciary is that exchange betting is anonymous. If someone today bet $2 million that an odds-on favourite was to be beaten, and it was, there is no way of identifying the bettor.

Schreck: "In the Fine Cotton case we caught the people after we followed the money trail. Had there been exchange betting it would have been nearly impossible to follow the money trail."

English Jockey Club delegate Christopher Foster said negotiations are in place with exchange betting agencies for access to information on punters who regularly lay horses.

Schreck made no excuses for his attack on exchange betting, describing it as parasitic, a cancer and its participants as conscienceless.

Which is why Wray said as he stood up on the floor late in the session: "Perhaps I should be doing this sitting down."

Wray said while he accepted there were probably unscrupulous exchange betting operators out there with no interest in operating in a regulated market, Betfair was keen to comply with all integrity issues. "That's why I'm here," he said.

Later he said Betfair was comfortable with the small gross profit tax applied by the British Government and was happy with a new tax expected soon, which he thought would be around 15 per cent.

Exchange betting is just starting to spring up in Australia and New Zealand and yesterday's wagering business session centred on how it could be contained before it blossomed.

Former prime minister Sir Geoffrey Palmer, in his governmental view speech, said it was crucial member countries agreed on a parallel policy, similar to civil aviation regulations, and encased the policy in law in each country.

It would be similar to the "good neighbour policy" signed between the Hong Kong Jockey Club and the Japan Racing Association late last year. "One sovereign country cannot achieve it alone," he said.

No authority has been granted for Betfair to operate in Australasia.

Wray said the interesting feature is that since Betfair had been operating a new vigour has been injected into gambling British horse races.

"All betting is going up and it's clear that what we are taking is new money. It's not from the same cake.

"Things are very vigorous and we seem to be the accelerator."

The boss of Thoroughbred Racing New Zealand, Murray Acklin, has been chairman of the 22-nation Asian Racing Federation for several years.

This week he passed that over to Lawrence Wong, CEO of the Hong Kong Jockey Club. Wong chaired yesterday's session.

To say Wong was against exchange betting is like saying the crew of Alinghi probably had hangovers yesterday morning.

Speaking on the issue of exchange betting operators being able to conduct business without a licence Wong looked exasperated when he said: "Every gambling operator in the world needs a licence, how come ... ?"

An Australian delegate asked the Devil's Advocate question: "When an Australian TAB bets on Pakistan playing India at cricket, does the TAB ask the cricketing associations of both countries for permission?"

This issue is not going away.