Marcya: Wow. There appears to be many different ways a horse player can approach a horse race. It sounds thrilling. But how do you see exchange wagering benefitting Monmouth Park -- it being the first entity in the U.S. to offer it?
Christian: Well, you can actually bet in the middle of a horse race.
This may not be available right away, but when it is it will be a huge benefit for Monmouth Park because in the long run, you want to bring people to the track.
As a horseplayer, you aren’t going to bet in the middle of a horse race unless you are at the track and you are betting in real time. That is a big incentive to get people to the track. You can bet a horse at the quarter pole and see if the horse is moving well or not or use your own other sophisticated types of betting to determine whether you are geting a better price. So for instance, when Zenyatta breaks a little slow -- in the Breeders’ Cup Classic I think she was up to like, 4-1. She’s a closer and people were like, “Well, she looks like she may not be able to do it,” so there is an advantage there.
Ultimately, exchange wagering is the biggest new acquisition tool for horse racing because we have a platform now. It may take a few years (and hopefully the reality television show will help generate some kind of buzz) to get the newcomers and the millennials to start looking at racing. Monmouth will be seen as an early adopter, progressive, willing to take chances, ready to go out of their way for their customers by offering wagering on a tech-savvy level.
I would imagine that TVG will be the go-to destination for the exchange wagering unless they license it out. I’m not sure how that is going to work. But it is going to be a win-win for TVG, for Monmouth Park and the horsemen because everybody is going to get paid. And I know, typically with these types of situations with these risks I wouldn’t be surprised if TVG was guaranteeing purse levels and/or making sure that they grow, but I think they would be willing to take that risk.
It is going to take time to teach people how to use it, to get the newcomers -- the new types of players -- that would add liquidity to the game: the day traders; the Wall Street crowd. For the first time ever, Wall Street can come in now and say, “Wow, I can actually set my price.” So literally, imagine that somebody who is working for a hedge fund says “I will offer a million dollars to this horse at these odds, take it or leave it.” So it allows for the first time liquidity to go into the clouds. That’s beneficial for guys like me who tend to bet big money, but very selectively.
It’s also going to be interesting to see if there is going to be a clash with the titans. There are about 12 computer systems teams across the United states that have been betting roughly 20% of the entire market and they might be able to step into this now because they’ve been doing it in Europe and they’ve become the house, so to speak, and they may be willing to lay a lot more down. It will be interesting to see what Betfair does and what Monmouth Park does to reach out to the bigger bettors that are currently using the exchange overseas.
Marcya: How popular is this in Europe? Has it really taken off? What is your perspective?
Christian: Oh yeah! Well let me say it two ways. Horse racing is in a completely different world in Britain. The queen comes out every year. You’ve got major television stations airing horse racing. It is high on the totem pole. Not quite as high as football or cricket, but certainly a solid third on the list.
Also over there they are much more sophisticated about the way they communicate, the way they make decisions. The queen of England gave Betfair the Queen’s Award for Enterprise for two years which is unprecedented.
This is first-rate technology. When I was there they did more transactions than the entire European stock exchange combined on
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