The latest international gambling craze – betting exchanges – are posing a real threat to the integrity of horse racing, according to Hong Kong Jockey Club senior consultant and former Sydney-based chief stipendiary steward John Schreck.

“It is a cancer that threatens to ruin the horse-racing industry. They are already beginning to have an effect on the integrity of racing and have the potential to do enormous harm to the industry in general,” Schreck said during a business session on wagering at the Asian Racing Conference today.

“They have only just begun to spring up but already are proliferating across the world as more and more consciousless people grab at the chance to get rich quick at the expense of world racing,” he said.

Betting exchanges are run by organizations such as London-based Betfair and the recently established Australian-based TwoFlys.

These exchanges manage the transaction of a person who deposits with it an amount of money. This in turn is made available at attractive betting odds on the Internet for accredited punters to bet against each other.

The betting exchange operator brings together these people via the Internet and makes a profit from deducting a management fee of about five per cent from net winnings by either the layer or the bettor.

Schreck said that exchange betting raised a number of factors which could impact on the integrity of horse racing. These include:

· Neither the exchange operator nor the layer or bettor are bound by the Rules Of Racing.
· The exchange operator is not subject to any probity check by either racing or civil authorities.
· The operator of the betting exchange is not subject to any criminal record check.
· Presently the betting exchange operator is unwilling to disclose to racing authorities the names of bettors.
· Licensed trainers or jockeys could, under the cloak of anonymity, may be inclined to assist their horse to lose.
· The bettor could have a close connection with a trainer, rider or stablehand.

Schreck said that already rumours were rife that many jockeys and trainers had been earning plenty from laying odds on their horses to lose or getting someone close to them to lay odds. “This is easily arranged given the anonymity of betting exchanges"

“My view is that the only way horse racing can survive this threat to its integrity is for it to be made illegal for anybody to have transactions with betting exchanges. If this is not possible then a second solution is that perhaps there may be grounds for establishing a structure that will enable racing supervisors to follow the money trail and thereby making the covert modus operandi of today an overt operation. This would require a club to establish its own legal betting exchange, creaming off a set percentage of the turnover that would benefit racing control and the supervision of the racing contests and hopefully ensure that participants were reputable and subject to the Rules Of Racing,” Schreck said.

England’s Racing Post news editor Tony Smurthwaite said Betfair.com was launched in London in June, 2000.

“From the outset it was more popular with existing sports fans with odds tending to be higher than those offered by traditional bookmakers as the profit margin was effectively stripped out. It was a maverick cool way of betting and people liked the fact they were not feathering the nests of the major bookmakers in betting through exchanges,” Smurthwaite said.

“Within nine months of its lauch Betfair broke through 1 million pounds a week in turnover,” he said.

“From 1 million pounds in April 2001 the figure grew to 5 million pounds a week by December 2001. By February 2002, after a merger of two exchanges, the turnover per week reached 10 million pounds and by the start of January this year the figure had exceeded 50 million pounds,” Smurthwaite said.

Betfair chief executive Edward Wray said the organization handled 600,000 bets last Saturday alone.

He said there was a lot of hysteria among traditional betting outlets about betting exchanges but this was totally unwarranted.

“We are helping to grow the racing industry and reputable organizations such as ours are putting something back to racing in the United Kingdom by way of a product fee which is currently 10 per cent on commissions (gross profit) which is paid to British Racing. We are also prepared to do so in other overseas countries by talking to the racing clubs concerned,” Wray said.

He said Betfair was operating globally and had taken bets on races in Australia and New Zealand in recent months.

“Betting exchanges are here to stay. There is no turning the technology clock back and the betting public want them,” said Wray.

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