November 21, 2012

California approves exchange-wagering rules; implementation at least months away

The California Horse Racing Board approved rules allowing for exchange wagering in the state on Thursday, but the launch of such wagers is still months away and faces the potential of legal challenges, officials said.

The state’s Office of Administrative Law is expected to receive the rules and supporting documents from the racing board in early December, and will have 30 working days to review materials. If the rules are approved, the racing industry can move forward in early 2013 with the implementation of the oversight technology and training to administer exchange wagering in the state.

A racetrack and horsemen’s group would then need to reach a financial agreement with an account-wagering provider and receive approval from the board before exchange wagering could start.

If the Office of Administrative Law expresses concern about the 25 rules approved on Thursday, it is possible that the legal approval could be delayed extensively.

There is also the possibility of lawsuits that could challenge the legality of exchange wagering, which allows bettors to back or lay horses to win or lose. Exchange wagering was approved by the state legislature in 2010, pending the development of rules by the racing board.

Betfair-TVG officials told the racing board on Thursday that they need several months before they are ready to implement exchange wagering in California.

Betfair-TVG and approached the board for licenses to conduct exchange wagering. The board issued a provisional license to Betfair-TVG, subject to the opinion of the office of administrative law on exchange wagering rules. is expected to apply for a provisional license in the near future.

The two account-wagering providers were asked to purchase computer hardware and software that will be used in the racing’s board regulation of exchange wagering. The cost of the software is part of the account-wagering providers’ license fee to conduct exchange wagering.

The hardware, software, and training of staff has an estimated cost of $530,000 through the end of the fiscal year, on June 30, 2013. All exchange-wagering providers must pay for regulation of such wagers, according to the 2010 legislation.

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