BISMARCK - North Dakota should create a central betting exchange for the North American horse racing industry, a Kentucky businessman has told the state Racing Commission.
The network would be an impartial operation that could generate up to $30 million per year in state tax revenue while offering a valuable service to the racing industry, said Joe Riddell of Lexington, Ky.
He told commissioners at their meeting this past week to think of such an exchange like a bank processing center.
"North Dakota is uniquely set up because you've got this great fiber-optic system," he said. An exchange could cost $1 million to build and then would be run by the racing industry, he said.
Commission's views
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Commissioners showed some interest and asked questions at the meeting but took no action, nor had Riddell asked them to. He wanted only to open the discussion for now, he said.
Riddell said the idea has been discussed in the industry for some time, but the different interests can't come to agreement.
Riddell is a real estate broker specializing in horse farms and also a senior partner in Fargo's Premier Turf Club, an off-track betting parlor and simulcast provider.
Riddell envisions an ultra-high-speed data service that uses the state's fiber-optic network to eliminate the existing lag time in horserace betting that he says has driven many North American wagerers to place bets with illegal bookmakers.
He said that, in the current tote system, the huge numbers of bets placed in the last few sections before a race starts creates a technological delay, a bottleneck, of up to 92 seconds. This causes displayed odds to continue changing even as the race is run.
This is a problem recognized by the National Thoroughbred Racing Association, whose 2004 study said, "Late odds changes . . . create perception issues with fans, who question the integrity of the race itself."
And that sends bettors to the bookmakers, costing race tracks and the thoroughbred industry tens of billions of dollars in wagers annually, Riddell said. That's because, unlike state-regulated and taxed wagers at tracks, licensed OTBs and legal account betting, the bets through bookmakers create no revenue for the industry.
"This industry lost over $3 billion last year," Riddell said. "My concern is why are we losing customers to somebody else and how can we get them back?"
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He said the national tote companies that currently process wagers, AmTote International, United Tote and Scientific Games, use systems with "outdated, old technology." He's not proposing to put them out of business; they would use the new central exchange too, he said.
Representatives of AmTote, United Tote and Scientific Games could not be reached for comment Friday to respond to Riddell's remarks.
Paul Bowlinger of Bismarck, a former North Dakota state racing director and now executive director of the North American Pari-Mutuel Regulators' Association, said that what Riddell is talking about is the "refresh rate" of the totalisator computers used to register bets and divide the winnings.
"It is everyone's goal to get the refresh rate down as low as possible," he said. "In the industry, that has dropped significantly" but he isn't sure if it can ever be reduced to virtually zero. "Thirty to 60 seconds is the refresh rate now."
The horseracing industry's losses caused by bettors flocking to betting exchanges and online bookmakers - and solutions to the problem - have been studied at least twice in recent years by the National Thoroughbred Racing Association. Its 2006-10 strategic plan calls on the industry to come up with technology "to eliminate or substantially reduce late odds changes." It also urges race tracks and horsemen's groups to work with law enforcement to go after betting exchanges and online bookmakers that illegally accept wagers on U.S. races from U.S. citizens.
Riddell's proposed central betting exchange in North Dakota would surely require action by the Legislature, Assistant Attorney General Bill Peterson, told Riddell and the commissioners.
"The state of North Dakota is going to want to know who's going to regulate it," Peterson said. "If any (public) money was going to be provided, the Racing Commission doesn't have the authority."
Cole reports for Forum Communications Co., which owns the Herald.
