Racing: Losers the new winners as the face of betting is changed

Amid concerns over racing's integrity, the new exchanges refute 'cheats' charter' claims

Cheltenham has always been far more than a theatre of classic equine repertory; traditionally, it is a festival of monetary union, too, with millions of pounds and euros in constant circulation around a few square miles of Gloucestershire countryside.

Cheltenham has always been far more than a theatre of classic equine repertory; traditionally, it is a festival of monetary union, too, with millions of pounds and euros in constant circulation around a few square miles of Gloucestershire countryside.

Yet increasingly, many who previously conducted their business through cash or simple credit, transactions with traditional bookmakers, now do so by matching bets with other punters on cyber-exchanges.

In simple terms, the benefit to punters from betting exchanges is that the odds are better than those offered by the bookmakers (the betting exchanges merely take a percentage commission on winning bets), and that the exchanges' clients can "lay": in other words, back a horse, team, or player, to lose, as well as backing them to win.

Within Betfair, which with 200,000 registered clients operates the largest of the three betting exchanges in this country, 12,000 bets are being placed a minute. Around a million bets are being matched every day. It is a radical transition of gambling strategy. Indeed, Mark Davies, Betfair's director of communications and one of the founding fathers of the company four years ago, argues: "In 50, maybe 100, years' time, probably everybody will be betting on exchanges, because everybody by then will be doing their shopping from home on computer. But in the short term we accept that some people will never use betting exchanges."

With Betfair alone employ-ing 350 staff at its Hammersmith base, the trend under- standably concerns the estab-lished bookmakers, such as Ladbroke and Coral, for commercial reasons. Yet the issue has become far more contentious.

Even before the recent media feeding-frenzy over Keiren Fallon's riding at Lingfield, Sean Fox's alleged "jump" at Fontwell and the Hillside Girl affair, over which four licensed individuals have been charged by the Jockey Club with "laying the horse on betting exchanges, knowing or suspecting that she was lame and therefore could not win" in a race at Carlisle last year, the question of integrity had begun to dominate the debate.

Inevitably, these incidents have been seized upon by the detractors of betting exchanges, who include the British Horseracing Board's chairman, Peter Savill, and its chief executive, Greg Nicholls, as evidence that betting exchange "layers" ought to be licensed on the basis that they are effectively bookmakers.

Davies contests that, maintaining: "You can't call yourself Honest John and run a book on Betfair. You are a punter. You have to go with the market."

The BHB and bookmakers initially wanted all exchange clients to be licensed. That has been softened now to a demand for "non-recreational" layers (clients who invest above a certain threshold) to be licensed when the joint committee of 16 Lords and MPs report early next month, and make their recommendations to the Government on the draft Gambling Bill.

It is difficult to imagine that the committee will concur. To do so would fly in the face of all logic. Betfair has established a ground-breaking memorandum of understanding with the Jockey Club, under which they communicate concerns about the betting patterns of a particular client, and, crucially, provide details of that client.

While there may appear to be an increase in dubious occurrences, it is more likely that the policing of it, with punters no longer able to hide behind a cloak of anonymity, has brought more cases to light.

Betting exchanges have been described as a "cheats' charter", but Davies retorts: "The bookmakers have very successfully mischaracterised our business. There are a lot of people in racing who believe we don't pay tax, or the Levy, and that everything is done anonymously, but it's all complete nonsense. There's anonymity between each customer, but we have better information than any betting organisation in the world. We can track every single bet to an end-user, and then back again."

He adds: "The betting exchange monitoring service, Racefax, said that last year there were 171 dodgy incidents where horses drifted [on exchanges] and those horses did not win. Well, we looked at the whole picture and we found that actually 1,700 horses drifted to double their odds - and won. The fact that a horse drifts in price doesn't mean anything. We're a completely transparent trading system. It's a free market, and everybody can see a price increase and make a judgement. We're the first betting operation to give the Jockey Club full access to their records."

Hence, Betfair informed the Jockey Club 10 minutes before the Ballinger Ridge race, on 2 March, that two of their account holders who had previously given cause for concern were "active" on the race. That gave the Jockey Club's security department the chance to scrutinise the horse's running.

"We speak to them [the Jockey Club security department] if not every day, then certainly several times a week," explains Davies. "There's an ongoing relation-ship. We have a team who analyse all aspects of our [web]site."

It is understood that one of the two clients is a "licensed person", the other a "former licensed person" (presumably trainers or jockeys). Betfair also assisted with the Hillside Girl case, but Davies insists there was "absolutely nothing in the betting to alert us" about Ice Saint.

"The only thing wrong with Fox is that it looked so ridiculous. It was right in front of a head-on camera. There are conspiracy theories going around, which I find impossible to accept. But it's certainly interesting that it has happened only three weeks before the joint committee make their decision."