Racing: Racing world remains divided over betting exchange revolution

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In a week in which racing has been shaken by Kieren Fallon's failure at Lingfield, Sean Fox's fall at Fontwell and Alan Berry's lame filly at Carlisle, laying the blame for all the sport's ills with the betting exchanges has been the most consistent chorus.

In a week in which racing has been shaken by Kieren Fallon's failure at Lingfield, Sean Fox's fall at Fontwell and Alan Berry's lame filly at Carlisle, laying the blame for all the sport's ills with the betting exchanges has been the most consistent chorus.

The business of exchange betting is the unwanted new arrival in a business realm which has existed quite comfortably for 40 years or so. We should perhaps not be surprised at the reception it has been given in some quarters. "They've taken our money," squeal some traditional bookmakers as they complain that the exchanges enjoy favourable taxation terms.

Exchanges, or person-to-person internet betting, allows punters to bet with one another: to wager on a horse to win, or to lose. It is the latter which has come into focus in recent days. There were exchange patterns which suggested that Fallon and Ballinger Ridge would be beaten at Lingfield last week, when the champion jockey dropped his hands. Fallon has been banned and a further investigation is under way.

This overlapped with the Lancashire-based trainer Berry being charged with a serious offence over the defeat of one of his horses last year after it, too, drifted badly on the betting exchanges. Were they evidence that those in the know can take straight punters straight to the cleaners?

The betting exchange is a relatively new phenomenon. The main players are Betdaq, Sporting Options and Betfair, with the last named the most significant outlet. Betfair was founded in June 2000 with £1m of private money, and gradually eased itself to a turnover of £30,000 a week. By April of the following year that figure was up to £1m. Today, Betfair matches bets between punters and layers in excess of £50m a week.

It is a business miracle, built on the choice and generous prices it provides for punters. The question now is whether it means there is a far bigger price to pay: are the exchanges helping to facilitate wrongdoing in racing?

Greg Nichols, the chief executive of the British Horseracing Board, certainly believes so. "Recent events have drawn further attention to the new and very real threat to racing's integrity posed by betting exchanges, which leave the sport more vulnerable than ever before to malpractice," he said yesterday. "Exchanges have opened the door for unlicensed, anonymous individuals, in Britain or anywhere in the world, to profit directly from a horse losing.

"After a straightforward registration process, people can make money from horses not winning. The result is increasing reports of irregular betting patterns relating to losing horses. These are having a damaging impact on racing's reputation.

"Recreational layers on a betting exchange should be distinguished from non-recreational layers by the size and/or frequency of their laying over a specified period, whereby non-recreational layers would be deemed to be in the business of betting and would require a licence, awarded on the basis of a 'fit and proper' test."

The exchanges say they have done all they can. Last June, Betfair and Sporting Options agreed to a "Memorandum of Understanding" with the Jockey Club, which means that, for the first time, punters' records will become available. It is a racing version of the overturning of the Hippocratic oath.

"We can name names. We can put the faces to the bets," Tony Calvin, the Betfair spokesman, said yesterday. "We have a sophisticated audit trail, by which we can build up a betting pattern to the nth degree and pass on the results. Then it's up to the relevant sport's governing body to regulate their own sport."

This arrangement is less well appreciated by rival bookmakers. "The Memorandum is all well and good. You can trace who has profited, but unless you can confirm a relationship between that person and a jockey or trainer you have absolutely no proof," Simon Clare, the Coral spokesman, said yesterday. "This bloke could be sitting in Hong Kong, Kazakhstan or the Virgin Islands. How does the Jockey Club police the sport in those circumstances? It would have to have twice the resources of Interpol. They are going to find it extremely hard to catch anyone even vaguely organised.

"Betfair don't actually have a duty of care. The people who are defrauded on Betfair are the other customers. It doesn't cost Betfair themselves a penny. In the old days, if a coup was landed or something dodgy happened it was the bookmakers - the big, bad bully - who got the beating.

"Dodgy things happening in racing are not new, but if you asked any punter in a betting shop about the number of suspicious or strange cases over the last year I'm sure they would tell you it's more frequent: weird performances from favourites and horses drifting badly before they lose.

"The simple fact that anyone can now profit considerably from a horse losing threatens the integrity of the sport. That threat has grown with the exchanges. They are providing the quick and easy platform for the cheats. If they didn't exist British horseracing would be in a far safer state than it is today."

Rob Hartnett, the Betdaq managing director, questioned the cause and effect element of the racing trauma of the last few days. "The exchanges are being tarred as being in some way responsible for these events, but I would make the argument that we [exchanges] are doing more than anybody else to try and bring these things to light and out in the open," he said.

"We are straight on to the Jockey Club if we think there is anything suspicious about the running of a horse and we will work with the Jockey Club to make sure those patterns are either ruled in or out as part of any investigation.

"If only from a commercial point of view, it is vitally important for an exchange that people who are out there and putting the bets on have confidence in the sport.

"In the long term, this will all be for the good of the sport and I am confident when we look back in history, we will see these episodes as significant."

To one punting man in the street, albeit a rather serious one, it is not the exchanges per se which are to blame, rather some of the people which use them. "It's the purest form of betting that's ever been invented. You could not get a simpler system: one person wanting to lay a horse and one person wanting to back it. It's absolutely perfect and cannot be improved upon in any way," Dave Nevison, the notable professional punter, said yesterday. "The betting exchange is nothing other than the conduit. It's just that some people use it in a scurrilous way. But that has gone on for time immemorial. There have always been ways of profiting if you were in the know in advance.

"To say the exchanges are detrimental to racing is like saying motorbikes are necessarily dangerous to your health, that people should not have fast cars because they might get killed driving them."