Betfair Receives USA's First Legal Online Betting Exchange LicenseNovember 24, 2015 12:11 pm
UK operator, Betfair, has just been cleared to run the USA’s first ever regulated online betting exchange after receiving a license from the New Jersey Racing Commission. For the time being, Betfair’s activities will be restricted to just horserace betting taking place within the Garden State, with the partnership between Betfair US and Monmouth Park Racetrack expected to launch by March 2016.
Betfair created the betting exchange model back in 1999, and has maintained a dominant market share ever since. Like traditional bookmakers, a betting exchange allows customers to wager on an activity which has a defined end. Unlike a bookmaker which generates revenue by setting unfavorable odds, however, a betting exchange features peer-to-peer wagering and allows its customers a whole range of wagering options in real-time, including setting their own odds, and buying and selling the outcome of discrete events. The betting exchange operator subsequently collects a transaction fee for the service.
Betfair originally applied for its New Jersey license four years ago, and at that time state residents had just voted in a referendum to legalize sports betting. Governor Chris Christie then signed the applicable legislation into law, but New Jersey never got the opportunity to enact its laws as the USA’s major sports leagues subsequently argued that they contravened the Professional and Amateur Sports Protection Act (PASPA) of 1992, which allows just the states of Oregon, Delaware, Montana and Nevada to allow regulated sports betting.
After losing its courtroom battle against the leagues, New Jersey has recently won a full rehearing of the case at the Third Circuit Court of Appeals as it seeks to offer real-money sports bets at the state’s racetracks and casinos. If successful, David Rebuck, director of the New Jersey Division of Gaming Enforcement, said the state would immediately move to “change the sports wagering prohibition to allow for sports wagering to be performed on the internet.”