Betfair takes a punt on US horseracing

Betfair bought TVG for us$ 50 million in January. The channel is available in 32 million homes across the US and provides more than 15 hours of live sports coverage a day. The TVG website handled about us$ 500 million in wagers last year.

Betting in the US is strictly controlled, and British companies had steered clear of its gambling market until the purchase of TVG by Betfair. The new owners want to revamp the service and bring betting on horseracing in the US "into the 21st century". Gerard Cunningham, president of Betfair USA and head of TVG, said the channel had added nearly 30 racetracks to its coverage in the last six weeks.

The company has just launched a new video streaming service, allowing punters to watch any race on demand on the website. "We want to be able to offer every single racetrack and have access to every single race. We are broadening the bases," he said.

The website is also launching a new community forum to allow TVG viewers to chat online with others - the Betfair forums in the UK have long proved a big driver of wagers. Betfair is also seeking to increase the number of ways that punters can place wagers via mobile devices.

Betfair, which launched the first online exchange betting system 10 years ago, has grown into the world's biggest legal online betting community. It has a portfolio of gaming products including sports, poker, casino and games.

The company has more than two and a half million registered customers with more than half of all new registrations coming from outside the UK and Ireland. It holds licences in the UK, Australia, Austria, Germany, Italy, Malta and the US, and is looking to expand internationally. Revenue in the year to April 2008 was 240 million euros.

Cunningham said TVG would give Betfair a significant foothold in the US and, looking to the medium term, would help the company take advantage of any easing of regulations.
TVG takes online pari-mutual betting on horseracing, like the Tote in the UK, in only 16 states where it is legal. Exchange betting, which allows for proposition wagers, remains unlicensed.

While the public has embraced the concept in Britain and elsewhere, American racing officials have frowned upon systems that allow players to bet on horses to lose rather than win. But US racing has struggled to compete in the domestic gambling market, prompting speculation that a change to the exchange model would revitalise the industry.

Online casino and poker is illegal in the US but Americans place many millions of dollars every day in off-shore operations. There are moves to ease the ban on online poker at a federal and state level. Cunningham said: "Betfair is in the the US for the long term. We have a legal US business now and as the regulations lighten up, the company is well-placed to take advantage. We are very much in learning mode. We recognise that this is the first step."

TVG's racing channel is based in Los Angeles while its website will be based in San Francisco. Tony McAlister, Betfair's chief technology officer, was in San Francisco this week, to recruit web developers for the company from Silicon Valley.

Betfair employs more than 400 computer engineers among a global workforce of 1,600 and its betting platform processes more than 5 million transactions on an average day.