by Tom LaMarra, USTA Web Newsroom Correspondent

Tucson, AZ — California residents are poised to become the first in the United States to wager on harness races through a betting exchange.

Under a 2010 law, exchange wagering is permitted to be offered in May 2012 as long as the necessary approvals are in place. There can be multiple operators, but TVG Betfair is the most prominent, having spent roughly $10 million on the California project.

Under the law, wagers can be placed by California residents on Standardbred, Thoroughbred, and Quarter Horse races.

Exchange wagering, considered pari-mutuel, offers bettors a chance to make their own odds on a certain outcome. Other players then bet against that outcome. As in pari-mutuel race betting, a commission is charged.

Stephen Burn, chief executive officer of TVG Betfair, said the company believes horse racing needs to take advantage of its current status as the only legal form of online wagering in the U.S.

“It’s clear what’s happening in the United States,” Burn said. “The train is coming down the track, and it’s relaxed online betting. Racing has to be very careful it doesn’t get left behind.”

Burn spoke in reference to things such as Internet poker and even sports betting should federal laws be relaxed.

In Great Britain the Betfair commission is only 5 percent, a percentage designed to encourage volume. In the U.S., where the blended pari-mutuel takeout rate is about 20 percent, the commission on exchange wagers will be higher.

Burn has floated 10 percent; for every $1 received by Betfair the racing industry would get $2. The actual percentage, however, depends on agreements between Betfair, racetracks, horsemen, and the California Horse Racing Board.

“For this to work it requires a degree of trust,” Burn said. “We need the racing industry to work with us on a pricing model. There has to be an optimal pricing point. We’re completely prepared to take a long-term view.”

Burn said it’s too early to predict how much money would flow through an in-state exchange.

The law states California residents will be able to bet on in-state and out-of-state races. New Jersey also has approved exchange wagering, but its status is murky given continued turmoil over the lease of two racetracks operated by the New Jersey Sports and Exposition Authority.