Betfair has announced that they will be removing their betting exchange platform from the United States as the company has yet to see much success. The state of New Jersey was the only market for Betfair, and the company has failed to expand throughout the US.
Betfair initially tried to bring the sports betting exchange platform to the United States as early as 2011, but the company was forced to wait more than five years before they were granted a New Jersey license. The betting exchange platform was launched in 2016, but it never really gained any traction.
Even though the betting exchange platform was introduced at a time when sports betting was not legal in the United States, that has since changed. Most sports bettors in the US prefer placing bets at sportsbooks or through mobile sports betting sites.
Initially, Betfair promised better odds for customers, and a more fair betting system. This style of betting has become extremely popular in the UK, but that hasn’t been the case with bettors in New Jersey.
Total sports betting handle at Betfair was reported at just over $12.4 million in 2018, and the company has not seen a huge increase since that time. Meanwhile, New Jersey just set a new industry record for their August sports betting handle numbers.
This sports betting exchange platform allowed bettors to create their own bets and then offer them to other site users. There was no bookmaker involved, and that allows both bettors and the people setting the wagers to make more money.
Betfair does receive a commission on the winnings, and that percentage is set at 12.0 percent in New Jersey. The company has a much lower percentage of commission in some of their other markets overseas.
Betfair Needed Bigger Market
The state of New Jersey has turned into a juggernaut in the sports betting industry, but the location has more to do with that rather than the size of the market. One of the main reasons that Betfair was unable to find success in the US is that they were extremely limited in New Jersey.
When Betfair first launched, they were only allowed to take bets on horse racing because of the US’s sports betting laws. As the sports betting rules changed both in New Jersey and throughout the country, Betfair found partners willing to let them in.
Monmouth Park in New Jersey was one of the biggest venues to partner with Betfair, but the company was forced to seek out deals with much smaller venues. Betfair could not compete with some of the biggest names in the sports betting industry, launching its brand in the state.
Some of the horse racing tracks stayed away from making a deal with Betfair because they feared that the company would create a monopoly on this industry. Other tracks were worried about the integrity of the races being compromised as bettors tried to gain inside information.
Kip Levin, COO of FanDuel, acknowledged the small population size in New Jersey was the biggest reason for the lack of success, and he compared it to the online poker industry that has struggled to take off in a reboot. FanDuel oversees the Betfair operations in the United States, and they ultimately decided to remove the platform.
Betfair’s merger with Paddy Power is another reason that this betting exchange platform never took off as the latter was more focused on the sports betting industry. Betfair still offers this program in the UK, and it continues to be extremely successful.