Since Khazaria was a big merchant nation and was smack dab in between the warring Byzantines and Muslims - I'm almost certain that the king decided to go a neutral route. By choosing Judaism [which both of those warring religions had foundations from/connections to/respect for] it kept them from trying to make Khazaria choose one of their sides - and it kept either side from getting mad at them for choosing the enemies religion and most importantly it maintained trading to both. It was a genius decision.
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