Launched in the summer of 2018, the Thoroughbred Idea Foundation (TIF) has sought improved outcomes for American Thoroughbred racing’s “voluntary” participants – horse owners and horseplayers. As the sport’s primary investment sources, horse owners and horseplayers drive much of racing’s value chain – buying/breeding horses to race and betting on those races. Every stakeholder in the sport depends on these two groups participating financially, paying bills and placing bets.
TIF believes that by improving outcomes for those groups, the entire ecosystem of the sport will be improved. TIF published a series of foundational white papers in its first year, outlining a series of ideas that could yield such outcomes. Among them: reduced bet pricing, modernized rules, increased transparency, improved access (and reduced cost) to data used to inform bettors and an introduction of fixed odds betting for racing to complement existing pari-mutuel offerings.
While some industry organizations have spent years focusing on other important issues – notably safety and welfare – the ball has otherwise been dropped as it relates to the sustainability of the sport through wagering.
Many racetrack operators have pivoted into multi-platform technology businesses as wagering has shifted largely from in-person, brick-and-mortar betting to online, mobile and computer-robotic wagering. Relative to racing-related purse generation, this has not benefitted horse owners. In 2020, TIF estimated mainstream horseplayers, those betting less than $1 million annually, reduced their share of total racing wagering by approximately 63% from 2003.
The future might be different.
NEW JERSEY AND THE WORLD
In February 2020, Monmouth Park operators Darby Development signed a 10-year deal with Australian firm The BetMakers to manage the fixed odds betting business. In early August, New Jersey Governor Phil Murphy signed a bill which enables such betting on the sport – for live and simulcast races – for the state’s customers.
“We feel the support for fixed odds as a solution to facilitate growth in the horse racing industry in the U.S. gaining momentum throughout the industry,” said BetMakers CEO Todd Buckingham after the vote. “We are excited about what this opportunity means for the racing industry in New Jersey and more broadly in the U.S.”
One notable concern often raised about introducing fixed odds to racing is the loss of business from higher revenue-sharing bets in pari-mutuel pools, typically win betting, which shift to the new option where odds are locked-in, but revenue back to purses is often lower.
TIF supported the concept, publishing a white paper on the topic in February 2019, and is excited by the possibilities it brings for the industry.
“The American pari-mutuel monopoly has not been kind to the sport or horsemen in the internet era,” said TIF Executive Director Patrick Cummings. “Pari-mutuel wagering has been allowed to stagnate – there has been little innovation in the space. Adjusted for inflation since 2000, overall pari-mutuel wagering on racing is down 50% in the U.S., and most of that occurred while racing had a veritable monopoly in online betting. Our customer base has changed, the market has changed, but racing’s betting business stagnated. Fixed odds competition should be good for racing, introduce racing to legal sports betting customers across America and offer an additional option for existing customers.”
But BetMakers is not banking on fixed odds for racing in America alone.
The Australian company recently completed the acquisition of the racing, tote and digital assets from Sportech, one of three companies which had provided pari-mutuel betting services to North American racing.
In an interview with SBC Americas, BetMakers chief operating officer Jake Henson outlined the long-term vision for the firm.
“Our mission is to create the world’s largest global racing network that rewards all industry stakeholders and provides a sustainable ongoing funding model for the sport,” said Henson.
The first fixed-odds service provider in U.S. racing is also a big pari-mutuel betting player too. The complement of fixed odds betting to existing pari-mutuel offerings is attractive to one of America’s biggest operators.
OPTIMISM FROM NYRA, HORSEMEN
David O’Rourke, the New York Racing Association’s chief executive officer, glowed about the possibilities of fixed odds bets for racing in his address at the Jockey Club’s Round Table in mid-August.
“A marketplace where most sports books offer racing should be our goal. Fixed odds on simpler wagers alongside pari-mutuel exotics is a potential winning combination, offering the new player a familiar entry point while maintaining deep exotic pools for our more experienced players.
“There are a lot of risks, challenges, hesitations, and hurdles to realize a market where fixed odds and ADW offerings come together. But we here at NYRA believe the rollout of sports betting is a once-in-a-generation opportunity.”
Joe Applebaum, president of the New York Thoroughbred Horsemen’s Association, embraced fixed odds as “inevitable” a day after O’Rourke at the Racing & Gaming Conference in Saratoga Springs in mid-August.
“Typically, horsemen sit on a panel like this and throw up all sorts of reasons why we shouldn’t change and we should stick with pari-mutuel,” Appelbaum said. “But I would say that it’s inevitable, maybe in six months or maybe in six years, there will be a mix of bookmaking and pari-mutuel wagering in this country, and in just about any jurisdiction. We should keep our eyes open, and we shouldn’t be scared.”
FIXED ODDS ONLY NEW FOR U.S. CUSTOMERS
Cummings notes that American track operators, and a subsidiary of 1/ST (formerly The Stronach Group), have enjoyed revenue from fixed odds betting for years through contracts between tracks, the subsidiary (XB Net) and foreign bookmakers.
“Several European bookmakers have shared with TIF, separately, that total betting on U.S. racing at fixed odds from European customers exceeds 1 billion British pounds annually, the equivalent of nearly 13% of total U.S. pari-mutuel handle. It is beyond time for the American market to expand and offer such bets to American customers on American races.”
Upon the publishing of fixed odds regulations by New Jersey’s Division of Gaming Enforcement, followed by the completion of agreements between New Jersey bookmakers, American tracks and their representative horsemen’s groups, fixed odds bets can be offered by registered New Jersey betting operators to their customers. Pari-mutuel betting remains unchanged.
The New Jersey Thoroughbred Horsemen’s Association (NJTHA) has been at the forefront of sports betting legalization in America. Their suit against the National Collegiate Athletic Association (NCAA) and professional sports leagues, later combined with one from then New Jersey Governor Chris Christie (and assumed by Governor Murphy) paved the way for legal sports betting to be adopted by states.
Through the end of July 2021, more than $17.3 billion has been bet, with over $1.2 billion in revenue to the state, through legal New Jersey bookmakers since June 2018.
When fixed odds bets for racing are first offered for New Jersey customers, the numbers will undoubtedly be small to start. More states are believed to be considering expanding offerings to include racing, but there is no doubt New Jersey is going first…again.
Photo courtesy Bob Ehalt