Horse racing is one of the oldest sports in the United States, but it remains a niche sport in terms of sports betting.
Odds can change up to the instant horses leave the gate under racing’s pari-mutuel model. That tends to scare away American players who prefer the simplicity of fixed odds sports wagering, but it’s doing well elsewhere in the world.
Despite that, industry experts predict that racing will eventually join mainstream content offered on sites like FanDuel and DraftKings once trust issues and other negotiating points are ironed out.
The industry took a big step in that direction in October when Churchill Downs Inc. entered into a multiyear agreement with DraftKings to provide pari-mutuel wagering rights to racing content owned or controlled by CDI, including the Kentucky Oaks and Kentucky Derby.
A stand-alone branded app, DK Horse, will launch in the coming months. Until plans are announced to integrate DK Horse into the DraftKings product suite, customers will have to deposit funds separately from their one account and one wallet tied to the DraftKings Sportsbook, Casino, and daily fantasy apps.
Unexplored option
The Stronach Group, which owns Laurel Park and Pimlico, operates two online wagering platforms, Xpressbet and 1/st Bet. It has nothing pending similar to what CDI is doing, although a spokesman for the group confirmed that it’s an option on the table.
Other track owners are also interested.
“We’ve had Advance Deposit Wagering for a year and a half on our racing app for the New York Racing Association,” said Matt Cosgriff, director of retail wagering and customer analysis at BetMGM. “We’d like to one day have the ability to offer fixed odds racing.”
It’s hard to say if the popularity of fixed odds betting platforms have had any negative effect on racing handle, but anecdotal evidence suggests that something has changed.
At the Maryland Racing Commission’s November meeting, Mike Rogers, president of the Maryland Jockey Club, informed commissioners that while track handle was up during Laurel Park’s Maryland Million stakes program this year, national handle was inexplicably down 7%.
“The entire industry was roughly down 7% that day,” Rogers said, acknowledging that wagering competition on Oct. 22 tied to NCAA football and baseball’s World Series could possibly be a factor.
“You could argue that when football is on, attention is there and people aren’t focused on horse racing, but the jury is still out,” Rogers said.
Ripe opportunity
Michele Fischer, a wagering systems consultant and vice president of Sports Information Services Content Services, a live betting services provider, is an advocate for moving racing onto the fixed odds platforms.
“Racing has something sportsbooks really want, and that’s content,” she said. “There are only so many football or basketball games a week bracketed by dead space. With horse races taking place around the world, it’s a 24/7 product.”
She acknowledges there are many unanswered questions to iron out.
“Normally, sportsbooks return less revenue to the racetrack than pari-mutuel wagering, but you have to weigh the option of how much more volume is done on sports wagering,” Fischer said.
The Interstate Racing Act also requires total agreement between the host track, the recognized horsemen’s group and the state racing commission before wagering can take place.
Additionally, casino video lottery terminal revenue is the only thing keeping a lot of racetracks alive today, and nobody knows if fixed odds players will spend the time to understand the ins and outs of pari-mutuel wagering.
“In the end we’re simply looking at who crosses the finish line first, so I think the industry can figure it out,” Fischer said. “We’re seeing a hybrid approach now. Stronach did do a deal with PointsBet, but they’re basically trying to bolt their pari-mutuel ADW onto a sportsbook.”
Racing’s biggest advantage of joining a sportsbook could come through cross-brand advertising potential, she added.
“Look how much money sportsbooks are spending to attract and retain players,” Fischer said. “The horse racing industry can’t even approach that kind of budget.”
Staying relevant
Last year bettors wagered more than $120 million on table tennis when nothing else was available on sportsbook platforms. And as of October, legalsportsbetting.com estimated that Americans bet $165 billion in fixed odds wagering annually, admitting it’s a lowball number.
“Racing needs to be part of that growth to stay relevant,” Fischer said. “The alternative forms of gaming that support horse racing aren’t engaging or building fans.”
The industry is rightfully being cautious, she said, making sure it sets out the proper financial model to ensure enough money flows back to support the sport.
“Horse racing has always depended on betting, and now other sports are suddenly benefiting greatly from it, but that’s not what they were predicated on,” Fischer said. “I think there are a lot of advantages to embracing (fixed odds) and it will come. The hybrid model is the first step, and we’ll see how the American public embraces it.”