The Kentucky Derby has rightly taken its place at the fore of the Triple Crown season. Just as the state of Kentucky will assume a national stage through the first Saturday in May.
Maryland (and then New York) will have their turns, especially if a special colt has a chance to capture a Triple Crown in June at the Belmont Stakes.
But likely before colts break from the gate for the Preakness Stakes in Baltimore – the second leg of the Triple Crown – New Jersey will backdrop a development that will matter much more for horse racing in those other 362 days a year. Just as a lawsuit filed by the horsemen of New Jersey flicked the first domino that eventually led to the repeal of the Professional and Amateur Sports Protection Act and facilitated the spread of legal sports betting to more than half of the country in less than three years, a bill to legalize a new form of wagering on horse racing could fundamentally alter the trajectory of an industry that has faltered for decades.
Senate bill 3090, which would legalize so-called fixed-odds wagering for horse racing, awaits action by the current Legislature after passing out of committee in November.
Fixed-odds horse betting, claims proponents like Monmouth Park chairman Dennis Drazin, is a key figure in the New Jersey horseman’s sports betting suit. It may not fix everything, but it will give the sport a chance. Either way, he said, “I believe it’s coming and here to stay.”
Soon, apparently. Or maybe none to soon, gambling industry lobbyist Bill Pascrell III assured PlayUSA.
“We’re going to get this across the goal line in a month or two,” he said.
Pari mutuel wagering an American enterprise past its time
In pari-mutuel wagering, bettors do not lock in the odds on a horse at the time of their bet, which is confusing for the type of inexperienced bettors who tend to dabble around the Derby, bet on a whim, and are left to wonder why their 10-to-1 longshot ended up at even money. Fixed-odds wagering, which is standard for team sports markets, locks in the price at the time of the bet. Simple.
“People want to bet at the price they’re betting at right now,” Hawthorne Race Course assistant general manager John Walsh said during an iGB webinar in March.
Fixed odds have been utilized successfully in most parts of the world for decades, while the pari-mutuel system has dominated American racing more than a century. In pari-mutual, winning bettors share the total amount bet in proportion to their wagers after management fees or “takeout” is deducted.
The fixed-odds system is needed in the United States, supporters say, if the sport is to have a future and not just “one-to-three days in America.”
“What [fixed-odds horse wagering] has done in places like Australia and New Zealand, Germany, England, Scotland is it’s really salvaged sort of a dying breed in terms of horse racing,” Pascrell said. “American horse racing is dying on the vine. Twenty-, 30-year-olds, they’re not interested in pari mutuel. The pari mutuel’s dying on the vine. This will stabilize it and create a whole new offering and allow for opportunities for parlays, with horses and all kinds of other opportunities.”
Pascrell predicted two years will likely be needed to “socialize and educate” this hopeful new generation of horse players and make them willing to dabble in a maiden claimer from the Fairgrounds or a Masters, Kentucky Derby, NBA parlay.
Dennis Drazin at the forefront of another epic gambling campaign
Drazin has long advocated for a broader adoption of fixed-odds wagering at his New Jersey track, and DraftKings was allowed to offer it on a trial basis for the 2019 Haskell Invitational. The New Jersey Division of Gaming Enforcement allowed parlays bets that day on three Haskell stakes races that included games from other sports. Drazin had hoped for legalization in time for the 2020 meet, but the bill progressed too slowly.
“It’s a proven success story in the other parts of the world and the US is lagging behind in terms of being willing to innovate,” Drazin said during an iGB webinar in March.
Drazin estimated that sports wagered in fixed-odds markets receive “20 times multiples of eyes” as horse racing.
There are advantages for experienced and neophyte bettors alike. The uninitiated get familiarity. The lower takeout associated with fixed-odds wagering as compared to pari-mutuel should also please regular horse players. The DraftKings takeout during a one-day trial run of the Haskell in 2019 was around 13% while at Monmouth it about 17%.
Drazin had hoped to secure fixed-odds wagering for good last summer and the track announced a deal in February to launch fixed-odds wagering with BetMaker in anticipation of passage of the new law. The race would have the system live for the July 18 edition if Pascrell’s timetable comes to fruition.
Pascrell III said his group is working on potential fixed-odds legislation in 14 states.
“We really want Jersey to be first because of its proximity to the Philadelphia/New York media markets,” he said. “New Jersey has got a rich culture. Dennis was the first person to sign a deal with BetMakers and Dennis is all in on this. He’s got a great deal, and a lot of other horsemen’s associations and tracks want the same deal.
“My only advice to them is get in now, because once this [New Jersey] bill goes, it’s going to go throughout the country like wildfire. And the first deal is always the best deal as you know.”
Fixed odds racing could also apparently have major political implications if allowed and if successful in Pennsylvania, where Gov. Tom Wolf wants to transfer $204 million from the state racehorse development trust fund to a college scholarship program. Pascrell said Wolf told him he would restore that money if fixed-odds racing was embraced there.
Horse racing had the PASPA era in US, didn’t capitalize
Horse racing exists purely because of gambling, but did nothing to position itself better before the repeal of the Professional and Amateur Sports Protection Act began the steady erosion of its national monopoly on legal wagering. As Craig Bernick of the Thoroughbred Idea Foundation told The Associated Press in 2019, “When we had a monopoly, we certainly benefited from that, but it made us very lazy and it’s time to get moving.”
Now, in an odd symmetry, it needs sports betting and New Jersey to help save it.
DraftKings Race and Sportsbook Director Johnny Avello, whose company is licensed to offer pari-mutuel wagering in Mississippi, also sees the crossover benefit in fixed-odds wagering.
“People kind of have to get accustomed to what that means and realize that has nothing to do with pari mutuel, won’t affect pari mutuel handle, will probably bring on new types of bettors that weren’t betting pari mutuel in our country. Fixed odds has been going on a long time over in Europe,” he told PlayUSA. It’s a different type of player. It’s a player that’s looking for value, trying to get value early, knowing that their value may be different than what the closing price would be in the pari mutuel pool. So it’s a different way of betting. As soon as we can get everybody on board and accustomed to that, I think we might be able to make some make more progress.”
PointsBet agrees. The Australian-based company is credited with helping double the racing handle and increasing purses by 24% in its home country using fixed odds, and opened a branded sportsbook at Hawthorne in Illinois as part of its American expansion.
Last summer, PointsBet became the first online bookmaker in the US to join BetMaker’s “Global Racing Network,” to facilitate fixed-odds wagering when finally available in New Jersey.
BetMakers has numerous other deals in place as it awaits legislation, including at Lone Star Park (Texas) and Colonial Downs (Virginia).
BetMakers CEO Todd Buckingham was heady, for sure, in announcing the Monmouth deal, but this level of enthusiasm around American horse racing was notable if not extremely optimistic.
“We believe that US horse racing has the potential to be the largest betting sport in the US, including basketball, American football, and baseball,” he said in a release. “There is a real opportunity for the US horse racing market to grow like it has in Australia, which has seen prize money levels double over the past 7-10 years based on a funding model that is equitable to all participants.”
Derby Day customer acquisition day of the future?
Easily accessible odds would figure to be a boon during May, when dabblers are watching perhaps their only race of the year and picking winners on colors and names. Eliminating confusion might create repeat customers once the roses have been draped. Perhaps the Triple Crown could become a customer-acquisition festival like March Madness in states where horse racing has roots and sports betting is legal or soon to be so like Virginia, Maryland and New York.
Every little bit helps a sport rooted in the previous century.
“When you look at what Jersey did, approaching $12 billion a year in handle on sports betting, we’re only expecting to be able to attract 10% of that,” Pascrell said. “And that’s plenty for this offering, but what it’s also going to do is it’s going to give people content in this time of the year when there’s not a lot else going on, pre-football in the summer when there’s only baseball and a little golf.
“You’re talking thousands of races a week, that once socialized and educated, I’m not saying you’re going to flick the switch and it’s going to happen overnight. But every operator we’ve talked to most of them are extraordinarily interested in this.”