New Jersey became the first state to legalize fixed-odds horse wagering last week, potentially setting it up as a leader in the American gambling industry again three years after it helped set legal sports betting onto a national trajectory.
With a signature from Gov. Phil Murphy, the long-held ambition of Monmouth Park Chairman Dennis Drazin and numerous others became law, but regulations must still be formed before New Jersey bettors will be able to wager on horse races with the same odds system as other sporting events.
But it’s finally happening.
“The big, big issue here is introducing an innovative product to horse racing, which hasn’t been done in over 50 years,” New Jersey lobbyist Bill Pascrell III of Princeton Public Affairs Group told PlayUSA. “Number two now, a fixed-odds bet on horse racing is a horse bet, not a sports bet. So it’s not taxed.”
In New Jersey, online sports bets are taxed at a rate of 13% if placed online – as the overwhelming number are – or 8.1% at sportsbooks.
US may finally close gap on global horse betting markets
Although most of the world currently uses fixed-odds horse wagering, where bettors lock into the price at the time a bet is made, the United States still largely utilizes a pari-mutuel system Pascrell and Drazin deem antiquated. In pari-mutuel wagering, bettors compete for prices with each other and final odds aren’t actually final until all bets made before the start are tallied.
“Consumers now who go in won’t be able to be beat up by the whales,” Pascrell III said in comparing fixed-odds to pari-mutuel. “You place a bet on a 10-1 and then you realize you’re only getting 3-1 because by the time it clicked off, the whales came in and made it a favorite. You got screwed. It helps the pedestrian consumer because he’s getting a fixed odds bet and it’s not going to move.”
BetMakers, which in June bought Sportech, is currently the only managed trading services company offering a fixed-odds platform licensed to serve New Jersey. As such, BetMakers will devise odds, manage risk and secure deals with tracks and horsemen’s associations to offer fixed odds on their cards.
In July, PointsBet, an Australian-based sportsbook that has partnered for fixed-odds horse betting there, entered into a deal with BetMakers to offer fixed-odds horse wagering in New Jersey. PointsBet, and therefore any other sportsbook that partners with BetMakers, would be able to offer parlays that include horse races and more typical sporting events.
Pascrell III said the over-arching importance of the deal was to bring more security for New Jersey horsemen and update a wagering system “that has been in a downward spiral for a long time.”
“There’s all kinds of other interesting prop opportunities, but the good news here is it’s no longer a sports bet, officially,” Pascrell III said. “It’s now a horse bet that benefits the industry, unlike the pari-mutuel system, which has become very antiquated. This can only be done if the track and the horsemen’s group sign off on the content. And then those tracks and horse groups will benefit from every bet placed. So it will help subsidize purses, which will get more attention to various tracks around the country.”
Monmouth Park signed a 10-year deal with BetMakers this year. It ran fixed-odds cards on a trial basis around its signature Haskell Invitational in 2018 and 2019, with DraftKings participating. Minimum bets under the new system would be a dollar.
What states followed New Jersey in fixed-odds horse betting?
Pascrell III theorized that as many as 10 states could follow New Jersey within a year. He said states that are “really ripe to go” include Ohio, North Carolina, Oregon, Washington, Colorado, Illinois and Michigan.
New Jersey proponents of fixed-odds horse wagering had been hoping for the second straight year to pass a law and have the system ready for full-time use by the Haskell Invitational in July. That timeline missed again, but because the new law has authority to employ emergency regulations, a launch should happen quickly with Murphy, as he did with the first legal sports bet, likely to do the honors in New Jersey. Pascrell III speculated that will happen “by Labor Day if not sooner.”