For John Walsh, assistant general manager at Hawthorne Race Course in Illinois, fixed-odds wagering “is the future of horse racing.”
Monmouth Park operator Dennis Drazin, whose New Jersey track is the only one in the U.S. to have experimented with that betting, is equally bullish.
But Walsh, who along with Drazin was speaking Tuesday in an iGB webinar titled “Off To The Races: Horse Racing’s Role in US Gaming Expansion,” acknowledged that such a sea change won’t be easy.
“Some tracks are worried about what they think their fair share is,” Walsh said.
The issue is one of perception of what a new reality would be in horse racing.
Would fixed odds — which includes lower “takeouts” for tracks — cannibalize the traditional parimutuel pools? Or would they create a new, younger customer base that doesn’t currently exist?
Drazin noted one advantage.
“One of the difficulties of parimutuel wagering — the complaint I get from customers at the racetrack — they don’t get how when their horse got to the gate it was 2-to-1, then goes a furlong, and now it’s 3-to-5,” once all last-minute bets, some of them large, are tabulated, Drazin said. “They think something is wrong, and they are not interested in that sort of bet.”
The times, they must-be-changin’
Drazin, who led the revolutionary battle to topple Nevada’s virtual sports betting monopoly in the U.S. — which has been a boon to his racetrack and many others — said more needs to change.
“We have to embrace a new way of thinking,” Drazin said of fixed-odds betting. “It’s a proven success story in other parts of the world, and the U.S. is lagging behind in terms of innovating.
“Racing needs to grow, and right now we are limited by the number of eyes on us. The sports betting business has 20 times the multiple of eyes on their product. I never thought getting sports betting would take as long as it did [from 2012-18 in federal court], but we can’t just rest on our laurels now. What’s next?
“And pricing has to be one of the main concerns right now. If everyone stays stuck in the sand, we can’t advance. Fixed odds, five years from now, could represent 50 percent of the total handle in the U.S. Others may disagree, but that’s what I think.”
Walsh said that he sees fixed-odds wagering, if it catches hold across the country, as an “add-on.”
“You’re not going to see it replacing the Pick-3 or Pick-4, but it has value,” Walsh said. “A whole different people are going to do [fixed odds]. It’s going to be sports bettors.”
Different countries, different results
Walsh and Drazin look at Australia and see remarkable success from fixed-odds wagering. BetMakers executive Dallas Baker said last year that the volume of such wagering had doubled in a span of five years.
“People there want to bet on the price they are seeing right then, and they can,” Walsh said.
But Ed Comins, president of the WatchandWager.com advance deposit wagering business in California, points to the United Kingdom, where his parent company Webis Holding is based.
“Price is incredibly important in our industry, and let’s face it, the purse money is extremely good,” Comins said. “But look at the UK model, where the prize money is less because of fixed odds.
“The racing there is brilliant, but at such low prize money,” he added. “Fundamentally, we need to protect our horsemen. We don’t have a product if we don’t have the horses to run around the track.”
Why does the UK system not seem to work? Comins said that while the industry used to be funded based on handle, now it is on a percentage of gross profits.
“So now the industry doesn’t want favorites to win, because then they are making less money,” Comins said. “It’s terrible economics.”
Drazin offered a remarkable statistic to demonstrate horse racing’s current predicament: The average age of a Monmouth Park track visitor is 66 — while limited exchange wagering there has brought forth a clientele averaging almost a generation younger.
The new betting was offered at the track’s prestigious Haskell Invitational in 2018 and 2019, Drazin said, and he noticed that a number of sports betting customers at the William Hill-branded sportsbook had more interest in fixed-odds bets than parimutuel.
“The trick is, how do you keep them engaged?” Drazin added.
Walsh said that handicapping contests have helped address the aging issue.
“We have found that a lot of young people like to enter the contests,” Walsh said. “Poker players come and try that. One contest, we had 107 people in it, and probably 40 of them were age 40 and younger, and a couple were only 22 or 23.”
Comins was skeptical, however.
“I’ve been in the industry for more than 30 years, and I love racing,” he said. “But you can spend a lot of money chasing after younger people. The pattern for horse racing is that people get into it, then they get busy, and they come back to it later [in life]. What’s wrong with chasing the gray crowd?”
Around the globe, around the clock
One angle, Drazin said, is to try offering fixed odds on international racing at his Jersey Shore track.
“People are dying to bet on something, and there are races going on literally around the clock,” Drazin said.
Walsh said that at Hawthorne, “We have Hong Kong at night, and every morning people are betting on [races in] South Africa.”
As for fixed-odds options for Monmouth Park simulcast bettors, Drazin conceded that he doesn’t expect Churchill Downs to offer it to his customers for the Kentucky Derby. He added that may be the same for Belmont and Saratoga, and that “the Breeders’ Cup is looking at pricing.”
Finally, Drazin said that while it’s possible that the fabled Hambletonian race at the Meadowlands Racetrack this summer could be a fixed-odds play, overall the standardbred industry in New Jersey is not on board.
“They want to see the thoroughbreds start it, and then learn from that experience,” said Drazin.
As with the fight for sports betting, Drazin again finds himself a trailblazer.
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