Will Fixed-Odds Horse Racing Ever Get Off The Ground In Colorado?

Pressure from within the racing industry could have an impact on getting horse racing into sportsbooks
Quarter Horse racing
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While New Jersey has led the way on fixed-odds horse racing, Colorado has worked over the last nine months to put itself in position to become a player in the budding space.

But although fixed-odds horse betting is legal in Colorado through the rulemaking process of the state’s Division of Gaming, there are indications that the plan to integrate horse racing into online sportsbooks may never truly get off the ground.

Although none of the principal stakeholders in Colorado will say it explicitly, industry sources have indicated that pressure from racing forces outside of the state have influenced how fixed odds may proceed — or not proceed.

The Colorado Limited Gaming Control Commission approved unique sports betting rules for fixed-odds horse racing in March, on an 18-month trial basis, after months of stakeholder meetings and negotiations. Those rules apply Interstate Horseracing Act principles to fixed odds in Colorado, in that they require agreements by the sportsbooks with both racetrack operators and horsemen’s groups (in Colorado, out of state, and internationally). Local horsemen and Arapahoe Park would also have to give approval for out-of-state content to be offered with fixed odds in Colorado.

Has Colorado been pressured not to use fixed odds?

Arapahoe, a Bally’s property and the only racetrack operating in the state, is thus in the position of negotiating fixed-odds contracts, and those negotiations are ongoing. A recent development, however, has lent credence to references by industry sources about outside pressure on the issue. Arapahoe recently decided that it will not sell its simulcast signal to domestic fixed-odds wagering operators (but is open to selling it internationally), even though it has offers from BetMakers and Sports Information Services (SIS).

Arapahoe and the state horsemen’s association could still authorize fixed-odds signals from out of state to be offered to Colorado customers, but why won’t Arapahoe sell its signal for domestic fixed-odds betting, with lucrative deals on the table for a track that has struggled mightily to fund purses adequately?

“We are just going to focus on our parimutuel signal being put out,” said Shannon Rushton, the director of racing at Arapahoe. “It also proves to our parimutuel and simulcast partners that we are still a part of the business. … It’s just us as a little guy. Whatever the big guys do, we can fly on their coattails.”

Although Rushton would not say Arapahoe has received threats about simulcast implications, that statement could speak to pressure and/or implied pressure from larger racing companies.

“I can’t say that we’ve been threatened by them to turn off signals or anything like that,” Rushton said. “But there’s a lot of concern out there from [Churchill Downs Incorporated] and [Monarch Content Management] about what [fixed odds] could do to their bottom line.”

Churchill Downs not only owns its iconic racetrack in Louisville, Kentucky, but also owns or operates racetracks in Virginia, Louisiana, and Pennsylvania. It also owns the parimutuel tote company United Tote and advance-deposit wagering (ADW) platform TwinSpires. Monarch is the content arm of The Stronach Group (rebranded as 1/ST in recent years), which owns racetracks in California, Florida, and Maryland. The Stronach Group also owns parimutuel tote company AmTote and the ADW XpressBet.

“In discussions with them, there could be a lot of pitfalls with this, and we completely understand that,” Rushton said. “We’re completely survivant on simulcasting. They look at it the same way. They’re the biggest players in the market. They’re concerned about something cutting into our market share.”

Requests for comment from CDI and The Stronach Group on the fixed-odds situation in Colorado have so far been unanswered.

Key Colorado regulator addresses issue

Dan Hartman, the director of Colorado’s Division of Gaming, said outside threats to Colorado stakeholders have not been communicated to him directly, but the notion that larger racing companies could pull parimutuel signals from Colorado, should Arapahoe and the Colorado Horse Racing Association reach a fixed-odds agreement with BetMakers or SIS, has “crossed [his] radar.”

“Look, everybody has to consent and everybody has to move forward together,” Hartman said. “If one of the companies that controls some of the content doesn’t want to jump in the pool, then you know what? They don’t have to.”

Hartman also spoke to the “apprehension” from the racing establishment over fixed odds, as well as the history of that sentiment from previous developments in wagering outside of racetrack enclosures.

“I think there’s apprehension from everyone in the industry, about what [fixed odds is] going to do and what it’s not going to do,” said Hartman, who served as director of Colorado’s Division of Racing Events before he moved to the Division of Gaming in 2019. “I’ve seen it happen when people started doing OTBs (off-track betting) … when they started doing ADWs, and [when they thought] the whole world was going to collapse. Some companies were late to the party and some were right up front, but they’re all there now.”

An industry source added, “The idea of pulling your signal and leveraging your signal has been going on since the beginning of time, or at least since the advent of ADW for horse racing.”

That apprehension stems primarily from a fear of consequences for horse racing’s current parimutuel betting model, and how much fixed odds could cannibalize that handle. That’s especially if fixed-odds betting doesn’t contribute as much to the lifeblood of purses, which are already desperately low in Colorado.

“Everyone I’ve talked to thinks fixed odds is an interesting proposition with potential, but we need to spend time considering what it means to horsemen and the racetrack,” said Jim Mulvihill, interim executive director of the Colorado Horse Racing Association, the horsemen’s group that represents owners and trainers of all racing breeds in the state.

Could fixed-odds horse racing fail to launch in Colorado?

So what does this all mean for the prospect of fixed-odds horse racing in Colorado? Could outside pressure and industry concerns mean it never launches in the state?

“[Our original thought was] you build it, and they’ll come, right?” Hartman said. “This might be the case where we build it, and it sits there waiting for people to jump in. We’ve done all the things we’ve promised to do. We made the rule so that it was advantageous to our horsemen, but the same principles for other horsemen in other states. Whether people want to do it is up to them at this point.

“If other things and other outside pressures have an effect on it, I can’t do anything about that. All I can do is give them the playing field, and they have to decide if they show up and play.”

Although negotiations are ongoing, Rushton said there is a possibility fixed-odds betting never gets launched in Colorado.

“It could, because we’re in the process to work out agreements with various companies that want to do this, and those agreements are all over the place,” Rushton said. “We know where we want to be to protect our industry, and if they don’t want to participate in that, it may not get off the ground.”

Photo: Omar Ornelas/El Paso Times 

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