As horseplayers become more and more frustrated with last-minute odds changes, there is more discussion than ever around the challenges of computer-assisted wagering.
According to panelists presenting at the 71st Annual Round Table Conference on Matters Pertaining to Racing in Saratoga Springs, N.Y., this week, computer players are driving out more traditional horseplayers – but they're probably here to stay.
Data presented by Thoroughbred Idea Foundation executive director Pat Cummings shows that in 2003, computer-assisted wagering accounted for $1.2 billion in parimutuel handle (or $1.93 billion when adjusted for inflation). At that time other players were responsible for $13.98 billion in handle (or $22.51 billion when adjusted for inflation). By 2022, computer-assisted wagering was up 109% to $4 billion, while other wagering was down 64 percent to $8.1 billion.
Combined, the two sources of wagering are down 50 percent when adjusted for inflation.
Computer-assisted players are often multi-owner syndicates, and the assistance of computer programming allows them to create highly complex formulas weighing different factors, including current odds, and to make huge volumes of wagers quickly. Some computer-assisted wagering (CAW) teams are given back-end access to tote systems, allowing them to get in even more bets more quickly, up until the last possible second. Additionally, large-volume players (whether computer-driven or not) are often given increasing rebates as they wager more, which reduces financial risk and encourages them to bet even more.
These factors combine to allow a large volume of late wagers that end up changing the odds significantly nfor parimutuel players.
Dr. Marshall Gramm, economics professor at Rhodes College, said rebates had a big impact on his wagering activity.
In 1991, he made his first bet on a racehorse and won at odds of 7-2. In 2010, he wagered $49,000 and made $52,000, and claimed his first horse at Philadelphia Park.
“Suddenly, I was a winning horseplayer and I was an owner; I was on top of the world,” Gramm recalled. “In 2011, I got rebates for the first time. It allowed me to be a winning player. By 2015, I bet $25 million in one year. So it was a 500-fold increase (with a betting partner) for me as the result of having an opportunity to win and the pricing being different.
“And, I went from one racehorse to now I have 113 racehorses in partnership or outright.”
Gramm is part of a partnership that does use computer programming to guide wagering choices, but doesn't have back-end access to ADWs. He estimates that his system could, at its quickest, place three bets per second, which makes him much slower than the large CAW teams with back-end access to the tote.
This year, Gramm expects he'll be betting a little less than he has before.
“Prices have become a more accurate representation of a horse's true chance of winning,” he said.
That means it's harder for him – and other players in the middle market not using CAW – to see the upside.
“I've talked to many of them and they're betting a lot less,” Gramm said. “They're getting squeezed out as a result of the shark-eat-shark environment.”
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If you appreciate our work, you can support us by subscribing to our Patreon stream. Learn more.The proliferation of CAWs in horse racing has come at the same time that many casual players are leaving for sports wagering.
The New York Racing Association has worked to reduce the impact of CAWs on traditional players. Two years ago, NYRA decided to cut off CAW players from the win pool two minutes before the race began, and later cut them out of the late Pick 5.
NYRA has also become a minority owner in Elite Turf Club, a betting services provider that works with a number of computer-assisted teams.
Joe Longo, general manager of NYRA content management solutions, said the organization had changed its policies after receiving numerous complaints about late odds changes in the win pool, which are confusing and discouraging, particularly to new horseplayers.
“In our view, there's nothing wrong with having some of those pools that the everyday retail player can participate in and hopefully have a good result in the end,” he said. “We've seen in the win pool itself, the percentage of our handle prior to the restriction is the same exact number it is after. More retail people have moved in there, so it's been very positive.”
Other racetracks have changed the way they handle rebates to reduce the impact of CAWs on the retail player. Longo believes that eventually, NYRA's approach to the problem may become more common across other tracks.
“I think as an industry as a whole, we come up with one industry-wide CAW policy whether it's the win pool or any other pool, and allow customers to know you can bet with confidence, that will eliminate some of the boogeyman in the room,” said Longo. “Know that we're working on that in the background. Hopefully we'll see more about that in the next couple months.”
Cummings and Gramm agree that CAWs aren't inherently bad – they're simply taking advantage of the technology available to them. And that technology isn't going away.
“People are price-sensitive,” said Gramm. “Our future horseplayer is very tech-savvy.
“This is our future – giving people the tools to do computer-assisted wagering; helping out current horseplayers bet more efficiently is I think the way to go. Because the competition is fierce and there's no walking back from it.”
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