Fanduel First to Offer Single Account

FanDuel announced that its customers can access both parimutuel wagering on horse racing and traditional sports book wagering with a single account after a successful soft launch last week. FanDuel Sportsbook becomes the first to offer this feature, as users will be able to wager on and stream racing coverage from FanDuel TV and other related content. In addition to live horse racing, FanDuel Sportsbook customers will also be able to wager on the Kentucky Derby for the first time through the integrated platform in 2023.

Prior to this innovation, sportsbook customers were required to open a separate account and wallet for parimutuel wagering on horse racing at FanDuel Racing or TVG.com. The merged wallet/single account feature is currently available for FanDuel customers in New York, Illinois, Indiana, Maryland, West Virginia, Wyoming, Michigan, Colorado, and Virginia. FanDuel plans to expand it to additional states in 2023. Earlier this year, the FanDuel launched FanDuel TV, which re-branded the TVG network.

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Sportsbook Panel Featured at Global Symposium on Racing

A panel of sportsbook operators was decidedly bullish on the near-future prospect of fixed-odds horse race wagering during a discussion titled “Integrating Horse Racing into the U.S. Sports Betting Environment” during Tuesday's Global Symposium on Racing hosted by the University of Arizona Race Track Industry Program in Tucson.

But even though they acknowledged a transition from pari-mutuels would likely take several years and that fixed odds and pari-mutuels could coexist in some hybrid future form, now is the time to start taking baby steps in that direction, largely because America's layers of gambling regulation and a current takeout system that hovers at around 20% payment for providing content aren't quite what global sportsbooks are used to dealing with.

Nor are customers familiar with or eager to try and figure out the complexities of the pari-mutuel system, in which odds fluctuate during the event and you have to wait several minutes after the race has been run to figure out your winnings.

“Horse racing has to understand that you're in direct competition now with sports wagering.”

Matt Cosgriff, the director of retail wagering and customer analysis for BetMGM. “And this sports wagering is using fixed odds. That's what the new-age gambler is using. And the pari-mutuel product itself isn't being well received by the newer age.”

Bettors want to be able to have trust in pricing, Cosgriff said.

And, he added, they want to be able to create their own bets, like making a three-way parlay wager involving two horse races and the featured football game.

“That's how the modern gambler is now working,” Cosgriff said. “And horse racing can't afford to sit back and just let the old system run itself into the ground.”

One interesting aspect that came up several times during this panel discussion was how lucrative a product the sportsbook operators perceive U.S. racing to be in a fixed-odds form.

Richard Ames, the chief executive officer for SIS Content Services, Inc., said part of the appeal is raw volume: The sheer number of races going off every day, year-round, at just about three minutes apart when scaled across the nation.

Paul Hannon, the senior vice president of corporate development at PointsBet, said racing should embrace what bookmakers might call being a type of “filler product,” because there is tremendous value in providing a “next to jump” betting market that can function as a collective, constant presence while other sports matches are being played out over the course of hours.

“It's attractive to sportsbook operators as a product because it is always-on content,” Hannon said. “And the availability of content is really important for any sportsbook that is generating engagement on their products…. As long as the underlying economics make sense, it is a very investible product.”

Hannon might have even made the boldest challenge uttered during Day One of the symposium presentations by telling the racing industry it is in a position to become the dominant summertime betting option in the country.

“In the U.S. in particular, one thing that I think is not highlighted as much as it should be is the idea of seasonality, and the fact that in the summer months, sports books are looking for content to be able to market,” Hannon said.

“In my opinion, horse racing should absolutely be the number on bet-on sport during the summer, ahead of baseball, ahead of tennis, et cetera. I think that absolutely should be the goal for the entire industry, to make sure that happens in the coming years, coming decade,” Hannon said.

Pari-mutuels and fixed odds can live side-by-side, Hannon explained. But, he added, “I think horse racing doesn't reach its full potential over the long term unless fixed-odds racing does become the new standard.”

Asked to compare pros and cons, Hannon continued: “The con, as I see it, is that it's going to be uncomfortable. It's going to take a little bit of risk-on appetite [on the part of] the major U.S. powers in horse racing. And that's going to come with an element of uncertainty…. But I guess what I'd say [is because of bold entrepreneurship decisions made by current U.S. sportsbooks], that's how modern-day, U.S. sports betting exists now. And that's what horse racing is going to have to look at far as fixed-odds goes.”

Andrew Moore, the vice president of racing for FanDuel, admitted that getting the proper balance of fixed-odds and pari-mutuel betting is going to take some time. But the payoff will likely be worth it, he added.

“With a fixed-odds product, obviously there's variability of margin. There's been some argument that books will not be able to make adequate margin [if U.S. racing content providers insist on getting paid takeout-era rates for their fixed-odds products], and I don't agree with that point, because I've seen us do very well on margin in Australia, and the U.K., and Ireland [with] double-digit margins on horse racing,” Moore said.

But, Moore acknowledged, “There is that sort of 'cannibalization' factor,” in which racing's stakeholders fear that fixed odds will totally gut the mutuel pools, or that fixed odds works, “but not maybe to the degree that people hoped,” he said.

“It does have to work for everyone. It does have to work for the content provider and the customer, Moore said.

But, Moore continued at a different point, the long-term industry-wide investment should be worth it.

“The economics per dollar unit probably wouldn't be the same as a tote bet,” Moore conceded. “But we would all tell you that-and it's proven out in other markets-that fixed odds would be exponentially bigger than tote. So the net revenue's coming to you at the end of the day even though your margin-per-dollar would not be the same.”

Christian Stuart, chief executive officer for North America for BetMakers Technology Group, pointed out that American racing has an opportunity to improve the sport via purse increases while both helping sportsbooks flourish and giving the customer a better overall experience.

“This whole ecosystem is ripe for creative innovation right now,” Stuart said.

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Sports Wagering Sunk in California: What’s Next?

After a months-long $400 million plus war of attrition between the two rival California sports wagering measures on this year's ballot, the endgame was a stalemate, both beat down into the muddy trenches–just as the polling had indicated.

The Associated Press made the call that both measures are sunk, though the official tally is far from in. With less than 50% of the ballots counted as of writing, roughly 70% voted against Proposition 26, and some 83% voted against Proposition 27.

“Ugly,” said Pat Cummings, executive director of the Thoroughbred Idea Foundation, calling the voters' rejection of sports wagering a “gag-reflex” to the incendiary nature of the attack-ads from the rival measures, which oftentimes left voters all at sea about exactly what each measure entailed.

Proposition 26 was an initiative called the Tribal Sports Wagering Act spearheaded by a band of extremely powerful Tribal gaming groups which, in short, would have allowed sports wagering at Tribal casinos and at approved racetracks in California. Most crucially, it would have prohibited mobile or on-line wagering on sports events.

Understandably, this Proposition garnered the public support of California racing industry heavy hitters like the Thoroughbred Owners of California (TOC), the Del Mar Thoroughbred Club and the 1/ST Racing and Gaming.

The second, Proposition 27, was the California Solutions to Homelessness and Mental Health Act led by online betting market outfits like FanDuel and Draftkings. This measure would have legalized online or mobile sports betting outside of Native American lands, though still leave legal avenues for Tribes to participate in the market.

As a selling point, the latter Proposition leaned heavily on the massive revenues it would have secured through license fees earmarked for homelessness initiatives, a hot-button topic for California voters. This included adds that often hid or obscured the sports betting component of the ballot measure, however.

Though the state's most powerful gaming Tribes lined up to support Proposition 26, a handful of less lucrative Tribal gaming groups threw their weight behind Proposition 27, including the Middletown Rancheria of Pomo Indians, who argued the FanDuel and Draftkings-backed measure would provide a financial life-line to struggling Tribes “that don't own big casinos.”

Proposition 26 proponents, on the other hand, spent more than $100 million on ads depicting the rival measure as an out-of-state incursion that would ultimately hurt California's Tribes. These conflicting Tribal allegiances only helped fuel voter bewilderment.

And what of the immediate future of sports wagering in California?

“The Tribes have asserted their power,” wrote TOC vice chairman, Bob Liewald, speaking independently of the organization, in an email. “I don't see a compromise that would make [sports wagering] possible without the Tribes having significant say [and] control.”

Liewald wrote it is “unlikely” that measures similar to Proposition 26 and 27 will be on the state-wide ballot in two years time.

Indeed, proponents of Proposition 27 have publicly hinted that the sheer scale of the spending behind both measures would make them think twice about endeavoring down the same path again.

Liewald also doubts state politicians will pass legislation in Sacramento legalizing sports wagering any time soon. “But if they did it would be crafted mainly by the Tribes for the Tribes,” he wrote. As such, he said it is “difficult” to see a viable path forward for sports wagering before 2025.

Scott Daruty, president of Monarch Content Management, the arm of The Stronach Group (TSG) tasked with distributing the company's signal, strikes a more ambivalent tone.

“I think it's too early to even assess that,” Daruty said, about the chances of one or both such measures returning to a state-wide ballot in 2024.

Sports wagering will eventually be legalized in California, he said. “How that happens, what the dynamic is that brings that about, I just think we need a bit more time to figure that out.”

If the Tribal groups behind Proposition 26 reintroduce it at some point, will California racetracks once again be part of the measure?

“I think it's too early to say,” Daruty said. “I think it'll take some time before that dialogue begins.”

As for why Proposition 26 was so comprehensively undone, Daruty points to the lack of resources invested in positive messaging.

“The Tribal interests that were the proponents of 26, I don't want to speak for them, but it appears they were much more worried about 27 passing than 26 failing,” he said. “There was never a positive message about 26 at all.”

A group of Tribes that includes the powerful San Manuel Band of Mission Indians are spearheading an online and in-person sports betting initiative restricted to servers on Tribal land that could run in 2024.

The Washington Post reports that at an October Global Gaming Expo, Tribal heavy hitters suggested that particular initiative could see collaboration with out-of-state entities as platform providers for Tribal mobile sports betting.

“There might be an opportunity for everyone, but they've got to be humble,” Dan Little, San Manuel's chief intergovernmental and tribal affairs officer, is reported to have said about gaming operations like FanDuel.

“That's not particularly favorable to the racing industry,” said Daruty, about the proposed initiative. “But it is something we're aware of.”

If sports wagering remains foreign to California's shores for the foreseeable future, the industry needs to ensure its wagering product is as “competitive as possible,” warned Cummings, pointing to things like eliminating jackpot bets, focused attention on lower takeout, and higher win-probability bets.

“We are already seeing the positive attention around Kentucky shifting to penny breakage. Give horseplayers the equivalent of a tax break and you give them an opportunity to invest that break back through the windows,” Cummings said.

The industry's continued focus on the “Pick X” and super exotic bets “is probably a mistake,” Cummings said. “It's great to have a low takeout pick five, but only if you hit all five winners. And the last I checked, it's still easier to pick one winner than five straight.”

With pari-mutuel betting California's only option, “the greater racing industry should want its customers to win and churn,” Cummings said. “Driving players to multi-race bets that are tough to win is leading them on a path to lower churn.”

As for the industry's long-term future within a sports wagering ecosystem in California, Daruty emphasized the importance of having a “seat at the table” as the lines are drawn.
“If you look at it today, racing is the only legal form of sports betting in California–it's also the only legal form of online betting in California,” he said. “So, we would just like to make sure we're part of whatever the sports betting future brings.”

 

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Hawthorne Opens Sportsbook with PointsBet

Hawthorne Race Course and PointsBet have been approved by the Illinois Gaming Board to open the state's first off-track and non-casino sportsbook beginning Jan. 27. The newly remodeled Club Hawthorne in suburban Crestwood is part of Hawthorne's off-tracking betting (OTB) network, and is the first of three such OTB locations that will open under Illinois' sports betting law.

“Hawthorne is the only gaming company in the Chicagoland area that is able to open sportsbooks at off-track and non-casino locations, so this is an opportunity on which we focused a lot of energy and investment,” said Tim Carey, president and CEO of Hawthorne Race Course. “We completely remodeled the space to create the best sports viewing and sports betting destination in the State.”

The PointsBet Sportsbook at Club Hawthorne will also feature exclusive retail-only betting promotions and sweepstakes. Current health safety protocols provide for limited seating capacity which will be available on a first-come, first-serve basis; however bet-and-go services for cash wagering are available. The sportsbook will open from 12 p.m. to 10 p.m. on weekdays and 10 a.m. to 10 p.m. on weekends.

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