Legal, fixed-odds betting on horse racing in America, which has essentially been limited to big races offered by Nevada books, will take a big leap forward this summer when Monmouth Park, in partnership with Australian firm The Betmakers, will introduce a daily fixed-odds market for Monmouth's races and enable other bet-takers in the state to do the same. It is thought that fixed odds on simulcast races imported to New Jersey might be offered soon as well.
There should be little question that this is both a work-in-progress and a potentially massive step forward for racing, presenting customers with a new set of wagering options. Dennis Drazin, CEO of Darby Development, operators of Monmouth Park, has been the driving force behind the fixed odds play. He led a prolonged battle to overturn the Professional and Amateur Sports Protection Act (PASPA), which yielded legal sports betting in New Jersey and other states since.
Pari-mutuel betting has dominated the American landscape for decades. The only routine source of fixed odds betting for Americans on American racing is through “off-shore” options, which generally contribute nothing to tracks or horsemen. The evolution of regulated, fixed-odds wagering on racing in America will serve as a much-needed competitive volley against pari-mutuel options which have done little to modernize their product over the years.
As it grows, fixed odds betting on American racing should improve tote betting on American racing. It should inspire investment to modernize the tote system, to better serve customers and present a better betting experience. Without the competition, the American tote wagering experience has stagnated. Some examples
– Bet pricing is high.
– Tote breakage, the rounding down of tote dividends, is an archaic practice that has long-served as an additional tax on customers.
– Late odds changes make it near impossible for customers to know what they would expect to receive should they win.
– New bet types have favored higher takeout, lower-churn wagers.
– Markets are only visible for short periods, roughly only the 25 minutes between races. A majority of money wagered comes in the last minutes before a race is run.
– Projected payouts in exotic bets like trifectas, superfectas and pick “n” wagers (beyond doubles) are not offered.
In a more competitive landscape, bettors should expect service upgrades.
In Great Britain, a jurisdiction which has been dominated by fixed-odds betting for decades, pari-mutuel wagering (often called pool betting in the UK) has been a minor player. The UK Tote Group, a consortium of key owners and breeders in British racing, completed an acquisition and took-over pool betting in the country in late 2019.
Faced with a market that has been dominated by fixed odds betting, bolstered with a strong retail business through betting shops in nearly every British town and an online product supported by a near endless marketing blitz, the UK Tote Group had to devise a method to attract interest in a more sustainable source of betting for racing through pools betting.
Their idea – guarantee that the final tote win price at least match that of the final “starting price” offered by fixed odds providers on win bets (a single “starting price” is agreed upon for placement in the permanent record of the race). If the tote price falls short, the UK Tote Group will chip in to top-up the win dividend to winning customers, with protections in place to avoid manipulation.
Now, there are some very clear deficiencies with the British racing funding model.
Contributions from fixed-odds bookmakers represent a source of funding for purses, governed by the rules set out by the Horseracing Betting Levy Board (HBLB).
“The Levy on off-course betting…is collected from bookmakers as a percentage of the gross profit on their horserace betting business. The majority of Levy income is expended in direct support of horseracing.
“HBLB is among the most important contributors to horseracing's finances. The original intention of establishing the Levy, and therefore HBLB, was to provide a means of compensating racing for the loss of attendance that was anticipated when off-course betting shops were legalised in 1961. Today, HBLB applies Levy funds to a wide range of schemes in direct support of horseracing.”
Per-race prize money in the UK is some of the lowest in the world. There is no suggestion this funding model should be replicated in America, in fact, the funding model should be the opposite.
Establishing fair splits of existing tote betting and new fixed-odds betting on racing should be the key. New Jersey is seeking to prove and refine the model, the rest of the country should follow along enabling fixed-odds betting on racing.
It should be good for racing and the trickle down benefits felt by all of the sport's stakeholders.
It's beyond time.
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