The Week in Review: Industry Needs to Embrace Fixed-Odds Wagering

Monmouth Park announced last week that it will begin to offer fixed odds wagering starting May 7, opening day of the meet. That was the good news. The bad news was that fixed odds betting will begin with a cautious rollout and without the major players in the sport on board.

Starting Saturday, bettors on-track at Monmouth will have the choice of making traditional pari-mutuel bets or placing fixed odds wagers. Two areas of the track will be designated for fixed odds and the bets can only be made through tellers. The minimum bet will be $1. Any wager calculated to return a profit of $5,000 or more on a win bet or $2,000 or more on a place or show bet will be subject to approval. At the start, the only track available to patrons will be Monmouth Park.

It's a bit disappointing that the bets will be limited to on-track patrons at first. Without having an on-line outlet, the handle will likely be very small at first. According to Dallas Baker, who is the head of international operations for BetMakers, the Australian firm that will deliver and manage fixed odds wagering at Monmouth Park, it won't be long until New Jersey residents can bet on-line. Some regulatory hurdles need to be cleared and when they are, the on-line bookmakers in the state licensed to accept sports bets will begin to take fixed odds racing bets. There are no current plans to have traditional ADWs like TVG, Twin Spires and Xpressbet accept fixed odds bets.

Saturday, will mark an exciting development. For years, the sport has been debating the importance of fixed odds bets and whether or not it should be part of racing's future. Now, finally, it will be offered by a U.S. track on U.S. wagers and we can start to see how it all plays out and whether or not players will gravitate to the new form of wagering. Fixed odds betting has been particularly successful in Australia, where it has led to a sizeable increase in total handle, which has boosted purses, and has been the most popular form of wagering in the U.K. for decades.

Should fixed-odds betting catch on, it will go a long way toward solving what is a huge and growing problem for the sport. With the computer-assisted players dominating the pari-mutuel pools, the everyday bettor has no idea what price his or her horse is going to go off at. You might bet a horse who is 4-1 going into the gate and it gets pounded down to 2-1 at the last second. Win or lose, that leaves a very bad taste in the bettors' mouths.

Recognizing that, Monmouth had adopted a marketing slogan for the fixed odds bets, “the odds that you bet are the odds that you get.”

While fixed odds can help with the massive problem of shifting odds, that's only one small part of the picture. Will it help to grow the sport? That's the great unknown.

To work, fixed odds wagering will have to lure some sports bettors over to racing. As things stand now, the pari-mutuel form of wagering doesn't fit into the model of on-line sports betting, but fixed odds do. If a sports bettor could place a fixed-odds wager on Mo Donegal (Uncle Mo) at +900 in the GI Kentucky Derby, that might be something they'd be inclined to do. The sports bettor is always looking for action and even obscure sports such as ping pong have attracted a surprisingly large amount of handle. Sports betting is a huge business and if racing could tap into just a sliver of the market that would mean significant gains.

“There are opportunities in front of us, specifically in sports betting, that offer us what I would term probably a once-in-a-generation opportunity,” NYRA CEO and President David O'Rourke said at last year's University of Arizona's Race Track Industry Program's Global Symposium on Racing. “Our content isn't on those platforms yet and we have the opportunity to actually do that. There's a lot of hurdles to get there. I know there's a panel on fixed odds and that's a debate, but in the end I believe, and I think our company believes, you have to give the customers what they want. We do have a great product–pari-mutuel is excellent, it's great specifically in the exotics, but there is room, I believe, for proposition bets and for this content to live side by side. And I think as these sportsbooks grow and acquire customers, that's just a huge distribution channel for us.”

O'Rourke isn't wrong, but this won't work if the product is not a good one. A different form of fixed odds betting was already tried in New Jersey, and it was a bust. Betfair, which offers exchange wagering and is wildly popular in the U.K., began in 2016. Four years later, the plug was pulled. Betfair was handling so little money that it no longer made economic sense to keep the platform operating. Betfair failed for a number of reasons, but the main problem may have been the content it offered. All of the top tracks, including the Stronach and Churchill tracks and NYRA, did not offer their signals to Betfair. What was left were tracks like Turf Paradise and Penn National. There just wasn't an appetite to bet on those smaller tracks.

So far, fixed-odds betting is saddled with the same issues. Baker said that about 15 tracks have signed up and that within a few weeks on-track players at Monmouth can also make fixed-odds bets on those signals. But BetMakers has not signed up any of the same premier tracks that Betfair never landed. That is a problem.

Baker is hoping that fixed odds will eventually prove to be so successful that tracks will come to the realization that it is something they need to be a part of.

“I'd like to think that once we start to show the model, we will prove that the sky isn't going to fall down because of fixed-odds wagering,” Baker said. “We're not expecting a miracle solution day one, to flip the switch and everything has changed. This is something that is going to take at least six to 12 months before it starts capturing the attention to the extent it needs to do before we see any great results. We hope this will speak for itself, that this is a really good solution for the racing industry. We hope the results speak for themselves and make it a no-brainer for other tracks to become involved once we can get rid of the fear factor. Once it starts speaking for itself, it will become an obvious decision for other tracks to be involved.”

Baker said that NYRA has expressed interest in selling its signal to BetMakers for fixed odds betting.

That would help, but it's going to take a lot more than that. It's understandable that tracks want to proceed slowly and let a place like Monmouth be the guinea pig. There is a possibility that fixed odds will do nothing more than siphon money out of the pari-mutuel pools and not grow the pie. That wouldn't do anyone any good.

A future sport without fixed odds and ties with on-line bookmakers is not a pretty picture, not with the way sports betting is dominating the landscape. This needs to be given a chance. And that means the top tier tracks coming on board. It means working behind the scenes to legalize fixed-odds bets throughout the country. It means looking at ways to involve the ADWs. It means taking these steps sooner rather than later.

Yes, it's still early in the game and, yes, having fixed odds betting at Monmouth is one small step in the right direction. But it's just one racetrack in one state taking bets on only one track and offering them only to those who are at the track. One would have hoped this could have hit the groung running. That hasn't happened. Hopefully, the best is yet to come.

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Which ADWs Have Gained The Most During COVID-19 Pandemic?

Without legal advance deposit wagering in the United States, horse racing would have suffered unimaginable consequences during the COVID-19 pandemic that was unleashed one year ago. As it was, many tracks were forced to close while racing officials, health departments and infectious disease experts across the country worked toward solutions to keeping a major industry going.

Almost without exception, on-track business evaporated and racing was dependent on leading ADW companies TVG, TwinSpires, Xpressbet and NYRA Bets to stay in business. Those companies, the “big four” among ADWs, handled nearly $6.5 billion through the Oregon Racing Commission wagering hub, about 60% of the $10.9 billion bet on U.S. races in 2020, according to Equibase.

Some caveats: NYRA Bets totals do not include wagers made by New York residents on in-state races. Also, the ADW totals include a relatively small percentage that is wagered on Standardbred and Quarter Horse racing and international races. The totals for TwinSpires and Xpressbet may include “white label” ADWs created by various racetracks that use the aforementioned companies' technology.

Another $160 million was wagered through the Oregon hub by six smaller ADW companies.

Also, keep in mind that a significant portion of wagering dollars (though the details are not available) is bet through a hub in North Dakota. Elite Turf Club, Lien Games Racing, WatchAndWager.com and several others are registered in North Dakota, which is not as transparent with wagering totals as is Oregon. Among those companies, Elite Turf Club is probably the largest, with a number of high volume customers employing computer assisted wagering programs.

The growth in wagering through the Oregon hub by the “big four” from 2019 to 2020 was 52%. From a percentage standpoint, NYRA Bets – the smallest of the four and the latest to launch its business in 2016 – had the biggest gain of 104%. From a dollars standpoint, TVG was the leader, gaining over $1.2 billion in wagers from 2019 to 2020.

Perhaps not surprisingly, those two companies are affiliated with television throughout the year: NYRA Bets through programming on Fox Sports and TVG with its long-established racing network.

TVG's growth was so dramatic in 2020 that it overtook TwinSpires as the largest volume ADW company using the Oregon hub, ending a long run at the top by TwinSpires. In 2019, TwinSpires handled over $640 million more than TVG.

From a percentage standpoint, TwinSpires showed the slowest growth of the “big four” during the pandemic, gaining 30%. Xpressbet gained 34% from 2019-'20 topping $1 billion for the second consecutive year.

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New Agreements With ADW Companies To Increase California Purses; TwinSpires Lone Holdout

The Thoroughbred Owners of California (“TOC”), Del Mar Thoroughbred Club, The Stronach Group's 1/ST Racing and FanDuel Group's TVG have announced a new purse enhancement program that will inject up to $15 million into California Thoroughbred purses in 2021 and 2022.

The parties to the agreement, all major stakeholders in California Thoroughbred racing, believed that working together on additional sponsorship and purse enhancements would help support the state's racing industry in light of the loss of purse revenue due to the cessation of live racing in California in 2020 and the restrictions on on-site attendance due to public health requirements. The parties also share a commitment to support and promote the significant equine health and safety advancements made by California racing interests over the last two years.

“California racing has always been very important to TVG, and we are committed to continuing our support of the racing industry here, especially given the challenging circumstances the industry faced in 2020,” said TVG CEO Kip Levin. “We feel the right strategy is to partner with the stakeholders to further strengthen what has always been a premier racing circuit in the United States.”

In anticipation of the program, Santa Anita Park recently announced a 10% across the board purse increase for its 2020-2021 Winter/Spring Meet. With a daily purse average of $533,000, Santa Anita Park's purses are now competitive with the top circuits in the U.S. despite not receiving any casino gaming revenues or government subsidies.

“This is a great development for California horse racing,” said Craig Fravel, The Stronach Group's CEO of Racing. “Along with our horsemen and regulators, we instituted historic safety reforms starting in 2019. We believe these reforms and the enhanced purses previously announced have created a great racing environment that has already attracted top stakes horses, trainers and riders from all over the country to our current Santa Anita Winter/Spring meet.”

With the support of these purse enhancements, the Del Mar Thoroughbred Club is projected to increase average daily purse levels at its summer meeting to more than $600,000 in 2021, Del Mar officials indicated. Josh Rubinstein, Del Mar's president, stated, “Coming off our extraordinarily successful summer and fall meets in 2020, these increased purses, coupled with the growing excitement for the 2021 Breeders' Cup World Championships, sets us up for a fantastic 2021.”

The purse enhancements come as a result of new hub agreements involving TOC and the advance deposit wagering companies TVG and 1/ST Bet, also known as Xpressbet. With the coronavirus pandemic eliminating virtually all on-track wagering, the ADW companies enjoyed a financial windfall for most of 2020 and into 2021, as betting shifted online. In recognition of that, TVG and 1/ST Bet agreed to accept a lower fee – 4.1% instead of 5% – on all wagers from California residents through their platforms. Other, smaller wagering platforms have also agreed to the new terms, according to TOC.

Churchill Downs Inc.'s ADW company, TwinSpires, did not agree to the fee reduction and the matter will go to arbitration in accordance with California Business and Professions Code 19604.

“This unprecedented level of partnership among California's horsemen and women, FanDuel/TVG, The Stronach Group and Del Mar is just the beginning,” said TOC President Greg Avioli. “With sports wagering on the horizon and its potential to both add millions more to purse accounts and to create new horse players, combined with the successful safety and welfare measures instituted over the last two years by our race tracks, we are well on the way to returning California to its historic place as the country's premier racing circuit.”

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1/ST Publishes Free Kentucky Derby Wagering Guide

Whether you handicap with your thumbs or years of experience and research, the 1/ST BET Kentucky Derby Wager Guide is a horseplayer's best resource for preparing for the 'greatest two minutes in sports.' The free, 16-page Guide is available for download at 1st.com/bet/kentucky-derby-picks and includes new technological handicapping approaches along with the all-star team of traditional racing experts across the 1/ST family, including Eddie Olczyk and Jeff Siegel.

The 1/ST BET Kentucky Derby Wager Guide features an exclusive look at the 'Run for the Roses' from a handicapper's and historical perspective as it pertains to the more than 50 handicapping factors incorporated by the 1/ST BET app. Inside the free downloadable guide, you'll also 'Meet the Contenders' for Kentucky Derby 146 with the traditional forward from analyst John Desantis, and get detailed race analysis from veteran handicapper Jeff Siegel and Triple Crown researcher Jeremy Plonk. The 1/ST team's workout analysts Zoe Cadman and Millie Ball have been stationed trackside coast-to-coast this summer and report on the morning movers. And you'll get Derby top-4 selections from 1/ST handicappers across the country, including Jon White and Michelle Yu from Santa Anita, Gulfstream Park's Ron Nicoletti, Stan Salter of the Maryland Jockey Club and Golden Gate Fields' Matt Dinerman.

An updated version of the 1/ST Kentucky Derby Wager Guide will be made available Friday, Sept. 4 with the final 1/ST INDEX artificial intelligence percentages for each Derby 146 contender, as well as AI picks for the entire Churchill Downs Derby Day program. The updated Guide also features the final analysis from 1/ST and NBC Sports handicapper Eddie Olczyk as well as legendary sportscaster Brent Musberger of VSIN.

 

The 1/ST BET Kentucky Derby Wager Guide is available to anyone and no wagering account is required. Visit 1st.com/bet/kentucky-derby-picks to download your free copy.

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