Horse Racing in America dates back to 1665 where the first organized track, The Newmark Course, was established on Long Island in Salisbury, New York. The first American meet was supervised there by colonial governor, Richard Nicolis. Horse racing has had a storied past in the US with many ups and downs. By the late 1800s the US had over 315 race tracks. Originally established in the United Kingdom in the 12th century, horse racing was the sport of royalty and aristocrats, and horse racing in the United States developed into a significant and vibrant industry that attracted fans across the socio-economic spectrum. After developing and flourishing throughout the country, American horse racing took a significant blow that almost brought it to its knees in the early 1900s because of moralistic suppression created by the growing anti-gambling sentiment at that time.
In 1908, with the introduction of the parimutuel betting system, US horse racing began to turn around and grow in popularity. This boom continued until World War II, which created a new set of challenges for the industry. The introduction of the Triple Crown Trophy in thoroughbred racing in 1950 gave the industry another boost.
Today, there are only 112 operational thoroughbred and standard-bred (harness) horse race tracks in 40 states with defined racing jurisdictions. In 2018 legal betting on US horses approached $11 billion, but it has seen a continued drop for the past decade due to a range of factors including the legalization of sports betting nationwide after the repeal of PASPA by the United States Supreme Court in May 2018. The current US horse racing model of predominantly parimutuel wagering has become antiquated, less interesting to younger potential punters and not consumer friendly. So US horse racing must innovate in order to thrive and flourish with so many competing interests. Fixed odds wagering on horses is a significant way to do that.
The introduction of fixed odds betting will revolutionize the US horse racing industry, starting with the leadership, once again, in New Jersey, as it has for online gaming and sports betting. New Jersey is now the third largest online gaming jurisdiction in the world with the UK and Germany being one and two, respectively. The vision to introduce this into the United States and to launch it in New Jersey was crafted by me and the Australian sports betting and data service provider, BetMakers.
Fixed-odds betting differs from parimutuel wagering because it allows the consumer to lock into prices prior to the start of the race. It’s very similar to sports betting, where the book-maker establishes and posts a line and consumers then decide whether to place the bet. With the more antiquated parimutuel wagering system, all wagering is pooled and odds are then determined by all the action taken on each horse. The odds are totally in flux with parimutuel wagering until the race jumps and even several seconds into the race.
Fixed odds horse racing also provides far more consumer friendly protections by not favoring the large whales in betting of horses.
American consumers will definitely have to be educated on this new fixed odds system. BetMakers is investing significant resources into education, advocacy and marketing because of the enormous potential that this new offering would bring. BetMakers has the data, experience and knowledge to help make this conversion to fixed odds. It has also doubled down by buying one of the world’s largest tote systems, Sportech. That deal closed earlier this year providing proof of BetMakers’ support to the industry and confidence in fixed odds benefiting the industry.
The most interesting facts that have provided tremendous enthusiasm for all stake holders in horse racing, as well as the bookmakers, is the Australian Experience. Fixed odds horse racing re-ignited the Australian horse racing industry 12 years ago when Australia launched it after years of battles in the courts. The current betting handle on horses in Australia, with a population of 24.6 million, is $25 billion. This is produced by the 20,000 annual racing events in the country, where the average handle per race is $950,000.
The United States has more than 10 times the population of Australia, with over 330 million citizens, and has double the number of racing events at 40,000 plus per year. However, the US numbers can’t compete with the antiquated parimutuel tote system, which only sees approximately $11 billion per year and less than $300,000 handle per race.
The most compelling reason for the power of fixed odds horse racing in the US is that it’s extremely attractive to the majority of 21 to 45 year old consumers who are not racing fans and prefer their traditional sports betting fixed odds offering. Introducing fixed odds to this audience will provide over 40,000 new events per year for them to consider in addition to all the current sporting events. Plus, it will introduce them to more significant world-wide content for fixed odds horse bets.
Horse racing in the US has a very compelling past, but in order for it to survive, it must innovate and take advantage of new opportunities like fixed odds. The current parimutuel only tote system is currently reducing handle year over year by about 5%. Without something to stop this, US horse racing will end relatively soon. Fixed odds will stabilize the decline of the parimutuel tote system and provide new opportunities to increase the handle and purse accounts, which will be a big boost for US horse racing.
Many pedestrian observers have attempted to claim ignorantly that fixed odds will cannibalize the parimutuel betting system. There is no evidence of that claim anywhere where fixed odds have been introduced like Australia, Britain and most of Europe.
According to Dallas Baker, VP of international operations for BetMakers, “Fixed odds has doubled the prize money in Australia. It brings a beautiful new bunch of money into the industry.”
And BetMakers recently executed its first fixed odds deal in the US with Monmouth Park Race Track, owned and operated by Dennis Drazin and Darby Development. Drazin is also the head of the NJ Thoroughbred Horsemen and a nationally recognized expert on horse racing, viewed as a trailblazer and visionary with his decade long campaign to legalize sports betting in the US.
With the power, force, experience, community engagement and commitment of BetMakers CEO Todd Buckingham, Dallas Baker and the entire BetMakers team along with Dennis Drazin and myself, happy days are ahead and the sky is the limit for US horse racing with the introduction of fixed odds.