SARATOGA SPRINGS, N.Y. – While racing has made significant strides toward uniformity in safety and medication rules over the past two years with the advent of the Horseracing Integrity and Safety Authority, the rules governing the management of betting pools and payouts remain frustratingly different from state-to-state, representatives of bet-processing companies said on a Wednesday panel on the final day of the Racing and Gaming Conference in Saratoga.
Aligning all the rules from state-to-state would eliminate significant sources of frustration not just for the four bet-processing companies in the U.S., but also the foreign bet-processing companies that are increasingly merging with U.S. pools through international agreements, the panelists said.
“Sometimes, for these international companies, it’s like dealing with two dozen other countries because every state is different,” said Andrew Archibald, the president of United Tote, which is co-owned by Churchill Downs Inc. and the New York Racing Association.
As has been the case for decades, a committee of the Association of Racing Commissioners International drafts uniform rules for the regulation of betting pools and payouts, but individual racing commissions are not required to adopt the regulations in full or in part. While most of the three dozen racing states in the U.S. have similar rules, the differences, no matter how minor, add up when pools are being merged from hundreds of sites in the national simulcasting network.
Adding somewhat to the frustrations is that many racing commissions have cut staff over the past several decades, including regulators who were familiar with the workings of bet-processing systems and the needs of the companies providing the services, according to Keith Johnson, the president of AmTote, which is owned by 1/ST.
“In some cases, we’ve seen an erosion in knowledge in the core pari-mutuel space,” Johnson said.
Panelists also all agreed that U.S. racing would benefit significantly if a common way of betting in many international racing jurisdictions was available throughout the country. The method, alternately called fractional betting or flexi-betting, allows a bettor to use a set amount of money, say $20, to bet any combination of interests in a single betting pool, regardless of the minimum single bet requirement.
Fractional betting is extremely popular in Australia and France, but no U.S. state has adopted regulations allowing for the practice.
“If there’s one thing that I can say that could really help our betting here in North America, it would be being able to implement [fractional betting] across all our platforms under one set of rules,” Johnson said.
On another interesting note, both Johnson and Archibald said that their companies are eyeing creating pari-mutuel pools for sports outside of racing. Johnson said that AmTote will have an announcement “soon” about a partnership with a non-racing sports league on a pari-mutuel offering, though he said he could not offer details yet.
Expanding pari-mutuel betting to fixed-odds markets would be the reverse of what many companies have been seeking over the past five years, ever since the Supreme Court ruling in 2018 that allowed states to authorize sports betting led to an explosion in fixed-odds betting in the U.S. So far, fixed-odds betting on racing is limited to two states, Colorado and New Jersey, and the results have been meager, at best.
On a separate panel on Wednesday morning discussing sports betting and racing, Joe Asher, a former president of a sports-betting company, said that fixed-odds in the U.S. may not ever become a big part of racing market share without broad changes throughout both the racing industry and its market.
For one, Asher said, betting in the U.S. is concentrated in exotic pools, which are generally not offered by fixed-odds operators. For another, racing’s betting revenues are distributed to multiple constituencies, all of which need to agree on a revenue-distribution model from fixed-odds betting, Asher said.
“I’m kind of bearish on fixed odds in the U.S. It probably gets more time and attention at conferences than it does from bettors,” Asher said. “It’s mind-bogglingly complicated to get it going at any scale.”
Other panelists on the sports betting panel said that racing companies would benefit from their partnerships with sports-betting apps if the operators were able to allow their customers to use one account to bet on both racing and sports. Only one sports-betting operator, FanDuel, has a “shared wallet.” FanDuel is the owner of TVG, the racing broadcaster and account-wagering operator.
“We have found that our customers are engaging more and more with horse racing, particularly when we start removing layers of friction,” said Chris Cipolla, the general manager of horse racing for DraftKings, FanDuel’s biggest competitor. “The [shared] wallet would be a tremendous asset. It’s all about removing friction.”
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