Criticism of the role played by computer-assisted wagering teams in the parimutuel pools has once again reached a fever pitch, spurred by late odds changes at the recently concluded Keeneland meet, posts on influential social-media accounts, and a longshot class-action lawsuit filed Oct. 24.
The debate is hovering over one of racing’s biggest weekends, the two-day Breeders’ Cup event at Del Mar in Southern California on Friday and Saturday, which traditionally presents a smorgasbord of betting opportunities for hard-core handicappers and casual fans.
The late odds changes and a curious exacta payout at Keeneland occurred just months after Southern California’s two major racetracks cut off computer-assisted play in the win pools at two minutes to post, citing public outcry over a handful of late drops during the Del Mar summer meet. Those decisions likely contributed to the uproar on social media and elsewhere over the Keeneland incidents, as bettors wondered aloud whether Keeneland would follow the lead of the Del Mar, Santa Anita, and the New York Racing Association, which cut off CAW play in the win pool at three minutes to post in 2021.
Dave Portnoy, founder of Barstool Sports and a prominent social-media influencer, was among those expressing frustration, posting that the “CAWs have basically forced me to stop betting horses except on big days.” Mike Repole, the outspoken horse owner and breeder, then posted a statement of support for Portnoy.
“I back Dave 1000% with his stance this weekend on CAWs,” Repole posted. “Every track in the U.S. must cut off the CAWs at a minimum of 2 minutes to post in all pools.”
Computer-assisted wagering took off two decades ago with the publication of a paper by an influential Hong Kong-based bettor who described algorithms that could analyze real-time betting data for inefficiencies and then calculate thousands of bets in various denominations. Provided the programs had fast access to the parimutuel betting network, those bets could then be poured into the pools at the last possible moment, protecting the edges identified by the programs.
Today, a few dozen CAW players operate in the U.S. pools, most using platforms owned or co-owned by Churchill Downs, NYRA, or 1/ST Gaming and Racing. The platform operators negotiate signal rates with the players, and they also grant the players sizeable rebates. While precise numbers are hard to come by, most betting officials agree that CAW play accounts for somewhere between 25 percent and 30 percent of all wagering on U.S. horse races.
Critics of CAW play contend that their late access and sizeable rebates grant them an unfair advantage over other players. Defenders contend that any player who develops similar technology and wagers at the level of the current CAW teams would be eligible for the same advantages, and they further point out that rebates and off-the-shelf programs allowing for data analysis and batch betting are already available to all players.
Perhaps nothing has raised the hackles of so-called “retail” players – a fuzzy catchword used to refer to all players other than CAWs, regardless of skill or level of play – than late odds changes in the win pools. At Keeneland, a horse in the sixth race on Oct. 19 went from 3-1 when the horses were being led into the gate to half that price when it won by a neck.
The race had a seven-horse field after it was moved to the dirt and six horses scratched. The horse who won, Velvet Devil, had two wins sprinting on the dirt among his five previous races, and it’s entirely plausible that it wasn’t only CAWs placing large win bets on the horse in the last few cycles, but also other players betting on their phones or computers.
Nevertheless, the late odds change set off an uproar on social media. The intensity of the reaction was almost certainly impacted by another incident at Keeneland three days earlier, when the payoff for a $1 exacta pairing a 44-1 shot and a 53-1 shot in a six-furlong maiden race for 2-year-old fillies paid $286.74.
In prepared responses to written questions, Keeneland officials said that “large wagers” were placed on Velvet Devil in the last 20 seconds before the race, and that lag time between data processing and video-display network caused the odds to be updated at different times on feeds available to viewers. The response stressed that no wagers were placed after the race started, citing “checks and balances” that ensure no past-posting occurs on its races.
Keeneland declined to provide exact figures for the bets or the sources of those bets. The response said that CAW wagering at its recent fall meet accounted for “less than a quarter of our total pool.”
The responses said that Keeneland has not decided whether to adopt measures such as the two-minute cutoff in the win pool.
“We’ve monitored the two-minute cutoff approach closely, but we have chosen to pursue other methods of disincentivizing play,” the response said. “Adjusting cutoff timing or restricting access to certain pools could help address issues in specific pools like the win pool, but it’s not a universal solution. What it can do is shift activity and impact elsewhere.”
The response said that “measures” taken by Keeneland over the past year, such as higher rates for CAWs on win bets, had reduced CAW betting in the win pool by 9 percent, “even though our overall win pool was up 4.7 percent” during the fall meeting.
It should be noted that a handful of racetracks other than Keeneland agreed to provide responses for this story last week. The racetracks pulled out after the class-action lawsuit was filed Oct. 24.
Class-action lawsuit
The lawsuit, which was filed by a firm that specializes in class actions, is the first direct legal attack on CAW betting. It attempts to make the case that the CAW groups have conspired with racetracks and their bet-processing companies “to divert money in the betting pools . . . to the defendants and away from the nonprivileged bettors.”
The defendants include Churchill Downs and its bet-processing company United Tote; the New York Racing Association, which co-owns United Tote with Churchill; The Stronach Group and an affiliated company, which is better known in racing as 1/ST Racing and Gaming; and three CAW platforms, two of which are owned and operated by the racing companies.
Although representatives of the companies have either declined comment on the lawsuit or failed to respond to requests for comment, the companies are likely to ask for the case to be dismissed outright because the damages to the potential plaintiffs are “speculative, at best,” according to an article by Andrew Cohen, an attorney who writes columns for The Paulick Report.
Only one plaintiff is so far named in the suit, a small-time bettor who lives in Colorado but previously lived in Kentucky. The firm that filed the suit is likely to find a large number of potential plaintiffs among the scores of disgruntled bettors who have become disillusioned by CAW play.
The companies also are expected to argue in briefs that the activity cannot be defined as “rigging” races because CAW operators are not guaranteed returns. Indeed, some CAWs have gone out of business in the past.
In addition, the defendants also are likely to argue that the suit would require a court to rule that one class of players that receives “advantages” is operating illegally, while other classes that receive the same types of advantages to a smaller degree are somehow legally immune from that distinction.
At the Breeders’ Cup, as has always been the case, CAW players will not be restricted in any way, according to a statement the organization issued after Del Mar cut CAWs off in the win pool. The statement cited the “liquidity” of the pools for the Breeders’ Cup races, a term that is used to refer to the efficiencies of parimutuel markets that have broad and deep participation.
Damon Thayer, the former Kentucky state Senate Majority Leader who is now a consultant for racing lobbying efforts, said Tuesday that he does not expect the outcry over CAW play to die down soon. Last week, he posted on social media that current Kentucky legislators had begun considering ways to restrict CAW play at state tracks, and though he said Tuesday that he does not expect such legislation to gain broad support in a legislature that is dominated by Republicans, he called the talk “emblematic of where we are right now.”
“People are so frustrated by what they are seeing,” Thayer said. “Maybe just the talk about a bill being out there will tell the tracks that they need to do something.”
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