In the second of three scheduled stakeholder discussions on the prospects of fixed-odds horse racing in Colorado, facilitated by the state’s Department of Revenue, the issue of how those bets would be handled and regulated – as sports wagers, as horse wagers, or in a hybrid system – was a main topic of discussion.
Most involved in Wednesday’s discussion, which was conducted via video conference, felt fixed-odds horse racing should be overseen by the state’s Division of Gaming, and not through the Division of Racing Events, where parimutuel race wagering is regulated. As the rationale goes, since fixed-odds horse wagers would be primarily (or entirely) taken by sportsbooks, they should be regulated by the organization that already governs sportsbooks.
“The regulatory body should be the organization that oversees the entity that takes the bet,” said Michele Fischer, a consultant for Sports Information Services.
That inspired some unease from Jim Mulvihill, interim executive director of the Colorado Horse Racing Association, the horsemen’s group that represents owners and trainers of all racing breeds in the state.
“I totally understand the reasoning for it to fall under gaming,” Mulvihill said. “My main concern would be where it will fall as a priority. You’re talking about gaming already overseeing $2 billion of business, and we’re talking about a tiny fraction of what they’re already dealing with and overseeing. I would be worried about whether it would be truly a priority, when it is something that is so complex and that is so important to us, the horsemen, and the racetrack.”
Others, like Bill Pascrell III, called for a “hybrid” approach. A lobbyist who represents BetMakers, Pascrell has been involved in the fixed-odds wagering push in New Jersey, the only state to approve the practice for U.S. customers.
“These bets have to be perceived legally as a horse bet,” Pascrell said during the meeting. “We do not want it to be a sports bet.”
In a conversation with CO Bets after the meeting, Pascrell explained that he is advocating for a model identical to that of New Jersey, where aspects of fixed-odds betting on horse racing are shared through the state’s Division of Gaming Enforcement and the New Jersey Racing Commission. He called New Jersey’s efforts “model legislation.”
“It puts licensing, rollout, and all that into the Division of Gaming,” Pascrell said. “What we put in the racing side is integrity, auditing, all those things.”
What might seem like the semantics of a “sports wager” or a “horse wager” are actually very important details. If treated as a sports wager, fixed-odds racing bets would incur a greater tax than if treated as a horse wager, which is essentially untaxed. But if considered a horse wager, it would be covered under the Interstate Horseracing Act (IHA) and would require agreements with both the racetracks and assigned horsemen’s group to offer wagering.
Horsemen hesitant to jump all the way in
But a lingering issue remains, which is pervasive among horsemen’s groups throughout the country, and it has a historical context. Back in the earlier days of the internet, when advance-deposit wagering operators made deals with racetracks and horsemen, those deals were exceedingly beneficial to the ADWs at a time when online wagering was a minuscule portion of the overall betting handle, and those deals still have a significant impact today. Tracks and horsemen still get a small portion of ADW wagers in comparison to bets that are made in satellite facilities or at racetracks, although many track operators have mitigated those margins by getting into the ADW business.
That made another point of conversation Wednesday — the concept of a trial period for fixed-odds horse racing wagering in Colorado — desirable to the horsemen Mulvihill represents.
“I admire and respect everyone on this call personally, but how many people on this call do I fully trust to have the best interest of the horsemen in mind? I’m not going to say how many, but it’s definitely not everybody,” Mulvihill said. “We, again, are looking to protect ourselves. There are so many unanswered questions. People on every end of this call have admitted that, regardless of what has happened in [other countries that have fixed-odds horse racing], we don’t know how it is going to play out in individual states. We really need the fallback of being able to reevaluate once we have real data.”
“Jim, you shouldn’t trust anybody. I agree with that,” Pascrell added soon after Mulvihill’s comments. “But I do think, the more you get into conversations with various folks on this call with an interest in launching fixed odds, you will learn there are some good players and there are some not so good players.”
John Sheeran, who represented FanDuel and TVG in the discussion, also pointed to expected apprehension and distrust from horsemen and racetracks. Cannibalization of the parimutuel business, which funds purses for horse racing, was another topic during the discussion.
“All of those people – horsemen, racetracks, rights holders – are all really, really nervous, regardless of what we tell them and regardless of what data we show them,” Sheeran said. “The fact that [Mulvihill] has fundamentally admitted that he was far more interested and willing to consider [fixed-odds wagering] as a trial period is a good illustration about how other people will receive it, when they feel like it isn’t always going to be for good.”
Can horse racing tap into younger demographic?
Even though those issues and doubts still need to be addressed, the prevailing sentiment of the discussion was that everyone involved wants to explore the possibilities because of the potential positives – like opening up underrepresented, younger demographics to add horse racing to their gambling consciousness.
“There’s a whole generation that are missing out on horse racing,” Sheeran said. “The decline in the tote that Pat [Cummings of the Thoroughbred Idea Foundation] referenced is entirely accurate. We’ve seen that in our TVG business. What we did notice, particularly in the COVID era, is that there is an appetite for horse racing amongst new bettors, and the best way to service that is through fixed odds.
“We found them to be really sticky. They’re with us. They’re still betting, even though they only came on board just because of COVID and because there was no other sport. They want it, they want to consume it, and they enjoy the experience. If you can put an even better experience in front of them, then you’ve got fans for life, and I think that’s the biggest win for the racing industry.”
Photo: Rion Sanders/Great Falls Tribune