Pulse

SIS: fixed odds wagering is the future of horse racing

By William - 7 April 2022

Michele Fischer, VP at SIS Content Services Inc., highlights the need for horse racing to evolve to ensure the sport becomes a mainstream betting product across the US.

Can you be considered a mainstream sport if you are not on a sportsbook? For horse racing in the US, this is a question that the sport must consider.

For all the excitement and positivity concerning legalised sports betting, horse racing is excluded from the conversation in most of the 30 states that have embraced sports regulation.

For a sport with such a proud history and long association with betting, it is inconceivable to imagine that horse racing is not included within these modern day, regulated sportsbooks that are in exponential demand from bettors.

Unfortunately, however, that is the position that horse racing currently finds itself. Ultimately, US horse racing will be left behind if the sport and industry does not evolve.

Therefore, it is vital that horse racing is brought to the attention of casual bettors, which means having a presence on sportsbooks.

In my view, and an opinion shared by an increasing number of stakeholders within racing, fixed odds betting presents a solution to secure the sport’s long-term future as a US betting product.

The fixed odds format is already familiar with a broad audience, allowing sportsbooks to attract and engage with bettors at scale. This will fundamentally assist the sport to become self-sustainable, which evidently is not the case at present in most states.

While US 2021 pari-mutuel wagering reached increased handle levels that had not been seen since 2009, the industry purses are fuelled by VLT and HHR revenue.

ENCOURAGING STEPS FORWARD

Fixed odds betting is slowly coming to fruition for horse racing, as several states have begun the move to introduce legislation. New Jersey’s efforts are well documented, but the state’s complex legislation means that progress has been limited.

Intriguingly, it does not fall under horse racing or sports wagering. In fact, it is based more on implementing fixed odds betting at a racetrack rather than within a sportsbook.

On the other hand, the developments in Colorado are far more encouraging. The Colorado Department of Revenue – Division of Gaming has recently approved rules to allow horse racing to be offered by sportsbook operators. We could see fixed odds horse racing become a reality in the state as early as this summer.

Stakeholders within Colorado have been exemplary in their approach to push forward fixed odds and could very well become the benchmark for other states to follow suit.

Further afield, Louisiana and New York are also known to be progressing with some sort of legislation. For horse racing, these are encouraging movements in the right direction to bring the sport closer to sportsbooks.

CONTENT TO DRIVE ENGAGEMENT

The divergence of the pari-mutuel model may initially raise concerns for some US racetracks. The fear that fixed odds betting could cannibalise domestic racing is understandable, but a financial model designed to direct funds back into the sport is a logical solution.

While some horse players will convert to the fixed odds model or shop for the best betting value, the objective has to be to attract the sports bettor, who does not currently wager or watch horse racing.

Simply put, the pari-mutuel model has worked well, but no longer has a monopoly as other forms of sports betting and gaming are growing in popularity and capturing the attention of a vast customer base.

Even table tennis, a sport that has a limited audience, is capable of generating strong engagement for sportsbooks. For instance, in Colorado, the sport provided just over $100m in handle last year. Much of this is driven by the frequency of betting opportunities.

Horse racing is a global sport with a tremendous number of events taking place across all hours of the day worldwide. Sportsbooks demand a huge volume of content, a requirement that horse racing can undoubtedly meet.

With fixed odds, we can attract a wider range of casual bettors who do not necessarily need specific racing intelligence in order to engage with the product.

In addition, unlike the pari-mutuel model, it is far more approachable as bettors know for sure what the payouts will be before a race starts.

In fact, fixed odds betting actually complements the tote system in offering opportunities it cannot, including proposition wagers, favourite versus the field, or how many wins a trainer or jockey will have on a card.

At SIS Content Services Inc., we firmly advocate the need for fixed odds betting in the US. For more than 35 years, SIS has been at the forefront of facilitating fixed odds betting content for retail and online sportsbooks worldwide.

Crucially, we have over 30,000 international horse races ready to be made available for bettors. The danger for horse racing in the US is that it will become forever known for a few marquee races if it does not evolve in the midst of increased sports betting legislation.

Undoubtedly, fixed odds wagering has to be the future of horse racing in order to take the sport forward and attract the attention of sports bettors.