Horse racing weighs changes to compete with sports gambling

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When Animal Kingdom romped to victory in the 2011 Kentucky Derby, he did so at odds of 21-1.

Anyone who bet on the horse when the initial morning line was set did so when Animal Kingdom was 30-1. Except they didn’t get those odds.

That’s just horse racing, and some say that needs to change because the industry – which is funded by gambling – is losing its betting monopoly.

The sport has a long tradition of pari-mutuel wagering where the odds fluctuate and nothing is set until the horses leave the starting gate. But with the legalization of sports gambling in the United States and its gradually expanding implementation around the country, adding fixed-odds wagering could be a way for the horse racing to adapt and compete in the changing landscape.

“When we had a monopoly, we certainly benefited from that, but it made us very lazy and it’s time to get moving,” said Craig Bernick of the Thoroughbred Idea Foundation that recently raised the possibility of adding fixed-odds betting in horse racing. “If we don’t adjust, I personally think sports betting has a very good chance to destroy most of the horse racing gambling because the price, the familiarity that everyday people have with those sports that they grew up with, the free access to data and the type of bets allowed all favor sports betting over horse racing. We really need to innovate.”

This isn’t the first time horse racing has needed to fend off challenges to its longstanding betting monopoly. There was the addition of lotteries across the United States, then came the proliferation of casino gambling that in some states partially funded horse racing and gave a boost to a fading business model.

The impact of legalized sports betting seems to be heading in the opposite direction.

Even though places like New Jersey’s Monmouth Park have championed the cause and embraced it, it’s not expected to be a financial windfall for horse racing.

The spread of legalized sports gambling since the Supreme Court’s May 2018 ruling is yet another threat to horse racing’s very existence. Unlike professional and amateur sports that can have bets placed on them but don’t directly benefit financially from those wagers, the horse racing industry counts on betting as the lifeblood that keeps everything up and running.

“Our sport is funded by gambling, so our participants have to share in any wagering that takes place,” said Alex Waldrop, president and CEO of the National Thoroughbred Racing Association. “There may be some reluctance because the pricing model is very different for sports betting and horse racing. Sports betting does not generate pay for the product that it takes bets on. That product has other forms of revenue.”

In sports betting, any bet placed is locked in at the odds at the time. Anyone who wants to bet the New York Knicks will win the 2020 NBA title right now could get some pretty good odds.

Such an advantage doesn’t exist in horse racing, where lines move based on the money bet, which can make a perceived long shot a favorite and eliminate the benefit of being on the ground floor of a possible upset.

“It’s very frustrating for the handicapper to bet on a horse and the horse goes to the gate at a certain odds, and then when they open the starting gate 30 seconds later the odds have dropped a point, a point and a half,” said trainer Tom Amoss, who graduated from LSU with a marketing degree. “In horse racing the way it works now is the odds are determined by how much is in the pools at the time the race goes off. So what you bet five minutes before the race goes off may not be the same odds as what you’re actually going to get when the race runs.”

That’s the tradition of horse racing and the risk avid fans and bettors understand they’re accepting when they go to the teller window or punch in their bet on their smartphones and computers. But it’s very different from the fixed-odds wagering that’s the standard in sports betting where a 50-1 bet on an unlikely outcome is worth the same when it’s placed and if the outcome occurs.

“The reason to do fixed odds is just so you can be competitive with other sports where you’ve got bettors coming in and they’ve quite a menu of opportunities to bet,” said Alan Foreman, chairman and CEO of the Thoroughbred Horseman’s Association. “We can’t be on the outside looking in. You have to be a part of it. You have to be a part of the choices for someone who wants to bet.”

Horse racing has fended off efforts to make its product available at sportsbooks as a way to protect itself. Bernick believes that is “shortsighted” and said the industry – from officials down to owners and trainers – have to understand how much of a threat legal sports betting in the United States is and that changes are needed.

One of the proposed changes is to make at least basic race stats – known as past performances – free and available to the public because that has traditionally been a pay-for service.

“If you’re an 18-year-old kid and gambling’s legal in your state, you can see who’s playing in European soccer today and have ton of information about that sport,” Bernick said. “If you want to know who’s racing at Belmont Park this afternoon or Keeneland, you have to pay. We aren’t going to transfer young people that want to gamble to horse racing now that all the other sports are legal.”

Australia has added fixed-odds wagering in horse racing successfully and given the U.S. the start of a blueprint on how to do it. But because the sport runs off the dollars wagered, there is still considerable debate about how to put together a price structure that keeps the industry profitable.

“That’s a work in progress,” Waldrop said. “There’s no question people do chafe sometimes at the way that odds move in horse racing, especially the late odds changes, so there’s a market out there. It’s up to someone to devise the proper way to access it and that might happen soon, it may not, but we certainly encourage operators to be creative and find ways to make it work because I know the horseplayers want it.”

Irad Ortiz sets single-season record with 77th stakes win

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NEW YORK – Jockey Irad Ortiz Jr. earned his record 77th single-season North American stakes victory when he guided Dr B to victory in the $200,000 Go for Wand at Aqueduct.

The 30-year-old native of Puerto Rico broke the old mark of 76 set by the late Hall of Fame rider Garrett Gomez in 2007.

“This is great. Amazing feeling,” said Ortiz, Jr., who won the Eclipse Award as outstanding jockey from 2018-20. “Gomez did it in 2007 and he was a great rider, one of the best in the game. I’m so happy just to be a part of this. I love this sport.”

Ortiz Jr. won the Belmont Stakes with Mo Donegal in June to go with Breeders’ Cup victories in the Juvenile, Filly & Mare Sprint and Sprint. He also earned nine other Grade 1 wins in New York, including Life Is Good in the Woodward and Whitney and Nest in the Alabama and Coaching Club Oaks. He won riding titles at Belmont’s spring-summer meet and Saratoga’s summer meet.

Ortiz Jr. leads North American riders with 304 overall victories this year. His purse earnings totaled over $35.8 million going into Saturday’s races, which already surpassed his single-season record of $34.1 million in 2019.

Appeals court strikes down federal horseracing rules act

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NEW ORLEANS — Congress unconstitutionally gave too much power to a nonprofit authority it created in 2020 to develop and enforce horseracing rules, a federal appeals court in New Orleans ruled Friday.

The 5th U.S. Circuit Court of Appeals said the Horseracing Integrity and Safety Act, or HISA, is “facially unconstitutional.”

The authority created by the act was meant to bring uniform policies and enforcement to horseracing amid doping scandals and racetrack horse deaths. But the 5th Circuit – in two rulings issued Friday – ruled in favor of opponents of the act in lawsuits brought by horseracing associations and state officials in Texas, Louisiana and West Virginia.

The Federal Trade Commission has the ultimate authority to approve or reject HISA regulations, but it can’t modify them. And the authority can reject proposed modifications.

Three 5th Circuit judges agreed with opponents of the act – including the National Horsemen’s Benevolent and Protective Association and similar groups in multiple states – that the setup gave too much power to the nongovernmental authority and too little to the FTC.

“A cardinal constitutional principle is that federal power can be wielded only by the federal government. Private entities may do so only if they are subordinate to an agency,” Judge Stuart Kyle Duncan wrote for the panel that ruled in the Texas case.

The same panel, which also included judges Carolyn Dineen King and Kurt Engelhardt, cited the Texas ruling in a separate order in favor of horseracing interests and regulators challenging HISA in a different case.

The chair of the horseracing authority’s board of directors said it would ask for further court review. Friday’s ruling could be appealed to the full 5th Circuit court of the Supreme Court.

“If today’s ruling were to stand, it would not go into effect until January 10, 2023 at the earliest,” Charles Scheeler said in an email. “We are focused on continuing our critical work to protect the safety and integrity of Thoroughbred racing, including the launch of HISA’s Anti-Doping and Medication Control Program on January 1, 2023.”

The ruling was criticized by Marty Irby, executive director of the Animal Wellness Action organization. “Over the course of three Congresses, the most brilliant legal minds on Capitol Hill addressed the Horseracing Integrity and Safety Act’s constitutionality and ultimately decided that the Federal Trade Commission’s limited oversight was sufficient,” Irby said in an email.

Among the subjects covered by the authority’s rules and enforcement were jockey safety (including a national concussion protocol), the riding crop and how often riders can use it during a race, racetrack accreditation, and the reporting of training and veterinary records.

Animal rights groups, who supported the law, pointed to scandals in the industry involving medication and the treatment of horses.

Duncan wrote that in declaring HISA unconstitutional, “we do not question Congress’s judgment about problems in the horseracing industry. That political call falls outside our lane.”

Louisiana Attorney General Jeff Landry, hailed the ruling on Twitter, calling HISA a “federal takeover of Louisiana horse racing.”