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12/05/2018 02:36 PM
TUCSON, Ariz. – Sports wagering is expected to gain a foothold in a number of U.S. jurisdictions over the next year, according to speakers on Wednesday morning panels at the University of Arizona Symposium on Racing, but it’s still an open question as to whether racing will benefit from the expansion, at least overall, panelists said.
Sports betting has become a major topic within the racing industry since the U.S. Supreme Court issued a ruling in May allowing states to legalize the practice, and the panels on Wednesday morning sought to expand the analysis to cover new ground. And while many racing officials remain bullish about the prospects of racing reaping rewards from the expansion, whether directly or through the ability to offer its product to sports bettors, some officials cautioned racing to set its sights lower.
Kate C. Lowenhar-Fisher, the chair of the gaming practice group at the Nevada law firm of Dickinson Wright, said she had found it “remarkable” to hear the optimism among racing participants surrounding the issue at the Symposium, noting that sports books in hyper-competitive Nevada are “slim-margin businesses” that aren’t often money makers at casinos.
“Sports-betting operations are an amenity,” she said, noting also that the business is highly volatile. “They’re there as an option for casino customers. They have never been a big money maker.”
Since the Supreme Court decision, eight states have either expanded or began allowing licensees to offer sports betting. Chris Krafcik, the managing director of political and regulatory markets at Eilers and Krafcik, said he expects as many as 13 other states to come on-line by December of next year, a list that includes New York, which could become the largest sports-gambling market in the U.S. (California can’t address sports betting until 2020 at the earliest because of the need for a state referendum.)
But Krafcik also said that he expects “friction” between casinos interests and racing interests in those states as legislation is hashed out to legalize the practice and settle on tax rates and potential revenue shares. At the same time, he said that he expects racing constituencies to have a seat at the table during those negotiations, as “land-based incumbents” in the existing gambling landscape.
A number of speakers on both panels agreed that racing will most likely benefit provided that sports and race products exist alongside each other at brick-and-mortar locations or online platforms. But that also means that the racing products on offer need to be marketable to bettors of both stripes.
“In our view, there’s a huge risk,” said Richard McGuire, the executive chairman of Sportech. “But racing and sports betting can coexist so long as you have an engaging, interesting product to offer.”
Panelists also agreed that states that authorize online sports betting will be market leaders among gambling jurisdictions. Krafcik pointed out that in New Jersey, where sports betting operations launched in the summer, the current split is already 67 percent online or mobile compared to 33 percent at bricks-and-mortar locations. He expects that ratio to go to 80 percent in the next year.
U.S. racing officials over the past year have used the example of Australia to offer evidence that sports betting will help horse racing, and an executive of a leading online betting operation there presented the numbers that have been used to justify that belief. In that country, horse-race betting began growing after sports betting was legalized 10 years ago.
However, the executive, Sam Swanell of PointBet, offered a new angle on the analysis by saying that the legalization of sports betting led to a number of new companies entering the market, and those companies, eager to grab market share for racing, began developing betting innovations that made horse racing more attractive. They did this, in part, because racing bets make more money than fixed-odds bets on sports, he said.
“Sportsbooks invest, because it’s their job to sell the racing industry,” Swanell said. “Racing is high margin. You want people betting on racing.”
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