Legalized Sports Betting: Opportunity or Omen for Racing?

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Next week, a federal court in New Jersey will hear oral arguments in a case that could have significant short-term and long-range implications for the country’s betting landscape.

The case pits New Jersey against the four major professional sports leagues and the NCAA over a law that would permit wagering on sports at the state’s racetracks and Atlantic City casinos.  The sports leagues – the NFL, MLB, NHL, and NBA – claim New Jersey’s new law would “irreparably harm amateur and professional sports” by fostering the idea that the outcome of games could be influenced by betting.  The leagues’ lawsuit says the New Jersey statute, approved earlier this year, violates a 1992 federal law banning sports betting in all but four states.

If the court doesn’t strike down New Jersey’s law outright and the legal process drags on, Monmouth Park plans to be first in line for an operating license, a move that could come in mid-January.  The track’s chairman, Dennis Drazin, has said Monmouth is willing to risk the $50,000 license application fee and about $1 million in renovations to begin taking bets on games as soon as possible.  The track is willing to take such a risk because it’s losing around $3 million a year, and the current management, the New Jersey Thoroughbred Horsemen’s Association, has said sports betting is an “essential component” of plans to make Monmouth Park financially self-sustaining.  In a statement last month, the group said a court ruling against New Jersey’s sports betting law would “likely sound the death knell” for the racetrack and put the state’s entire racing and breeding industry at risk.

How much of that is true and how much is rhetoric is certainly debatable.  Monmouth is saying that sports betting would help level the playing field against states that allow slot machines and casino gaming at racetracks, something New Jersey Gov. Chris Christie has opposed in the interest of protecting Atlantic City.  But if New Jersey wins a case that could ultimately open the door to sports betting in all states, would that ultimately be good for racing?

One only has to look at the proliferation of slot machines and casino games at racetracks to see where this could be headed.  Gaming revenue has certainly given a healthy boost to owners, breeders and horsemen in states like New York, where racino-infused purses have skyrocketed and incentive programs have reinvigorated the breeding industry.  But at what cost to the sport long-term?

Many racetracks with slots have shown little interest in supporting the racing product, and it’s hard to make the case that racing has seen an increase in popularity because of gaming revenues.  Furthermore, the very states that allowed expanded gaming at tracks are yanking subsidies out from under the industry (see: Ontario, Pennsylvania and yes, New Jersey).  States are building casinos that compete for gambling dollars with horse racing.  And, in many ways, slots revenue has been a crutch preventing the racing business from innovating out of necessity, from engaging in a survival-of-the-fittest exercise that, in the long run, would make the industry leaner and healthier.

And so it might go with sports betting.  Wagering on sports certainly seems a more logical partner to horse racing than slot machines, but if sports betting proliferates the way slots have, won’t that be the ultimate competition for racing’s wagering dollar?

There’s a long way to go on this, but it would behoove the industry to think long-term about the potential gambling landscape.  The professional sports leagues may appear to have clout in their fight against legalized sports wagering, but their position is tenuous.  Billions of dollars are already wagered on games each year illegally.  How is that better for the integrity of those games than legal wagering?

Embracing sports betting as a partner to racing could be a positive development, but only if the racing industry views it as a competitive partner and not a crutch.  The sport cannot afford to outright dismiss opportunities, such as exchange wagering or other technology-driven enhancements, which could keep it competitive with wagering on other sports.  If New Jersey wins this case, other states desperate for revenue are sure to follow.  Depending on how horse racing responds, it could either be an opportunity or a death knell.

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  • No Penalties in Horse Racing

    I didn’t even read the article as I normally do, just the headline.  What I can say is that any wagering on a product other than ponies is not a long term solution.  Now I’ll read the article and see if I still feel that way.

  • No Penalties in Horse Racing

    I didn’t even read the article as I normally do, just the headline.  What I can say is that any wagering on a product other than ponies is not a long term solution.  Now I’ll read the article and see if I still feel that way.

  • Gary Fenton

    Just like slots… No real solution.  Sure, it might be a huge success, but what does it have to do with racing?  Will they put profits back into racing?  If so, where and for how long?  I suspect, like slots, eventually the governing body will decide the profits can be used in different areas. 

    • nu-fan

      California allowed Indian casinos to flourish and got the taxpayers to buy into it.  Why?  Promises that a good chunk of the revenue would go into paying for schools.  Has that happened?  People are now asking: “Where’s the money that was promised?”  This, especially, after the last election that Governor Brown pushed to increase taxes of some so that schools would not have to have their budgets cut severely.  But, what happened to the casino money that was supposed to be the lifesaver for public education?  Where did it go?  Yeah!  They take the public for chumps.  Careful, those of you in horseracing.  You may be taken for a ride too.

  • Gary Fenton

    Just like slots… No real solution.  Sure, it might be a huge success, but what does it have to do with racing?  Will they put profits back into racing?  If so, where and for how long?  I suspect, like slots, eventually the governing body will decide the profits can be used in different areas. 

  • http://Bellwether4u.com James Staples

    Four states have it & the rest of the states can’t is BS…hope like hell NJ pulls it off & let the chip$ fall…”THE GAME” like “ROCK & ROLL” will never die…”THE GAME” will THRIVE when SMARTER HUMANS start calling the shots & CHEATERS/REPETERS/ANIMAL ABUSERS receive JAILTIME & LIFETIME BANS…GET BUSY!!!…ty…

  • http://Bellwether4u.com James Staples

    Four states have it & the rest of the states can’t is BS…hope like hell NJ pulls it off & let the chip$ fall…”THE GAME” like “ROCK & ROLL” will never die…”THE GAME” will THRIVE when SMARTER HUMANS start calling the shots & MAJOR CHEATERS/ANIMAL ABUSERS receive JAILTIME & LIFETIME BANS…GET BUSY!!!…ty…

  • Warren Byrne

    Sports betting is absolutely a huge opportunity for racing. All one has to do is look to France, Hong Kong and Australia.

    Gamblers inherently want action. When a group of guys sit down to bet on the 1:00 football games on a Sunday and have to wait 4 hours for the result, if racing is going on around them whether it be a bar/restaurant or a racetrack sportsbook they’re quite likely going to gravitate to racing. Bigger payouts, quicker action. There is great potential for crossover, unlike slot machines which only detract from racing. Slot machines are a mindless, solitary game, whereas sports betting and racing are social and cerebral.

    In Australia many people have become involved in racing because of just this example. They started at their local TAB, betting on sports and started playing horses in between, which led to owning horses.

    As opposed to operating slot machines, racing as an industry is an excellent custodian of sports betting, no one has more experience offering odds based betting. where as Vegas essentially invented the slot machine.

    Also, slot machines in Ontario were not a subsidy. It was a lucrative partnership between the industry and the provincial government, which the government is ending for an unknown reason.

  • Warren Byrne

    Sports betting is absolutely a huge opportunity for racing. All one has to do is look to France, Hong Kong and Australia.

    Gamblers inherently want action. When a group of guys sit down to bet on the 1:00 football games on a Sunday and have to wait 4 hours for the result, if racing is going on around them whether it be a bar/restaurant or a racetrack sportsbook they’re quite likely going to gravitate to racing. Bigger payouts, quicker action. There is great potential for crossover, unlike slot machines which only detract from racing. Slot machines are a mindless, solitary game, whereas sports betting and racing are social and cerebral.

    In Australia many people have become involved in racing because of just this example. They started at their local TAB, betting on sports and started playing horses in between, which led to owning horses.

    As opposed to operating slot machines, racing as an industry is an excellent custodian of sports betting, no one has more experience offering odds based betting. where as Vegas essentially invented the slot machine.

    Also, slot machines in Ontario were not a subsidy. It was a lucrative partnership between the industry and the provincial government, which the government is ending for an unknown reason.

  • nu-fan

    Long article and a pretty good one.  And it seemed to have more than one thread running through it.  Interesting that the traditional pro sports (NFL, etc.) are not in favor of allowing betting at the racetracks (or anywhere else, I gather).  However, racetracks are embracing this opportunity.  Of course, racetracks/horseracing needs more revenue while the pro sports are not suffering greatly and, in some cases, are enjoying great success.  Perhaps, that is why the difference.  One sport (racing) is desperate while the other is not.  But, am I the only one who is seeing that racetracks may be easing out of horseracing altogther?  If they can get betting on pro sports, why keep horseracing?  They can sell off half their land, ditch the horses, and go totally betting on pro sports.  Talk about saving expenses!  In business, it is always stressed that a company ask what its mission statement is.  Those that own, breed, or train horses may have a totally different goal than the operators of racetracks.  Don’t look now but many racetracks may not be the friend to racing that one would assume.

    • Juleswins3

       Absolutely correct!

  • nu-fan

    Long article and a pretty good one.  And it seemed to have more than one thread running through it.  Interesting that the traditional pro sports (NFL, etc.) are not in favor of allowing betting at the racetracks (or anywhere else, I gather).  However, racetracks are embracing this opportunity.  Of course, racetracks/horseracing needs more revenue while the pro sports are not suffering greatly and, in some cases, are enjoying great success.  Perhaps, that is why the difference.  One sport (racing) is desperate while the other is not.  But, am I the only one who is seeing that racetracks may be easing out of horseracing altogther?  If they can get betting on pro sports, why keep horseracing?  They can sell off half their land, ditch the horses, and go totally betting on pro sports.  Talk about saving expenses!  In business, it is always stressed that a company ask what its mission statement is.  Those that own, breed, or train horses may have a totally different goal than the operators of racetracks.  Don’t look now but many racetracks may not be the friend to racing that one would assume.

  • nu-fan

    California allowed Indian casinos to flourish and got the taxpayers to buy into it.  Why?  Promises that a good chunk of the revenue would go into paying for schools.  Has that happened?  People are now asking: “Where’s the money that was promised?”  This, especially, after the last election that Governor Brown pushed to increase taxes of some so that schools would not have to have their budgets cut severely.  But, what happened to the casino money that was supposed to be the lifesaver for public education?  Where did it go?  Yeah!  They take the public for chumps.  Careful, those of you in horseracing.  You may be taken for a ride too.

  • http://profile.yahoo.com/GM4MKOH3SRM3GAZLMIKOOOAI74 jttf

    canterbury park has horse racing fans on the 2nd floor and card players on the 1st floor.  these two blend in well together and is successful.   sports betting would get new horse players involved.  i always did like it when the track would show a local sports team on the television, so the majority of people there are cheering for the same team.  it creates a nice environment.

    • nu-fan

      jttf:  To some degree, I have thought of that possiblity as well; having a separate area to watch some of the pro games might get more fans to attend.  Right now, it is set up where one needs to make a choice: watch a football game or go to the races.  And, with so much time between races, some fans might be able to do both.  Of course, I’m not sure how much time they would have for placing wagers/bets unless they do it on their smartphones where they don’t have to wait in lines.  But, a lot is hinging on “what ifs” and I am not that confident that this will increase sufficient interest in horseracing.  It may end up cannibalizing that sport’s revenue in favor of the usual sports of NFL, NBA, etc.

  • http://profile.yahoo.com/GM4MKOH3SRM3GAZLMIKOOOAI74 jttf

    canterbury park has horse racing fans on the 2nd floor and card players on the 1st floor.  these two blend in well together and is successful.   sports betting would get new horse players involved.  i always did like it when the track would show a local sports team on the television, so the majority of people there are cheering for the same team.  it creates a nice environment.

  • nu-fan

    jttf:  To some degree, I have thought of that possiblity as well; having a separate area to watch some of the pro games might get more fans to attend.  Right now, it is set up where one needs to make a choice: watch a football game or go to the races.  And, with so much time between races, some fans might be able to do both.  Of course, I’m not sure how much time they would have for placing wagers/bets unless they do it on their smartphones where they don’t have to wait in lines.  But, a lot is hinging on “what ifs” and I am not that confident that this will increase sufficient interest in horseracing.  It may end up cannibalizing that sport’s revenue in favor of the usual sports of NFL, NBA, etc.

  • Sampan

    It will create a false market for horse racing and pari-mutuel racing just like the slots.

  • Sampan

    It will create a false market for horse racing and pari-mutuel racing just like the slots.

  • Janeal

    I agree with you that the racing industry has used slots money as a crutch and not an opportunity to inovate. Ontario had 15 years of income and we see the fall out today. 
    Economic history has taught us that companies and industries who do not to keep up with innovation and technology ultimately fail. We all can remember Palm,Inc, once a leader and innovator in smart phone tech. A good read on the subject is, World Economic Primacy, by Charles Kindleberger. 

  • Janeal

    I agree with you that the racing industry has used slots money as a crutch and not an opportunity to inovate. Ontario had 15 years of income and we see the fall out today. 
    Economic history has taught us that companies and industries who do not to keep up with innovation and technology ultimately fail. We all can remember Palm,Inc, once a leader and innovator in smart phone tech. A good read on the subject is, World Economic Primacy, by Charles Kindleberger. 

  • Juleswins3

     Absolutely correct!

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