A New Problem: Legalized Sports Gambling

One day during the running of the Santa Anita Handicap, my youngest son leaned into me and yelled “This is the greatest game in the world!” Will there be a Santa Anita Handicap in his son’s future?

In May 2018 the Supreme Court ruled to allow state-legalized sports betting—and millennials will be hooked on the action. Look around you now: Try to find one person under the age of 40 who isn’t looking at a small screen every 15 seconds. They will soon be able to bet on the NBA and NFL from that screen and make wagers heretofore unknown. Will Tom Brady get a first down? They can bet $5 dollars on that. Will Steph Curry make more than six three-pointers in this game? They can bet $5 on that.

The NBA, NFL, MLB, and NHL will all soon be competing for horse racing’s gambling dollars. Horse racing was getting killed by televised sports even before those sports could get into the gambling business. And get into the business they will. Already the NBA, MLB and golf’s PGA are lobbying for an “integrity fee” or “royalty fee” on every dollar wagered. Typically a fee of .025% is proposed. This could make owning a sports franchise one of the most valuable business opportunities in the world. And horse racing needs to become extremely pro-active to this new fierce competition coming soon.

“The four major sports leagues will earn a collective $4.2 billion from widely available legal sports betting,” said Sara Slane, senior vice president of public affairs for the American Gaming Association.

Horse racing earns its revenues from collecting approximately a 16-25% pari-mutuel commission from every dollar wagered. Racing has had a virtual monopoly on legalized on-line gambling since 1985 when “simulcasting” was legalized—allowing racetracks and Las Vegas to accept bets from bettors located off-site of the host racetrack. That has now been expanded by large betting corporations like “TVG” that do a great job of televising races into your home on their private channel and accepting your legal horse racing bets. But horse racing has never before had to contend with major, televised sporting events with sports leagues competing for your wagering business.

Horse racing has placed itself at a huge disadvantage when decades earlier it failed to get on television in a significant way. Generations of NBA and NFL fans have grown up watching their favorite sports stars, while the track was busy charging admission and parking fees with little television coverage other than the “Triple Crown” races annually. If you wanted to gamble legally on a sporting event, you had to go to the track or to Las Vegas.. Now the young adult fans will be watching their sports heroes on TV and betting on their cell phones.

The best thing and the worst thing to ever happen to horse racing was simulcasting. Simulcasting allows the fan to remain at home and watch the best of horse racing on their 72-inch high-def television monitors, betting with abandon, and avoiding the two-plus hour commutes on crowded freeways. It’s both a miracle and a curse. When simulcasting was first introduced, I was ecstatic. Now I had the choice to go to the track—or stay at home and bet. What few could have predicted is that 30 years later, live track attendance has been devastated. Andrew Beyer wrote of this in the Washington Post in 2013: “Racing Still Draws Fans – Just Not to the Track.”