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The Conscience of Thoroughbred Racing


By Dr. Carlo Zuccoli, Special to HorseRaceInsider — Until the year 2000, the Italians were not allowed to bet on sports: only horse race betting was permitted. On – course and off – course; betting shops, bars, restaurants, etc., there were illegal bookmakers and “runners” collecting bets.

Betting handle on both horse racing and on sports were booming; sports betting turnover did not and does not cannibalize horse race betting.

The reason is very, very simple: Every man in the street has a bet on sports, but that’s not the case for horse racing.

People living in LA who support the Lakers lay out a few quid in the basketball market, as does Signor Smith in Chicago who supports the Bulls.

Investors in the various horse racing markets, either at fixed – odds or putting their money into a parimutuel pool, are experts in a way sports bettors are not: They know the form of the horses running, as well as their trainers, jockeys, track dynamics, etc.

If you want to put a few bucks on the Lakers against the Knicks, you don’t need to be an expert. You simply support your team, mainly for your own satisfaction as a fan or to show your pals that the Lakers are better than the Knicks: that’s it.

Of course, there are experts in sports betting, such as HRI contributor Marc Lawrence. Sports experts can handicap any football team, baseball team, tennis player, etc. Given voluminous research in their field of study leaves little time for them to following horse racing deeply.

The August 18 edition of the Racing Post contained an article written by Bill Barber entitled “Push for fixed–odds betting in the US illustrates the challenge facing the Tote.”

The problem here is that the headline was misleading and mistaken: Racecourses and the horsemen face a challenge from both markets.

Several years ago on these columns, thanks to Signor Pricci, I wrote an article, “Step back Satan,” explaining how it was lucky for the racing industry if the Betfair betting exchange would have been a failure:

Thank God that Betfair was not at all popular but nevertheless that company was able to drain some money from the pools, returning nothing to the racing industry. Now we see a similar scenario occurring again.

Fixed–odds markets will drain money from the various pools, returning little if anything to the racing world.

In the UK, bookmakers pay a 15% GPT (Gross Profit Tax) when there is any profit for the Government and another 10% GPT, if any, as a levy for the use of data: That 10% goes back into racing.

In that country, prize money is provided mainly by sponsors but in the US the situation is not the same of course: takeout from every single pool finances racecourses and horsemen.

Many of the same people are in favour of fixed – odds markets to protect the sheep. They are totally wrong.

Bookmakers worldwide offer their odds with an “overround,” a kind of betting tax as it were, that is over 100% in their favour. If that overround is around 2% per runner, it means that those odds are fair.

If the “high rollers” put down their money, let’s say Snowfall to win the Darley Yorkshire Oaks at 8/15, you can be sure that the price immediately will go down to 2/5, putting the sheep in the same position.

I agree that both “sharks” and “sheep” in fixed – odds markets will know in advance what they will get in return for their stakes but the poor sheep cannot avoid being cannibalized by the sharks.

So, for example, if BetMakers provides data and analytics to industry regulators to help ensure race integrity. That would be a totalisator, a no-risk way of taking bets. Conversely, bookmaking is a very risky exercise.

In the UK the prize money is provided mainly by sponsors and in the US the situation is not the same: the takeout from every single pool bet finances racecourses and horsemen.

I’ve heard people saying that in the US these people are “sheep,” in the stock market sense of the term, suffering big losses because of the huge money “sharks” put into the pool in the final minute, significantly reducing the odds of many live horses.

If the “high rollers” put their money, say on Snowfall to win the Darley Yorkshire Oaks at 8/15, you can be sure that the price immediately will go down to 2/5, so the sheep will be in the same position.

I agree, both the sharks and the sheep in the fixed – odds markets will know in advance what they will get in return for their stakes, but the sheep will still be cannibalized by the sharks.

What about in the US, in New Jersey. Who is going to run the business? Which bookmaker will take the liability? The contracted fixed-odds agreement with BetMakers presents a problem:

BetMakers isn’t a bookmaker, it’s a technology company that provides much of the data infrastructure that supports the racing industry. That data and analytics provided to regulators helps ensure race integrity, a significant contribution.

Racing in the US does need to grow the betting market with what it has already. Leave the American system to finance horse racing as it is: never change a winning combination, or a winning system.

Dr. Carlo Zuccoli has a consulting services company based in Como, Italy, has practiced law, covered major races around the world as a free lance racing journalist and has served as a breeding syndicate manager

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One Response

  1. Carlo, I have long been an advocate for fixed-odds, mostly because of the unfair benefit enjoyed by deep-pocketed, computer assisted program able to place a thousand bets in a keystroke and enjoy access to pool information not shared with the general public.

    But given the policy change by NYRA and a handful of others that have time-limited or eliminated access all together, the pari-mutuel system is fine. Parimutuel, “between us” from the French, is democratic, provided tracks do not give a handful of players-admittedly the largest bettors-special access denied the every day fan/player.

    As you can see from comments below my Sunday piece, an overwhelming majority of responders agree with our call for fairness for all.

    I do, however, live in the real world, and very likely know what to expect in the short term.

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