By Wes Burns from BettingUSA.com —
One man’s threat in another man’s opportunity. As such, what are those threats and the opportunity for regulated and licensed sports betting it presents to the racing industry —
More than two dozen states have legalized sports betting since the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) in May 2018.
The decision has already had direct and measurable impacts on the horse racing industry in some states, but the long-term implications for horse racing as a whole are yet to be seen.
Whether the spread of legal sports betting constitutes a threat to the survival of horse racing or an opportunity for the industry’s revival depends largely on the decisions made by three key groups affected by the Supreme Court decision.
State-level lawmakers, horse racing industry stakeholders and consumers will determine the future of horse racing in a post-PASPA world.
Sports betting and horse racing naturally compete for viewership and gambling dollars, but both are adjacent industries and can potentially complement one another as well.
In either case, the legalization of sports betting will continue to impact horse racing in ways obvious and not-so-obvious.
Horse Racing Faces New Competition for Viewership and Gambling Dollars
A report issued by the Thoroughbred Idea Foundation (TIF) in 2019 described legal sports betting as a “momentous threat” to the business of horse racing.
Sports leagues, media outfits and lawmakers across the country have embraced sports betting to a degree never seen with legal horse racing betting. As a result, the horse racing industry faces the threat of losing customers to well-funded sports betting operators.
The major threats to horse racing identified by the TIF report include:Large and persuasive advertising campaigns
Innovative betting products that generate excitement among fans
Increased engagement with other sports now that fans can bet on their favorite teams and players
Sports betting is conducted in the fixed-odds format, which is more intuitive and newbie-friendly than horse racing’s parimutuel betting format
Fixed-odds sports wagers are subject to less commission. An average sports betting market keeps roughly 5% of betting handle for the house while the takeout in pari-mutuel horse racing betting often approaches 20%
Yet another threat not discussed in the TIF report is the risk of decoupling. Many racetracks are now dependent on casino gambling and, to a lesser extent, sports betting for revenue and to fund racing purses.
Decoupling would allow racetracks to drop horse racing and essentially become standalone casinos. Doing so would benefit the many individual racetracks that no longer treat horse racing as the main attraction.
Of course, it would be devasting for the racing industry as a whole, breeders, trainers and jockeys included.
These are all considerable threats for an industry that was already in decline before the Supreme Court ended the federal sports betting prohibition.
If the horse racing industry does not respond, it risks losing market share to the shiny, new thing that is sports betting.
The threats detailed above are significant, but they are not insurmountable. In any case, horse racing will either change and adapt of its own accord or have change forced upon it.
Tomorrow: The synergy of sports betting and pari-mutuel horse racing