Last year a door opened for the pari-mutuel industry, leading to an
opportunity for racetracks to expand their gaming options and
potentially boost revenue and purses.
But too few have even bothered to look through the door, let alone pass through.
That
doorway leads to Internet gambling, and, in at least one gaming
executive’s opinion, racing is quickly losing ground because of
inaction.
“Rather than embracing the gaming marketing, the
racing industry has been hermetically sealed,” Joe Brennan Jr. said
during the recent International Simulcast Conference in Clearwater
Beach, Fla. Brennan is head of the Interactive Media Entertainment and
Gaming Association. “In Europe there is no such thing as just a horse
racing website. Half of the (racing) industry is trying to be
protectionist, and half of it is trying to find solutions to get into
this game.”
Brennan later said: “I’ve asked this question many
times. Why aren’t you leading this? What are you waiting for? You’re
late because you’ve allowed yourself to be late.”
The questions could pertain to many aspects of horse racing. But Brennan was addressing Internet gambling, now called I-gaming.
The
door opened when the U.S. Department of Justice issued an opinion that
the federal Wire Act pertains only to wagering on sporting events,
meaning online bets on lotteries and casino games, for instance, are
fair game.
A revision to the Interstate Horseracing Act of 1978
gave horse racing—a sporting event—exclusive rights to interstate online
wagering. Because of that, Brennan said racing has an advantage in the
online gambling market.
There has been movement on Internet
gambling legislation, but it has been intrastate, meaning bets must be
made within the state in which it is legal. Those include Nevada,
Delaware, and New Jersey.
Internet gambling is a perfect example
of states’ rights versus federal oversight. States control gambling, but
wagering across state lines (interstate) lies with the federal
government.
As Brennan noted at the conference, New Jersey Gov.
Chris Christie believes only the Atlantic City casinos, not the state’s
racetracks, should benefit from I-gaming. Delaware is a different story.
The
Delaware Gaming Competitiveness Act of 2012 authorizes the state’s
three racetrack casinos to offer intrastate I-gaming. The law actually
states one of its purposes is to “provide further support to Delaware’s
harness and Thoroughbred horse racing industries by expanding the gaming
offerings benefitting video lottery licensees and the horsemen who race
there.”
Delaware is far from perfect, but no state has respected
more the original intent of its law authorizing racetrack video lottery
terminals: The bill was passed to protect horse racing and its
agriculture-related economic benefits.
Delaware horsemen get a
cut of the revenue from VLTs, casino table games, and limited parlay
sports betting on professional football, which was expanded to
non-racetrack facilities this year. Though not stated in the most recent
gambling expansion law, they also get 4.5% of I-gaming revenue,
whenever it materializes.
Horsemen’s groups are working with the
administration of Gov. Jack Markell to increase that percentage should
I-gaming generate more revenue than projected. With a population of
under one million, it would appear intrastate I-gaming won’t be a
windfall unless people drive to the state specifically to place bets via
their computers.
What Delaware did, however, is put itself in a position to benefit greatly should I-gaming become interstate in nature.
What does that mean for horse racing? That’s hard to say, given racing’s track record.
Anyone
who frequents racetrack casinos knows the deal: There may be 5,000
people in the casino and 250 betting on live horse racing and
simulcasts. If betting on horse races and casino games were offered on
the same website, would the same thing occur?
Would wagering on
racing be marketed as well as wagering on blackjack or video slots? That
hasn’t been the case at many brick-and-mortar facilities.
Also
disturbing is the fact that advance deposit wagering was hailed as the
primary vehicle to attract new customers to horse racing. The percentage
of ADW pari-mutuel handle has grown—but total handle has declined in
recent years. ADW is a good thing, but it’s clearly not the savior.
So
horse racing is faced with a choice: It can use its current interstate
online wagering exclusivity to its advantage—assuming racetrack
companies have their hearts in the right place—or crawl into a hole and
be reactionary.
Brennan’s questions are legitimate, but they beg even more questions.
Does horse racing have a plan for I-gaming? If so, how does racing fit in?
Revenue
from slots, table games, and non-racing sources should be a bonus, not a
subsidy. The ultimate objective should be growing pari-mutuel handle
through multiple sources.
