For Kirchner, 20 Years of BC Wagering

After a successful Breeders' Cup at Churchill Downs in 1994, when total pari-mutuel handle of $78.2 million was the second-highest in the 11-year history of the event, the following year was a major downer.

Total handle in 1995 at Belmont Park dropped 18.1% to $64 million. So in 1996, Ken Kirchner, who previously served as executive director of the Pennsylvania Horse Racing Commission, submitted a proposal to Breeders' Cup officials to run wagering operations for the then one-day event. They gave him a one-year contract—and he's been handling the Cup simulcast every year since.

His first year on the job wasn't easy.

"It was the first time the event was being held outside the United States, at Woodbine in Canada," Kirchner said. "An issue rose in my first year; there was a pari-mutuel strike that summer, and it threatened to derail conduct of the event. There was even a contingency plan to move it to Churchill Downs."

The Cup was held at Woodbine, however, and total wagering was up more than $3 million from the previous year.

Kirchner, whose consultant business is called FalKirk International, now works with Breeders' Cup under three-year contracts. After 20 years, Kirchner said the challenges are still the same.

"I've learned a lot," said Kirchner, who worked as a regulator at a time when Pennsylvania was building its off-track betting network. "Each year is a learning process, and that's one of the great things about it. I'm pleased to be a part of it."

Breeders' Cup handle has grown, in large part because it became a two-day event in 2007 at Monmouth Park. The one-day record wagering record of $134.3 million for just Cup races was established the year before at Churchill Downs, which also holds the two-day Cup handle record of $158.3 million in 2010.

Breeders' Cup was launched in 1984 at a time when the number of pari-mutuel facilities in the United States was expanding. That hasn't been the case in the past 10 years; many OTB parlors—including those in the lucrative New York City market—have closed.

Simultaneously, online wagering has increased market share. Kirchner said that in 2014 total handle for the two days at Santa Anita Park was about $160 million, with $42 million generated by advance deposit wagering systems.

"So about 26% of Breeders' Cup handle now comes from online sources," he said. "That is substantial when you look and see that not that long ago there wasn't much ADW activity in the country. We have fewer brick-and-mortar facilities this year than in many years. Tracks have closed OTBs in several states."

The international simulcast market for Breeders' Cup has grown—up to a point. This year about 25 countries including Canada will import the races, but mostly through separate pools.

"There are difficult technical and legal issues surrounding the commingling of pools, which is important to the expansion of wagering," Kirchner said. "Countries like Japan have protective laws, and to have a country like that be a closed market (for Breeders' Cup) is a detriment to expansion. We've had some success with Hong Kong, but it has restrictions on the number of signals it can import. And we also have the time-of-day issues because of time zones."

Hong Kong will not offer any Breeders' Cup races this year. Among the countries that will participate are Belgium, Ireland, France, Germany, Netherlands, Switzerland, Turkey, and the United Kingdom in Europe; Argentina, Colombia, Panama, Peru, Uruguay, and Venezuela in Latin America; and Australia and New Zealand.

Kirchner said handle has increased over the years for another reason: an expanded wagering menu. Even in the late 1990s host state laws required the coupling of entries because of common ownership or trainers. In 1996 there weren't superfectas and only a handful of trifectas on the Breeders' Cup program, he said.

The first Pick 4 in the United States was offered as part of the Breeders' Cup in 2000, Kirchner said.

"All of this has helped greatly with wagering and the exotic payouts," he said. "For the last five or six years we've been productive in lowering bet minimums."

In a change this year, the minimum amount for the Pick 6s will drop to $1 from $2. Kirchner said he believes it could lead to handle growth in those pools.

"At $2 it can be difficult for a lot of people to put money into those pools," he said. "The $1 bet opens it up for more of the smaller players to jump into the pools. (The $2 Pick 6) has been represented in some ways as being a syndicate players' pool, and to some extent that's true. I think (with the lower minimum) we'll see more players get into this bet."

Kirchner said the Breeders' Cup remains attractive from a wagering standpoint because of its focus on quality and quantity, in terms of field size.

"I think what sets the Breeders' Cup apart is the product its puts on the racetrack," Kirchner said. "Special events like the Breeders' Cup, Triple Crown races, and few others are days fans look forward to. So, much of what I look at is how handicappers approach the event.

"With large fields in grade I stakes and the right betting menu, there's a chance to hit the big one. Those types of scores can be difficult to make on a daily basis with the short fields handicappers face every day. That makes the Breeders' Cup a special event."