Symposium: Racing Needs to be Ready for Sports Wagering

If the objective was to answer the title question of the first panel Dec. 6 at the at the University of Arizona Race Track Industry Program's Global Symposium on Racing—"Is Racing Ready for Legalized Sports Betting?"—that objective probably was not met.

With the parameters of what legalized sports betting in states other than Nevada would entail and look like if the U.S. Supreme Court decides to overturn the Professional and Amateur Sports Protection Act, the answer of whether the horse racing industry would be ready for the implications is not clear.

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What is clear, according to the assembled panel Wednesday in Tucson, Ariz., is that the industry needs to prepare for those implications, and should be doing so already.

"Everybody in this room that cares at all about the impact of legalized sports betting on this industry, and the possible loss of pari-mutuel handle as a result, if every state jumped in and legalized sports (betting)—you need to be ready," said lawyer and lobbyist Marc Dunbar, who attended the Dec. 4 Supreme Court hearings in Washington. "Because I don't think there's any question that there were six justices that ... very much appeared to be backing New Jersey."

NTRA president and CEO Alex Waldrop moderated the panel and said, of the racing states, California, Kentucky, Pennsylvania, West Virginia, Maryland, Oklahoma, and New York all have legislation to make sports wagering legal ready or in the works, should the Supreme Court decide to repeal PASPA.

Michael Grodsky, the vice president of marketing and public relations for sportsbook operator William Hill, was asked by Waldrop if lower-takeout sports wagers would be a "competitive problem" for horse racing.

"Absolutely not," Grodsky responded. "I don't think it's a competitive problem at all. Sportsbook operations can bring in more casual fans to drive more revenue."

Dunbar warned of a potential "Wild West" scenario if PASPA is overturned, where, without federal oversight, states would have the freedom to run sports wagering in any number of ways.

"New Jersey is going to get the green light and go, and go immediately. ... But when PASPA goes ... the net result will basically be the Wild West. There is no federal prohibition against states legalizing some sort of regulatory environment over sports betting within their states," Dunbar said.

Dunbar is hopeful sports wagering could somehow be aligned with or modeled after the Interstate Horseracing Act, and, because of the Interstate Wire Act, he sees potential problems for sports betting on events outside of states where wagering would be legal. Still, he views legalization as an opportunity for racing.

"Sports wagering is an additional piece that can attract new people. ... There are lots of opportunities for creative thinkers and I hope our industry leaders. You've seen the tide is coming. Let's not paddle against it," Dunbar said.

Jessica Feil, a lawyer who specializes in gaming and internet companies, also expressed the opinion that horse racing can and should get involved in legalized sports wagering.

"Each state has its own set of concerns and issues, but two things always come out—how do we keep the games and our citizens safe, and how do we make money off of it?" Feil said. "And this is where I think the horse racing industry has a fascinating role to play. ... Horse racing is legalized sports betting in this country. This industry has the ability, and the connections and the know-how to go over it—to go to legislators and say, 'This is how we keep our races safe and this is how we keep our customers safe. This is our experience to bring to the table to show the states how to do this the right way.' That's a position the horse industry can take to make sure that there's a spot at the table for everyone."

Both Dunbar and Feil also emphasized the value of education on the state level regarding taxing sports wagering, considering the effective takeout rate for sports wagering doesn't provide as wide of margins as betting on horse racing.

"This is not a lottery ticket for states," Dunbar said. "That has to be explained to state policy makers. Where the advantage is, particularly for brick-and-mortar operators, is we're already regulated, first of all, so you don't need an overregulated bureaucracy on it; and two, the benefit is truly going to be ... new people at the horse track, new people at the casinos."

"Don't underestimate how much education they need on how this industry works, because it's got to be mutually beneficial in these situations and right now all people see is money," Feil added.