Sports Wagering Has Monmouth, Delaware Optimistic

Beyond the encouraging sports wagering handle numbers at Monmouth Park, and the increased pari-mutuel wagering that has followed since sports betting was launched, track principal Dennis Drazin notes the increased energy at the New Jersey track.

"Everyone is excited to come out to Monmouth Park again; it's an exciting atmosphere," said Drazin, chairman and CEO of Darby Development, which operates the Oceanport, N.J. track. "Both fans and horsemen love the spirit of the place right now."

That excitement, which followed the track's commitment of having a facility ready to launch when a May U.S. Supreme Court decision allowed outlets in the state to offer sports wagering, helped make Monmouth the top sports wagering outlet in New Jersey through the end of July. According to the New Jersey Division of Gaming Enforcement, since Monmouth launched sports wagering operations June 14 through July 31, the track posted more than $3.1 million in sports wagering gross revenue (sum of all wagers less only the payouts on winning wagers). That $3.1 million figure accounts for 43% of New Jersey's sports wagering gross revenue through July 31.

Sports wagering also has helped fuel a bump in on-track pari-mutuel wagering at Monmouth. Average daily on-track wagering for the 18 days since sports wagering has been added (through July 31) is up 16% to $525,273 and attendance has improved 4% to 10,851 compared with the corresponding 21 race dates in 2017. Looking at the first seven Saturdays of pari-mutuel wagering since sports wagering has been in place, on-track handle is up 15% to $3,460,912. Total attendance for those dates is up 4% to 65,844. 

Drazin said the excitement has ratcheted up because many horseplayers already had been wagering on sports, so adding a legal, reliable outlet has been very attractive for them. Monmouth has been working to educate sports bettors arriving about wagering on Thoroughbreds through wagers such as a Pick 4 that includes races and a sporting event.

"It has translated to some good crossover," Drazin said.

The track also is offering simple wagers for new players such as head-to-head wagers or fun bets based on margins of victory.

In terms of benefits for horsemen, Drazin said horsemen-owned Monmouth will see money committed to purses by next year, if not sooner. He said that money will include added race dates to strengthen the New Jersey schedule. 

A story in the Asbury Park Press posted Aug. 13 said the New Jersey Thoroughbred Horsemen's Association owes Drazin's Darby Development millions of dollars in management fees, for track operations, and legal fees, as well as incentive fees.

Despite the money owed, NJTHA board member Robert Matthies told the paper that there is optimism because of the strong start by sports wagering. Beyond that, the NJTHA is suing sports leagues it claims blocked efforts to add sports wagering for $150 million. 

"The feeling right now is that there are better days ahead," said NJTHA board member Robert Matthies. "If you're down in the dumps and you see expenditures in some areas that you would or wouldn't agree with ... right now I think good times are on the horizon.''

At Delaware Park, which under previous state law had offered some parlay wagering on sports, opened sports wagering to individual events in early June. The track has seen little impact on its pari-mutuel wagering but sports wagering handle is benefitting the track and purses. 

According to Delaware Lottery reports, since full-scale sports wagering was launched June 5, Delaware Park handled more than $11,055,907 on sports wagers, generating $984,572. The Delaware Lottery reports sports wagering at Delaware Park in June and July generated $397,767 for the track, of which $94,519 will be committed to purses.

Delaware has not seen a bump in on-track pari-mutuel wagering since sports wagering was added. Comparing the 31 race dates since full sports wagering has been allowed this year, on-track handle is down less than 2% to $2,067,017.

Bill Fasy, president and chief executive officer of Delaware Park, has been encouraged by the numbers and is looking forward to football season. He noted that under the parlay rules, the track could not offer wagers on college sports. That has changed, and he expects college football to generate a lot of interest.

Monmouth also is looking forward to football season. Compared with current sports wagering crowds, Drazin expects as much as a 10-times increase to turn out to wager on football Saturdays and Sundays. Drazin added that he'd like to see Monmouth take advantage of those crowds by running additional dates in the fall.

Speaking Aug. 12 at The Jockey Club Round Table Conference on Matters Pertaining to Racing, McKinsey and Co. executives Dan Singer and Mike Salvaris said the addition of sports wagering provides new opportunities for race wagering, and they see minimal concerns that current horseplayers may shift their handle to sports wagering.

"The legalization of sports wagering has created a once-in-a-generation opportunity for race wagering," said Salvaris, a McKinsey senior external adviser. "At least three sports networks are in the process of launching sports gambling shows, and they've indicated they'd like to include racing as long as there are compelling stories to tell."

Singer, McKinsey's leader of global sports and gaming practice, said they project legal sports handle to exceed $120 billion in wagers by 2023, which is about 12 times the handle of North American pari-mutuel racing. Despite that growth, Singer doesn't expect racing to see a decline in handle caused by players migrating to sports wagering.

Singer noted that racing has prospered in countries such as Hong Kong, Ireland, Australia, and France, that all offer sports wagering. He noted in all four of those countries, like the U.S., the takeout on sports wagers is lower than racing's rake. Secondly, he noted that in researching U.S. horseplayers, McKinsey determined many who plan to bet sports wagers are already betting on sports legally or through an illegal bookmaker.

Singer said racing needs to cross-sell race wagering with sports wagering to take full advantage of the emerging opportunities. He said as sports books move online, they'll be spending hundreds of millions of dollars developing their platforms, marketing, and promotions. He said racing needs to be included in that.

Because races are just a couple of minutes long, Singer said they will be a natural way for sports bettors to fill downtime before another match or during halftime of a big game. He said to fully enjoy the benefits of cross-selling, racing needs convenience in placing a bet. He said that means the bettor should have to only register for one account and use the same sign-up, funding, and cash-out processes for both sports and race wagering.

"Racing should just be another tab in the online sportsbook, just like other sports," Singer said. 

Singer said sports wagering should provide incentive for racing to provide innovative wagering options. He said in the United Kingdom, bookmakers allow insurance, cash-out bets during multi-race wagers, and in-race bets and exchanges. 

The third and most fundamental change sports wagering expansion will offer racing would be the opportunity to put in place fixed-odds wagering for win, place, and show bets. 

"The experience of Australia and the U.K., which offer fixed-odds wagering in parallel with pari-mutuel wagering, suggests bettors prefer fixed odds when they have a choice," Singer said. "In Australia fixed-odds wagering now represents 39% of Tabcorp's racing revenues, versus only 14% in 2013."

He said for fixed odds to be successful in the U.S., there needs to be a commission paid to the sport roughly equal to the net of off-track pari-mutuel bets today of about 8%-10% of the wager. That money would be committed to the track and purses. Singer would anticipate regulators being fairly receptive to changing rules to allow fixed-odds wagering. That assessment is in line with Association of Racing Commissioners International president Ed Martin, who at this year's ARCI convention encouraged regulators to allow for such innovation.