The struggle is real for the sport of kings.
With the second jewel of the Triple Crown this weekend, it should, in theory, be an ideal time for the horse racing industry to woo new and loyal customers who already bet on sports, especially with the help of partners such as DraftKings and FanDuel.
The same sort of opportunity was presented by the recent Kentucky Derby, which attracted a record amount of wagering this year of $210.7 million, according to Churchill Downs.
But whether sports bettors who dabbled on the Derby stick around for the Preakness Stakes this weekend, or any other racing day, is a real concern for horse racing.
Even with legal sports betting booming, total wagering on U.S. thoroughbred races in 2023 was down 3.7% compared to 2022, to $11.66 billion, according to Equibase.
Jeffrey Gural, who, among other things, is the managing partner of the company that operates the Meadowlands Racetrack in New Jersey, called horse racing “basically a dying business” during a panel last week at the SBC Summit North America conference in Secaucus.
“The real challenge for us as we bring sports players into horse racing is to not just bring them in for the Derby, but to keep them,” said Andrew Moore, general manager of racing at FanDuel, during the same SBC panel. “And the real challenge there is to help those customers to understand the sport, to help them realize what an engaging and enjoyable product it is. So our view is that we can actually grow the sport by having it in the sportsbook, and it’s something that sits very well in that space, especially during the summer when there’s only baseball on.”
"And that's where they'll be cheering for you from."
— Preakness Stakes (@PreaknessStakes) May 15, 2024
Trainer D. Wayne Lukas showing #SeizeTheGrey and his best friend the track @PimlicoRC. #Preakness149 pic.twitter.com/Jxi0d6z4dp
The comments underscore the ongoing struggle the horse racing sector faces in attracting and retaining new bettors who could fund its operations. While legal sports betting is viewed as a way to help, there are still hurdles to overcome, such as trying to get customers to wrap their heads around the pari-mutuel wagering model that is predominantly used in Canada and the U.S.
But the industry is going to give it a shot.
Moore and FanDuel, for instance, provide a more seamless experience with their single account and wallet that allows sportsbook users to click over to horse-racing markets with relative ease. That, combined with a constant flow of traffic through the online sportsbook, offers an opportunity to sell users on horse racing.
“The big thing is the shop window that the sportsbook provides that horse racing did not have previously,” Moore said.
Gural hailed the Meadowlands’ partnership with FanDuel as a lifeline for the track. The operator has a brick-and-mortar sportsbook at the East Rutherford facility in addition to their online sports wagering partnership with the Meadowlands, which likewise provides financial help.
“Without sports betting, I think the Meadowlands would be closed,” Gural said.
That sentiment was shared by Dennis Drazin, chairman and chief executive of the Monmouth Park racetrack, who was on the same panel as Gural. Drazin said the state was losing around $13 million a year when his firm took over the track and it is now profitable thanks to its sports betting relationship with Caesars.
“Sports betting has also saved Monmouth Park,” Drazin said. “And we’re looking at a lot of things to grow the business in the future.”
No 'homework,' please
One of the biggest opportunities for horse racing does indeed remain the legion of relatively younger sports bettors who may be looking for something else to wager on outside of football season.
Bill Pascrell III, a partner at Princeton Public Affairs Group and someone who was heavily involved in the effort to expand legalized sports betting in the U.S., noted the horse-racing industry offers approximately 40,000 races a year, a ton of content for sportsbook operators.
Carving out just 10% of sports bettors and getting them to play the ponies could be significant, he suggested.
“I think it’s an extraordinary offering,” Pascrell said on the SBC panel. "Not only in between games, but races are quick. They’re just a couple of minutes. So it’s that instant gratification.”
Nevertheless, Pascrell said there needs to be “a little more push” and collaboration with operators to educate younger bettors on horse racing.
The panel members offered a few ways of doing that, such as tapping into the sport’s vast quantities of data and video. By dangling some “threads” for bettors to pull on, they could then get further invested in horse racing, Moore suggested.
“It can’t feel like homework,” he said.
Perhaps an even easier method would be the wider-spread implementation of fixed-odds wagering, which is only available in a limited fashion in Colorado and New Jersey. For sports bettors used to betting -110, full stop, the shifting odds of pari-mutuel wagering can act as another obstacle to becoming full-time horseplayers.
“The younger demographic likes that I bet 3/1, it never changes, and I’m going to get 3/1,” Drazin said.
The @MyRacehorse owned SEIZE THE GREY this morning at Pimlico. He will be running in the $2M Preakness Stakes (G1) on Saturday. Jaime Torres will be in the irons for D. Wayne Lukas. pic.twitter.com/p9NJZHx8kC
— FanDuel Racing (Formerly TVG) (@FanDuel_Racing) May 16, 2024
But the long history of horse racing means there are plenty of existing stakeholders to deal with, and nailing down new fixed-odds opportunities could be a challenge in its own right.
In the meantime, there is an effort underway in Drazin’s backyard to expand the number of operators offering online wagering on horse racing. At the moment, there is just one holder of an “account wagering” license in the Garden State, which is the New Jersey Sports and Exposition Authority.
Darby Development LLC manages that account wagering system — Drazin is the CEO of the company, which also manages the Monmouth Park racetrack on behalf of the New Jersey Thoroughbred Horsemen’s Association — and Flutter-owned TVG provides the platform.
The New Jersey Racing Commission approved another year-long extension for TVG last year that will maintain its legal monopoly as the sole advance deposit wagering platform in the Garden State until at least the end of 2024. That, however, leaves open the possibility of regulators approving additional platforms for 2025 and beyond.
Drazin said they intend to open up the market for all advance deposit wagering platforms and sportsbooks, giving the industry “a minimum of 20 times the amount of people” who are currently watching and wagering.
“I think that sports betting has always existed and horse racing has a rich history and we’re about to blend the two and try and make multiples of what we’re currently enjoying now,” Drazin added.
