Are racing's economics broken? Insiders tackle issues facing industry

Are racing's economics broken? Insiders tackle issues facing industry
Photo: Eclipse Sportswire

Canterbury Park in Minnesota is not going to make up its lost revenue from the pandemic with online wagering. Horsemen are not seeing the benefits from most wagering going online. Online Advance Deposit Wagering platforms need to continue to make money to stay competitive with legalized sports betting.

Insiders discussed the relationship between racetracks, horsemen and ADWs Tuesday evening at a panel titled "Racing's Now Reality: Is it Sustainable?", as the first of a three-part industry speaker series presented by the University of Louisville’s Equine Industry Program.

“I just say to the leaders of the ADW, we need to come together,” said Terry Finley, founder of West Point Thoroughbreds. “Our model has to improve and I think if we do that, I think that show of good faith will go a long way in any number of aspects of our industry.”

One of the other panelists was Andrew Offerman, vice president of racing operations for Canterbury Park. Offerman spoke of the difficulties facing the track because of the COVID-19 pandemic and the changing of the industry as a whole.

Offerman said the track relied heavily on in-person revenue, including admissions and on-site betting. He said that in the long term, the new model of online betting, with much of the takeout going to ADWs such as XpressBet or TwinSpires, is not sustainable for the track.

“I would not be surprised to see contraction in some way, shape or form,” Offerman said. “Maybe even at an accelerated rate from what we’re seeing right now.”

Fall 2020 Industry Speaker Series - Racing's Now-Reality

UofL Equine is live with the first night of the Fall Industry Speaker Series talking about the sustainability of the business model racing has had to adopt in 2020.

Posted by Horse Racing Nation on Tuesday, September 22, 2020

From the perspective of the ADWs, companies such as XpressBet and TwinSpires still need to make money to fund technological upgrades and keep their systems on par with those of newly legalized sports gambling companies such as FanDuel, said Jack Jeziorski, executive vice president of Monarch Content Management, a subsidiary of the Stronach Group, which owns XpressBet.

“You need to protect your interests but leave room for growth by not trying to take every last dime off the table,” Jeziorski said. “And look to grow the pie instead of getting just a bigger slice of it.”

Jeziorski acknowledged that “the economics are a little out of whack,” in regard to the split between ADWs, horsemen and tracks, saying the disparity was heightened when the pandemic moved most betting online overnight. He said the system should be adjusted to make it more equitable.

Another issue facing horsemen and ADWs alike is how to handle newly legalized sports betting — how to make sure gamblers can have sports and horse betting in the same place and the ability to parlay the two. The difficulty lies in keeping the takeout for horse bets separate from that of fixed-odds sports wagering.

Churchill Downs Inc. already has announced plans to integrate a sportsbook within TwinSpires to have the two side by side.

“Sports betting can be a bane or a boon to our sport,” Jeziorski said. “I think if we don’t embrace it and make sure that our content is side-by-side with it, I think we run the risk of losing customers to sports betting. … I think if we sit there and try to put a fence up to protect ourselves, we’re going to have dwindling returns on that.”

The next University of Louisville Speaker Series panel is scheduled for Oct. 13 and will discuss horse sales moving online. All panels can be seen via livestream and replay on the Horse Racing Nation Facebook page.

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