Case Made for High-Volume Betting Services
Horsemen hashed out the issue of high-volume bettors and rebates Jan. 13, and in the process got a fairly detailed look at their impact on pari-mutuel Thoroughbred racing in the United States.
The panel discussion kicked off the National Horsemen’s Benevolent and Protective Association winter convention in Hollywood Beach, Fla. Members of the National HBPA Wagering and Alternative Gaming Committee said the goal of the session was to educate affiliates on how to work with such players and the advance deposit wagering companies that cater to them.
Interesting statistics came out of the forum. Roughly $2 billion a year, or just less than 20% of total pari-mutuel handle, is said to come from high-volume shops. One of them—Elite Turf Club, which has only 11 customers—accounts for 10% of handle nationwide each year.
Elite Turf Club didn’t have a representative on the panel, which attracted Rob Terry, vice president of Racing and Gaming Services; Nelson Clemmens, chief executive officer of AmWest Entertainment; and Ron Luniewski, president of XpressBet.com and its related services, which have expanded under owner The Stronach Group.
Bob Reeves, a member of the Ohio HBPA board of directors and chairman of the National HBPA wagering committee, reiterated his position that volume discounts are necessary in pari-mutuel racing. He said if horsemen work with high-volume services, they can actually benefit despite the belief such players are raping pools.
“If you’ve got someone betting $1 million a year (on racing), I believe he deserves a discount,” Reeves said. “If you’ve got someone betting $200 million a year, I believe he deserves a bigger discount.”
Discounts effectively lower pari-mutuel takeout, so high-volume players have no reason to clamor for actual takeout reductions. The flip side, of course, is that the average player doesn’t share in the takeout reduction unless the rate on certain bets is reduced by racetracks.
The high-volume service operators didn’t reveal rebate numbers, but they sought to dispel a common belief in the industry that their players win “straight up,” or without the discount. Terry of RGS, which has about 90 customers, said that in 2011 they lost about 6% when rebates aren’t factored into the equation.
Terry and others contended that high-volume players don’t cause late odds changes in win pools. At RGS, where 60% of the wagering is done robotically through computer programs, about 14% of handle comes from the win pool. Clemmens said the figure for AmWest, which has a broader spectrum of customers and doesn’t employ robotic wagering, is about 15% of total play in win pools.
“There are late odds changes but they’ve never been properly addressed to the public,” Terry said. “We keep giving the public the notion that something is wrong. We’re not willing to go out there and educate the public that this is a safe industry, a protected industry.”
He said the industry created the “boogieman” of late odds changes.
Arkansas HBPA president Bill Walmsley disputed the claim that high-volume players don’t impact ontrack patrons. He said the horsemen’s group, with the blessing of Oaklawn Park, continues to keep high-volume shops out of the racetrack’s pools.
Walmsley said certain wagering sites consistently had “won” up to $1 million a week, which was out of line with most of the other 1,000 sites that were taking the Oaklawn signal.
“We made a value judgment,” Walmsley said. “It does cost us handle, but we’re trying to protect the ontrack wager.”
Dave Basler, executive director of the Ohio HBPA, and Terry said the impact of high-volume operations on pools is about one-half of 1%, meaning a winning wager that would have paid $100 will pay $99.50. Basler said it’s a small price to pay when most of a racetrack’s business comes from off site.
Basler used Beulah Park as an example. Over a recent five-day period the Ohio track handled $4.1 million on live races. RGS and Elite Turf Club, he said, accounted for 20% of the total handle; their players lost $41,000 straight up but made $137,000 through rebates.
Luniewski of XpressBet.com, which recently launched a service for high-volume players, told horsemen technological improvements have opened the door to what he called “micro ADWs.” He said such services seek out other services’ existing players and offer them higher rebates because they have no regard for supporting live racing.
“They’re getting 10%-12% of takeout for $200,000-a-year players,” Luniewski said. “The ‘micros’ are offering players much more. These are people who may have no stake in the industry.”
Luniewski said a recent look at simulcast information from The Stronach Group-owned Gulfstream Park showed 36 ADW services are available. The major ones still get most of the handle, but micro ADWs are making inroads, he said.
Reeves said horsemen should find ways to work with high-volume services, all of which claim to wager directly into pari-mutuel pools, unlike offshore bookmakers.
“They pay us nothing,” Reeves said of bookmakers. “They don’t support our industry. I can’t believe the industry hasn’t done more to curtail it. We know it happens, and we let it happen.”
Clemmens and Luniewski noted their services have found “incremental” handle from overseas customers. None of the panelists offered insight into how domestic handle, which dropped about 5.5% in 2011 to under $11 billion, could grow.
According to estimates handle through ADW services isn’t growing as fast as it was even five years ago, but it has been hailed as the only real growth mechanism for horse race wagering.
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