Will Racing Capitalize on Internet Gambling?
by Tom LaMarra
Date Posted: 10/1/2012 7:41:17 PM
Last Updated: 10/2/2012 1:54:36 PM

Horse Racing
Photo: Anne M. Eberhardt
Horse racing risks the chance of being left behind again if it doesn't position itself to participate in Internet wagering outside the advance deposit wagering arena, officials said Oct. 1.
 
A discussion on I-gaming and social media kicked off the 20th International Simulcast Conference in Clearwater Beach, Fla. Currently, the only legal form of online wagering in the United States is on horse races, but a Department of Justice opinion issued in 2011 opened it up to lotteries, poker, and other casino games.
 
"When it comes to I-gaming, it is open season," said Chris Scherf, executive vice president of the Thoroughbred Racing Associations, which hosts the simulcast conference along with Harness Tracks of America in association with the American Greyhound Track Operators Association. "It will look something like it looks in Europe. Can pari-mutuel racing compete or face the same competition it did to its bricks-and-mortar facilities?"
 
Joe Brennan Jr., chairman of the Interactive Media Entertainment and Gaming Association, said developments in New Jersey may answer that question. The struggling Atlantic City casino industry wants online gaming–at least the in-state variety. The state's horse racing wants to participate but was left out of the most recent version of legislation, in part because Gov. Chris Christie believes racing should stand on its own.
 
In turn, the horse racing industry decided to fight the measure.
 
"What the racing industry has decided to do is to stand up and thwart history," Brennan said. "The public has spoken. This disruption has already happened (despite a difficult political and economic environment). To try to stand in front of the disruption when it has already happened is counterproductive."
 
Brennan then directed his comments to the racing industry at large.
 
"You should be leading this (effort)," Brennan said, noting horse racing current exclusivity with legal online wagering. "I've asked this question many times: Why aren't you leading this? The Internet didn't happen last year. You've had six years. What are you waiting for?
 
"You're late because you've allowed yourself to be late. How do you jump this train when it's already in motion? You are either a force for change or a protectionist. If (you are the latter), you're resigned to the dustbin of history."
 
Brennan said the lack of urgency is questionable given the fact pari-mutuel wagering is legal in 38 states, and online wagering on horse racing is interstate, not just intrastate.
 
"What are you doing with that power and expertise now?" he said. "You had better make sure you're not setting up the United States to be colonized by European countries again."
 
Europe is well ahead of the U.S. in this regard, Brennan said.
 
Gene Chabrier, vice president of regulatory affairs and business development for XpressBet.com, which is part of The Stronach Group, said the company sees I-gaming as an opportunity "because we already have all the systems in place for funding (of wagers), marketing, and background checks. We can exploit our technology."
 
Chabrier said, however, XpressBet.com is currently focused on growing its pari-mutuel wagering business.
 
"When it looks like (Internet gaming) is going to become a reality, we'll get serious, be focused, and get it done," he said.
 
Churchill Downs Inc. has indicated it plans to be involved in online gaming when legal issues are resolved. It hasn't commented on its plans in any detail.
 
Brennan said U.S.-based companies have a major advantage because overseas companies often underestimate the difficulties in winning regulatory approval. He said it's a "buyers' market if you're an American company and you hold a (gaming) license."
 
Donald Hoover, vice president of Gaming Hospitality Experts, said he believes social media can assist horse racing make positive strides–if done properly–and also ultimately drive business to bricks-and-mortar facilities.
 
Hoover said one Atlantic City casino, to compete with illegal sports betting, offered a promotion whereby $1 million is given away in a free-picks pro football contest. The idea is to attract patrons to watch games–and perhaps gamble–at the facility.
 
"The demographics of people betting sports illegally are outrageous," Hoover said. "This is one way a bricks-and-mortar facility is bringing traffic through the door.
 
Hoover said social media is a great tool, but it's more than having a website and Twitter account. He used Facebook.com as an example.
 
"What do 'likes' get you in handle?" Hoover said. "I'm saying use social media intelligently. I'm talking about tracking the 'likes' so people make a bet. Social media does not alone drive revenue. You can have a lot of 'likes,' but that doesn't mean they come to your track."
 
Annie Allman of Last Frontier Consulting and a former casino executive with a horse racing background provided figures that show that in 2011, pari-mutuel wagering on Thoroughbred races totaled $10.8 billion. Sports betting totaled about $380 billion, with only about $2.8 billion of that bet in Nevada racebooks.
 
Allman also said Spectrum Gaming Group reported that I-gaming currently accounts for more than 8% of the global gambling market.


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