Commingling of Pools with Canada Paying Off

In the two months since common pool pari-mutuel wagering with Canada was first introduced at Emerald Downs and Arlington Park, both tracks have seen significant increases in handle from Canada.

Susie Sourwine, vice president of marketing at Emerald Downs, said handle received from Canadian bettors has increased 57% since commingling of pools was introduced in early August.

"This number keeps growing each day," Sourwine said Tuesday morning during a presentation on international merged pools at the International Simulcast Conference being held near San Diego. "Canada players have been dying to get into these pools for years, and they're having fun with it. I think you'll see an continued growth in handle."

Under previous regulations, bettors in Canada were prohibited from wagering into U.S. pools. Congress passed an international tax bill in October 2004 that eliminated a 30% alien withholding tax, paving the way for Canadian tracks to bet directly into U.S. pools and increasing the potential for larger pools and higher payoffs.

Since merging pools with Canada, Arlington has seen a 23% increase in handle from Canada, according to Jack Lisowski, director of mutuels at the Chicago-area track. Lisowski noted Canadians place more trifecta and superfecta bets than U.S. bettors.

Sean Pinsonneault, vice president of wagering operations for Woodbine Entertainment Group in Canada, said he is excited about the potential opportunity for more foreign race intertrack betting, and called it a "win-win" situation for the horseracing industry. He said Arlington's increase in handle from Canada since merged pools began represents a $1.3 million gain.

Though the benefit of commingling is increased handle, Pinsonneault warned making the switch comes with a cost. First, tracks must meet certain requirements before Canadian tracks will be allowed to participate in their pools, and since the rules that govern horseracing are determined by individual states, many states will first need to change their rules.

For instance, tracks must convert from gross-pool pricing, which is the standard used in the U.S., to net-pool pricing.

Beatrice Lall, project manager of the Canadian Pari-Mutuel Agency, said net-pool pricing, which has been used in Canada since 1996, is required for foreign race intertrack betting because not all international jurisdictions are allowed by local law to wager into U.S. pools using the local takeout rates, and must use the standard takeout rate for their locality.

"What we're seeing is a new era in horseracing that is the globalization and that is facilitated by net pool pricing," Lall said.

Lisowski said other factors to consider when making the switch to net-pool pricing are various taxes and levies specific to jurisdictions, currency conversions, tote communications, minimum bet values, and tote odds and price displays.

Other states that have approved commingling of pools are Ohio, Delaware, West Virginia, and Iowa, Pinsonneault said. New York, Florida, California, and New Jersey may be approved soon.

Pinsonneault said merged pools might be approved in New York in time for the Oct. 29 Breeders' Cup World Championships at Belmont Park. Florida may have approval by the end of this year, and California by early 2006.