Businesses see plenty to gain—and lots of competition—in sports betting
The competition is already in the starting gate as organizations across Kentucky and the nation prepare to capitalize on Monday’s U.S. Supreme Court decision, which struck down a federal ban on sports betting.
After the ruling came down, Alex Waldrop, president of the National Thoroughbred Racing Association, released a statement that read, in part, “Our multi-billion dollar industry (of horse racing) must rise to the challenges and seize the opportunities presented by this expansion of sports betting.”
States can now legalize fixed-wager betting on major professional sporting events, which could add to the consumer base for horse-racing tracks. Whether in two weeks or several years, tracks could have the ability to establish sports betting and hope to draw customers looking to bet on, for example, NFL games alongside their pari-mutuel wagers on horses.
But the main challenge for horse racing is added competition from casinos, lotteries and any other organizations that seek to draw betting payments. Churchill Downs and other tracks could set up sports books if wagering becomes legal in Kentucky, but so could any other organization.
Chip Polston, a spokesman for the Kentucky Lottery, said the lottery “stands ready to administer a sports-wagering program if so charged by the Commonwealth.” But he also voiced concerns: “There’s only so much discretionary income in the Commonwealth, and if this new form of betting taps into it, we feel our (lottery) sales could be negatively impacted, which in turn could effect proceeds to the Commonwealth.”
The Court’s ruling expands the playing field in the gambling market and unleashes several competing forces against each other in a multi-billion dollar industry. The states will seek to levy marginal taxes on each bet to raise revenue.
Each of the four major professional sports leagues released a statement Monday, as did the NCAA, and three mentioned “the integrity of the game,” the justification that led to the original law banning sports betting in 1992.
Potential entrants into the market, such as casinos, will want a seat at the negotiating table to ensure opportunities to accept wagers. Waldrop on Monday advocated by phone for horse racing’s stake, encouraging tracks to “argue forcefully to participate.”
“The good news is that the industry has been preparing for this result,” Waldrop said.
In Oceanport, New Jersey, Monmouth Park Racetrack may have set a precedent. New Jersey brought the case to the Supreme Court in opposition to the 1992 Professional and Amateur Sports Protection Act. The state fought for seven years for the right to legalize sports gambling. Monmouth Park was one of the leading forces in that effort, believing that the ability to accept sports bets would rejuvenate its financial standing after years of fewer race dates and decreased revenue.
At a press conference Monday, Dennis Drazin, the chairman of Darby Development, which operates Monmouth Park, said he hopes the track will open sports betting within two weeks.
While the Supreme Court decision places the onus on states to legalize gambling, and other states have longer timetables, Drazin said he doesn’t think a bet placed at Monmouth Park after Monday will violate the ruling, though he will delay that effort if a state lawmaker encourages him to hold off.
“We’ve seen our revenues decline,” Drazin said. “The subsidies that we used to enjoy for many years to equalize us for not having casino gaming were eliminated back in 2011. So the industry has been struggling.
“What Gov. (Chris) Christie did give us at the time, even though he took away the subsidies, is he gave us an opportunity. He gave the racetracks and casinos the opportunity to fulfill their own destinies, to have an opportunity to do sports betting to try and strengthen both industries, bring people back to racetracks and casinos.”
Monmouth Park and other businesses of all sorts prepared for sports betting in anticipation of Monday’s decision. Monmouth Park has almost finished an addition to its gaming area on site. Draft Kings, the daily fantasy sports site, also announced Monday it will enter the market by offering sports betting on mobile platforms.
Eric Hamelback, the CEO of the National Horsemen’s Benevolent and Protective Association, said that competition is ultimately positive.
“As long as we’re all in this together, nobody is trying to shut down another industry,” Hamelback said. “As long as we’re all treating this as something that can benefit all of us symbiotically, then yes.”