Bettors aren’t buying line from Woodbine
Canadian horseplayers seek bigger share of take, like those at other tracks
When Country House became the official winner of the Kentucky Derby in May, after the fastest finisher was disqualified for the first time in the race’s storied history, bettors who backed the colt left Churchill Downs racetrack happy and with pockets full of money.
If they were lucky enough to score a trifecta (by picking the top three finishers in order) or the superfecta (the first four in order) they were over the moon — collecting $11,475.30 for a $1 tri wager and a whopping $51,400.10 for the super.
However, Canadians who wagered through the Woodbine Entertainment Group (WEG) online betting platform, HPIbet, or Champions teletheatres across Ontario and were lucky enough to pick the trifecta went away with $10,739.70, or $735.60 less than bettors collected at the home of the Derby in Louisville, Kentucky. If they hit the super, they walked away with $2,635.90 less.
That’s because WEG charges a higher commission (or takeout) than host racetracks do in many cases. For Canadian horseplayers such as Dean Towers, Woodbine’s take seems excessive.
“They are getting money from the government, a subsidy. They are given a monopoly. Yet they don’t offer track prices. They skim,” said Towers, who writes the horse racing blog Pull the Pocket as well as for harness racing and thoroughbred racing trade publications. “It’s a pari-mutuel game: If a horse pays $20, it should pay $20. It’s really weird that they are allowed to get away with it.”
For decades, horse racing’s only source of revenue was betting. Times have changed. Now every jurisdiction (except for Santa Anita Park in southern California) is propped up by another form of gaming or government subsidy — including Ontario, where the local industry receives more than $105 million each year from the province. WEG was chosen as the wagering provider by racetracks in every province, making it the only legal operation in Canada — except for Alberta, where Stronach family-owned Xpressbet also has a licence. In Ontario, the government granted the Woodbine group a monopoly in 2014, part of a longterm funding agreement aimed at keeping the sport alive in the province.
Toronto-based horseplayer Eric Poteck penned a letter to Premier Doug Ford to complain about the takeout issue, writing in part: “For a pari-mutuel gambling game to be fair and have integrity it must offer a level playing field to all competitors. It is clearly not fair that Ontario residents do not receive the same winning payout as Americans.”
WEG customers are hit with higher commissions on trifecta, superfecta and Pick 3 wagers for races at most U.S. tracks. In some cases, the difference is one per cent. In others, such as the ones mentioned on the Derby, it can be four or five per cent. Poteck calls the extra levy a “winners’ tax ... (that) destroys Ontario horseplayers’ bankrolls, while leaving Americans to reap the rewards.”
Jamie Martin, director of operations at Grand River Raceway in Elora Ont. and Woodbine Entertainment’s former executive vice-president of racing, says takeout has been an ongoing issue and that Woodbine’s cut is “perfectly legal.” That’s true: Licensed racing operations can deduct up to 35 per cent, which is on top of the 0.8 per cent federal tax and 0.5 per cent provincial levy on all bets. But is it good for business? Woodbine Entertainment declined to answer specific questions about horseplayers’ concerns and how takeout rates are set, but offered the following statement:
“HPIbet is a wholly-owned brand of Woodbine Entertainment and the takeouts used by all Woodbine locations and on HPIbet are an important source of funding for the horse racing industry. We match all Canadian racetracks’ takeouts and most pools from U.S. and international racetracks. Customer winnings are taxed in the U.S., but in Canada the taxes and mandatory deductions are charged upfront, so for some U.S. pools we increase the takeout to help pay for mandatory deductions, higher fees paid to U.S. host tracks and our rewards program.
“Furthermore, it’s critically important to understand that Woodbine Entertainment does not have any shareholders and operates like a not-for-profit business. Our sole mandate is to grow and sustain the horse racing industry. Any profits we generate are invested back into initiatives that support the growth and sustainability of horse racing.”
How those profits are invested back into the industry is unclear. Before government support, racetracks were required to turn over about half of gross wagering commissions to horsemen’s groups. Today, according to Katherine Curry, WEG’s vice-president of legal and compliance, the split is determined by confidential agreements with those same groups.
According to the national governing body, the Canadian PariMutuel Agency, Canadians bet $1.3 billion on horse races in 2017.
Sixty-nine per cent of that was on races run outside Canada. So while only a fraction of bets placed in Canada are on live Woodbine Entertainment races, WEG accepts virtually all of the wagers made on Canadian soil.
South of the border, Americans have more choice when it comes to wagering sites, or Advance Deposit Wagering (ADW) platforms. The largest are Churchill Downs’ Twinspires, Xpressbet and TVG.
That competition has encouraged all three to match the host track’s payouts.
“If we increase takeout, there’s no question we’d lose customers,” said Ed DeRosa, director of communications at Twinspires.
In 2014, horseplayers boycotted Churchill Downs after it was reported that they’d increased their commissions, and the volume of bets declined significantly.
Poteck says more Ontario bettors — some of whom, the biggest spenders, are offered rebates that ease the sting of commissions — could turn to grey markets or offshore bookmakers, which are illegal but known to be widely used. Woodbine Entertainment CEO Jim Lawson has said in the past that his group has lost substantial business to offshore operators.
Poteck and Towers both recognize that setting the takeout rate is a business decision for Woodbine Entertainment, but say that customers simply deserve more.
“You can call Woodbine and ask for a better price,” suggested Martin. “If there was enough public pressure, then WEG may reconsider their position.”