Daily Racing Form National Digital Edition
Monmouth Park’s fixed-odds experiment off and running
Fixed-odds betting on horse racing in the U.S. is set to finally become a reality with the Saturday opening of Monmouth Park in New Jersey, but the track plans to take baby steps as it works out the kinks throughout the meet, according to track officials.
When Monmouth opened on Saturday, fixed odds were to be available on every race at the track, though placing a bet will initially be limited to live tellers in two locations at the track. Fixed-odds bets will be available for win, place, and show, with a minimum of $1. Any win bet that nets $5,000 or more will have to be approved by a betting manager, as will any place or show bet that nets $2,000 or more.
Fixed-odds betting is a relatively simple concept, and one that is familiar to most sports bettors across the country. Under the system, you place a bet at the listed odds, and when the race is over, you are paid off at the odds listed on the bet. Supporters of fixed-odds betting contend that the simplicity of the system, as opposed to the ever-changing odds in a parimutuel system, may attract new bettors to racing and give existing players more options.
Many U.S. horseplayers say that they support the implementation of fixed-odds systems alongside pari-mutuel systems, as it will allow players to lock in a price on a horse. Some horseplayers have consistently complained over the past several decades about late odds changes in the pari-mutuel system, especially when those late odds changes drive down a winning horse’s price. Fixedodds bets may mitigate some of that frustration, supporters contend.
There are some caveats to the fixed-odds system at Monmouth that bettors should know before placing a bet. Although the state’s rules explicitly state that bettors must receive the payoff listed on their betting slip, Monmouth has been granted an exception to that requirement by the state’s Division of Gaming Enforcement in the event of one or more scratches.
Under the exemption, players who bet a horse who scratches out of the race will get a refund. That’s the good news. However, in the event of a scratch, all remaining bets that were made prior to the scratch will be subject to “deductions” to reflect the elimination of the scratched horse from the field, with that reduction determined by the horse’s odds at the time of the scratch.
Dallas Baker, the head of international operations for the Australian betting company BetMakers, which has a 10-year deal to run Monmouth’s fixedodds racing operation, said that the practice of discounting payoffs in the event of a scratch is “exactly the same mechanism and process that happens around the world” in jurisdictions that have long offered fixed-odds betting on racing.
Still, in an acknowledgement of the unfamiliarity of the practice to U.S. bettors, officials at Monmouth said that there will be ample signage explaining how “deductions” work. They also said, based on prior experience in foreign racing jurisdictions, that it is likely that many bettors will not be aware of the discount until they try to cash a winning bet, and they are expecting some blowback.
“It’s been done this way for years and years and years in Australia, but when it happens, there’s still a lot of complaining,” Baker said. Baker described the deduction system as balancing the needs of the bookmaker with the player, and said that bookmakers would not be able to offer refunds on scratched horses without the system in place. (In contrast, bookmakers do not offer refunds on horses that do not make a race in futures markets.)
“It’s basically the lesser of two evils,” Baker said.
For examples as to how discounting works, if a horse that pays even-money is scratched from the race, all win bets made prior to the scratch will be discounted by 40 cents on a dollar. If the scratched horse is 5-1, the applied discount is 12 cents on the dollar. Once a scratched horse’s odds reach 30-1 or higher, no discount is applied to winning tickets. Discounts for place and show bets are lower.
Also in the event of a scratch, BetMakers will recalculate the odds for the race, and all fixedodds bets made after the scratch will pay out at the listed price, provided there is not another scratch from the race.
BetMakers still has not worked out what to do with races that are moved off the turf, said Baker, who is from Australia. Monmouth does not run turf races until the third week of its meet, so Baker said, “We’re still finalizing our position on turf races.”
Bookmakers in Europe and Australia, where bookmaking is common, do not have to deal with off-the-turf races because tracks there don’t run on dirt. So there’s no established model yet.
“We’re trying to figure out a fair system to the punter without” the bookmaker taking on the risk that would accompany a situation where half the field scratches and the main trackonly entrants are suddenly the overwhelming favorites, Baker said.
Horse-racing bookmakers generally seek a profit margin of 12 to 15 percent, according to officials with knowledge of the operations. They protect those margins by offering horses at odds that are slightly lower than the theoretical real odds of a horse winning the race.
Fixed-odds betting is not expected to be available on mobile apps for at least several weeks, according to Baker and Dennis Drazin, the head of the company that operates Monmouth Park on behalf of the track’s horsemen. An app will be available starting Friday that will allow account holders to see fixed odds, but the app is not expected to go live for at least several weeks, Drazin said.
In addition, fixed-odds betting will be limited to races run at Monmouth. Baker said that “15 or 16” tracks in North America have expressed interest in allowing Monmouth to take fixed-odds bets from New Jersey residents on their races, but Baker said that it may be several months before any other tracks are available.
“It’s been a long road to set this up and get it up and running,” Baker said. “And naturally you can’t do things like this without something going wrong. The learning process is still ongoing. Sometimes you take one step forward but then end up taking two steps back.”
Most prominently, officials at the New York Racing Association, which operates Aqueduct, Belmont Park, and Saratoga, have expressed enthusiasm about making their races available for fixed-odds betting at Monmouth.
Although Monmouth conducted a pilot project offering limited fixed-odds betting on racing three years ago, the track has had to navigate a long and winding road to get to where it expects to be on Saturday. Legal issues and regulatory delays have consistently delayed the track’s plan to launch fixed-odds betting over the past two years, and clarification on the “deduction system” did not come from the Division of Gaming Enforcement until Thursday.
There are also questions about the enthusiasm for fixed odds among U.S. horseplayers, despite the social-media clamor from some horseplayers for it. In 2016, a bet-exchange opened in New Jersey allowing customers to post their own fixed-odds on horse racing and take bets from other customers, but the exchange was shut down four years later after failing to attract any significant business (In 2018, according to records, total handle for the entire year on the bet exchange was just shy of $13 million, or the equivalent of a single-day’s handle at a major track for an ordinary Saturday.).
Exchange wagering is a much more complicated model than fixed-odds betting, however, and the New Jersey exchange, unlike its highly successful counterparts in Europe and Australia, could not attract lay-off bets from legal bookmakers, since there weren’t any operating in New Jersey at the time. In foreign jurisdictions where bookmaking is legal, a sizeable portion of an exchange’s business comes from bookmakers looking to balance their books and mitigate risk, which provides a substantial amount of liquidity to a race.
New Jersey’s regulations allow for bookmakers to lay off bets on other platforms, so it’s possible that exchange wagering makes a comeback in the state sometime in the future, provided fans and bookmakers begin to do a sizeable amount of business in the market for fixed-odds bets.
Players should also be aware that fixed-odds bets are not likely to differ substantially from the eventual pari-mutuel odds, at least not as often as players might be expecting, according to U.S. racing officials who have studied the markets in other countries. At a legal conference last year examining the potential of fixed-odds betting in the U.S., Jack Jeziorski, a simulcasting official for 1/ST racing, warned players that bookmakers typically have a good handle on their lines.
“These guys are really sharp,” Jeziorski said. “If you think a horse on the board that is 5-1 [in the pari-mutuel system] with four minutes to go is going to go to 2-1 at post time, you are not going to get the horse at 5-1 at the bookmakers. That horse is going to open with them at 2-1.”
At Monmouth, fixed-odds will be displayed on monitors alongside the pari-mutuel odds throughout the plant, Drazin and Baker said. BetMakers also spent $1 million to install an enormous infield display next to the existing pari-mutuel board to draw attention to the bets.
Baker points to Australia’s experience with the introduction of fixed-odds betting a decade ago to predict that the debut of the betting type at Monmouth will lead to a sea change in horse-race betting in the U.S. In Australia, with a population of 25 million people, the introduction of fixed-odds betting alongside its existing pari-mutuel market led to a doubling of total bets on horse racing in the country. Purses doubled as well.
“It’s a landmark day for racing in the U.S., I truly believe that,” Baker said, stressing that large-scale changes will likely take at least five years to occur. “We’re not doing anything new here, we’re just refining a concept that has been unquestionably successful in Australia, and there’s no reason it can’t be even bigger here. The room for growth in the U.S. is just so much more significant.”