The horse racing industry continues to be shut out of the booming Ontario sports betting industry. And, if that persists, Canada’s largest racing company said it could spell the demise of the centuries-old sport.
“If we don’t get the right to integrate, then the cannibalization and the competition would be overwhelming. It’s not overly dramatic to say it could spell the end of racing if we don’t have the ability to provide a product on a competitive footing,” said the Woodbine Entertainment Group’s president commercial Michael Copeland in a long interview with PlayCanada.
“If we turn it from a negative to a positive, we can see that [sports betting is] also the platform for us to become self-sufficient and an even greater contributor to the province.”
Woodbine is a not-for-profit company. It operates thoroughbred racing at Woodbine Racetrack in Toronto and harness racing at Woodbine Mohawk Park in Milton, ON. The company also runs a national horse racing betting platform called HorsePlayer Interactive. Betting on Woodbine races produces the vast majority of all horse racing handle in Ontario (sometimes as high as 96%). Woodbine also plays a role as a shepherd of much of a provincial horse racing industry. Ontario has 15 racetracks and supports some 25,000 full-time equivalent jobs.
Yet, time and again, horse racing has been denied the right to compete fairly in Ontario’s gambling industry, said Copeland.
The OLG’s fractured relationship with horse racing
Woodbine officials are loath to lay direct blame. But, it’s obvious a main culprit is the Ontario Lottery and Gaming Corp.
The OLG has a long history of professed “integration” with the province’s horse racing industry. Yet, for more than 20 years the OLG has acted more like horse racing’s predator than its partner.
Much more on that troubled history tomorrow in part two of this series.
For now, let’s talk about what horse racing thinks it needs to compete.
What horse racing wants
Woodbine is asking for two things, mainly:
- Authorization to partner with gaming operators to allow betting on horse racing on legal sites and apps.
- The right to open retail sportsbooks at Woodbine track and teletheatre locations throughout Ontario.
Getting horse racing on operator platforms is likely to happen sooner. And, it will probably benefit horse racing more, said Copeland.
“All we’re saying is give us a chance to fight on an equal footing,” he said. “We like our chances because our product is fantastic. It’s perfectly complementary to a sports wager. In fact, you could say that, of anything, horse racing is actually optimized for sports wagering. The races take two minutes and you’re done… We fit in non-traditional times. But even when other sports are going on, we only need your attention for two minutes every 40 minutes.”
Currently, you cannot wager on horse racing in Canada on any of the legal, regulated gaming sites, except Woodbine’s HPI.
And the reality is, Woodbine doesn’t have the marketing dollars to compete with the major gaming operators to promote HPI. Woodbine CEO Jim Lawson told PlayCanada in April:
“Many of big ones are targeting $75 million each of marketing spend in this province over the next 12 to 24 months. We won’t be able to keep up and it’s going to hurt us.”
Wait, didn’t Woodbine lobby to keep operators from offering horse racing?
Copeland said Woodbine has been trying to “advance our right to integrate our racing content in with the online sportsbooks… for the better part of a year or more.” He said the company has been talking with iGaming Ontario, the Alcohol and Gaming Commission of Ontario, the Ministry of the Attorney General and the Canadian Pari-Mutuel Agency to try and get approval.
There is a twist in all this. Prior to single-event sports betting being approved federally in 2021, Woodbine fought and won the right to exclude operators from offering pari-mutuel wagering in Canada. That meant Canadian operators could not add horse racing to their gambling mix.
“Horse racing remains pari-mutuel and with us being the only current pari-mutuel license holder in the province of Ontario, if they want our product, they have to come and get it from us,” Lawson told PlayCanada in August.
Pari-mutuel wagering is a system in which bets are pooled, the house take is deducted and the payoff odds are calculated by sharing the pool among all winning bets. The system is critical to supporting the costly exercise of owning and campaigning racehorses and putting on the horse racing product.
Woodbine said fixed-odds wagering would kill the sport
Woodbine was concerned that bringing in the fixed-odds wagering that sportsbooks offer would lead to razor-thin margins and, ultimately, horse racing’s demise.
Copeland said the ban on other operators being able to offer pari-mutuel wagering directly was “specifically to allow the profits from racing to remain within the industry and not to leave through an expat entity.”
It’s a vicious circle.
Racehorses cost a lot of money to breed, acquire, feed, keep and train. Race purses are, mostly, derived from the track’s take of pari-mutuel wagering. The danger is a lower take for the tracks leads to lower purses. Lower purses drives owners out of the game of racing horses. Since field size is critical to driving handle, having fewer horses leads to smaller fields. That leads to a further decline in handle. And, in turn, that lowers purses even more and drives more horse owners out of the game.
And that could spell the death of horse racing, an industry that provides significant employment in rural Ontario.
Do gaming operators even want to offer horse racing?
How then, can gaming operators offer horse racing for betting in Canada? And, do they even want to offer it?
The former is still a bit tricky. But on the latter, Caesars, FanDuel, BetMGM, PointsBet and DraftKings, at least, appear to have very strong interest. All of them offer, or are soon to launch, the following separate horse racing betting apps in the United States:
- FanDuel Racing (in partnership with TVG, now rebranded as FanDuelTV) launched in 2020.
- BetMGM Horse Racing (in partnership with NYRA Bets LLC) launched in 2021.
- Caesars Racebook (also in partnership with NYRA) launched in November of this year.
- PointsBet (in partnership with the Stronach Group’s 1/ST Technology) announced in October that it will launch a yet-to-be-named horse racing app early in 2023.
- DK Horse (in partnership with Churchill Downs Inc.’s TwinSpires betting brand) announced in late November that it should launch “in the coming months.”
The hope for all of the above is to integrate with each operator’s main sportsbook app before too long. So far, it has been a technological challenge to incorporate pari-mutuel wagering into fixed-odds sites.
And as sports betting is still in a major growth period in North America, there are higher priorities.
PointsBet is bullish
However, Paul Hannon, the senior vice president of corporate development for PointsBet, told PlayCanada that horse racing is important to his company’s gambling mix.
“I think as operators begin to mature their products, horse racing obviously is, from a content perspective, a really important piece of that,” Hannon said. “We identified that very early on, because our company really does have its roots in horse racing going back to Australia. Not only just in Australia, but even in the US. A lot of our tech team has deep roots in horse racing.”
Hannon, like Woodbine, believes having horse racing on multiple operator sites will be a boon to the sport in terms of exposure.
“The bigger opportunity is to grow horse racing. If you look at it, it is ‘the’ betting sport if we’re talking about sports that you bet on,” Hannon said. “Horse racing is not only the original one, but it is a sport that is entirely built around betting on it.
“We really view horse racing as being able to crack back into that top 10 of most wagered on sports in the US. So, that’s kind of what we’re positioning to do with [our horse racing betting app].”
And, yes, you can bet on Woodbine races in the United States through those platforms. Yet, none of the above — or any other operator, for that matter — has publicly said it was planning to offer the ability to wager on horse racing while the bettor is located in Canada.
Hannon, for one, said that will be resolved before too long. He said it would be a natural extension for PointsBet to bring its horse racing app to Ontario one day.
Woodbine says operators will soon be able to offer horse betting in Canada
Naturally, Woodbine said it is pushing hard to give legal operators the ability to offer horse racing. With some 40 live gaming operators now in Ontario, the competition for the gambling dollar is intense. And as many as 10 more operators are in the pipeline to launch.
The racing company is now working with an operator on the tech to allow operators to offer horse racing in Canada. For now, Woodbine is keeping the name of that operator private.
“We hope that [it will launch] by the end of this calendar year, or very early in the new year if holiday schedules interfere,” Copeland said. “We’re really in the last mile on the development process.”
Copeland said there’s “no downside” to horse racing being available for betting on operator sites. The only caveat is that it remains pari-mutuel wagering, for now.
“The customer wins because they get access to racing content. It is proven to be the number one complementary wagering product to traditional sports betting around the world. It’s a win for the online sportsbooks, because they provide a more attractive offering. It’s a win for the racing industry. Clearly, it’s a win for the government because they generate more tax revenue. And, it’s a win for the taxpayer,” Copeland said.
Hannon: sports betting will help grow horse racing
In fact, rather than sports betting being what kills horse racing, Hannon believes the opposite.
“I think the misnomer that the proliferation of sports betting is a challenge for horse racing couldn’t be more incorrect,” Hannon said. “After a few years of trying to figure out the best way to play it, the dominant horse racing players in the US have adopted a philosophy that this is a means for further distribution for their content, for their races. That’s definitely the way that I would be looking at it up in Canada for the horse racing industry.
“It is a transformative type opportunity for them to get horse racing in front of millions of more eyes every year. And, specifically, the correlation between the marketing dollars spent behind these products and platforms will allow them to distribute their content on a much wider basis than it ever has done before. And we’ve seen that play out in other markets, specifically Australia. So, if I’m a horse racing industry stakeholder that has a mandate to grow the sport and generate additional revenue dollars for the ecosystem, I would partner with as many sports betting operators as I possibly could to get that done.”
Hannon said fixed-odds betting on horse racing will be offered, eventually.
“It’s going to take some time and needs to be done correctly and diligently as far as the economics are concerned. But I think there’s a bridge to be built from the pari-mutuel ecosystem to one that has fixed odds racing incorporated on every major sports betting platform in the space,” Hannon said.
“I do think it’ll take a few years still, though, especially in the States, where legislative appetites consider that sort of thing.”
Making the tech work, satisfying regulators the biggest issues
For now, Copeland said technology and navigating the approval process have been the chief challenges. Woodbine and its sports betting partner need to get the authorization of the CPMA, iGO and the AGCO. Those regulators need to see that the technology will work to route bets through Woodbine’s tote system. And, of course, the entire process must protect the betting customer.
“It’s been a really heavy lift in terms of developing the technical backbone to do this, surprisingly so,” Copeland said. “The partner that we’re working with has had a multi-person development team on this for months, as we have. But, once we develop this, because we’ve anticipated the questions and kept the regulatory authorities in line with what we’re doing, we’re hopeful for a quick turnaround and a quick green light.”
When that green light comes, Copeland said it will offer the technology to any “legitimate and credible” gaming operator that meets Woodbine’s standards.
“So, there’s a massive benefit to racing in terms of increasing distribution,” Copeland said.
As for having retail sportsbooks at Woodbine tracks and teletheatres across Ontario, that appears to be a bigger challenge.
Yet, Lawson told PlayCanada it was an effort worth making.
This despite long-standing opposition from the OLG, horse racing’s supposed partner.
More on that tomorrow in the second and final part of this series.
