CEOs discuss federal law, sports betting, fixed odds and more

Tucson, Ariz.

It was a 95-minute summit meeting of racetrack bosses. Four CEOs gathered on stage Tuesday afternoon at the 47th annual Global Symposium on Racing, exchanged ideas, revealed future plans and embraced the passage of a federal law that created government oversight of the sport.

“If you had asked me 20 years ago do I want to turn over our sport to the federal government, I would have said no way,” said Shannon Arvin, president and CEO of Keeneland. “But after so many times of trying again and again and again to get to the place where we need to be, it became very clear to me that that’s the right path.”

Arvin, 1/ST Racing CEO Craig Fravel, Del Mar president Josh Rubinstein and New York Racing Association president and CEO David O’Rourke took turns talking about the scheduled implementation next summer of the Horseracing Integrity and Safety Act.

Where Arvin called it “a game changer,” Fravel said HISA fills the void of an independent authority that racing has long needed.

“We cannot be promoting the sport and regulating the sport at the same time,” said Fravel, who later touched on horse deaths such as that of Kentucky Derby winner Medina Spirit on Monday at Santa Anita, a 1/ST track. “The public is no longer willing to accept the lack of transparency in a system that works like it used to. Let’s face it. You can’t paint death in a good color. It doesn’t exist.”

The specifics of HISA’s implementation were discussed at length during other panel discussions Tuesday morning. In their presentation, the CEOs expanded the list of topics to include sports betting, fixed-odds wagering, the phasing out of Lasix and even some building plans at two racetracks.

More synthetic tracks in the East

Gulfstream Park did it first. Laurel Park is on deck. Now Belmont Park appears to be on the verge of adding an all-weather track that would make dirt, inner and outer turf and synthetic circuits available simultaneously.

“We have a project right now to build a tunnel to the infield,” O’Rourke said. “It’s not approved yet. It’s still in the planning phase to put a mile-and-a-sixteenth synthetic as a fourth track primarily used during the weather and then off the turf.”

O’Rourke’s informal announcement of the project came more than two months after Gulfstream christened its new Tapeta track, which was installed between its dirt and turf courses. Fravel said plans that were first announced three years ago are moving forward to do much the same at Maryland’s Laurel Park, which, like Gulfstream and Santa Anita, is owned by 1/ST Racing.

“It’s going to be a little different configuration,” Fravel said. “We’re working very hard on a way to put the Tapeta on the inside there rather than on the outside (of the turf track), which allows us to have training go on simultaneously with the dirt and the Tapeta. That’s a huge opportunity.”

Fravel spoke around about the same time as the Maryland Jockey Club announced separately that Laurel Park activity would remain suspended indefinitely to continue making repairs to the cushion under the main track. Eight horses suffered what proved to be fatal fractures this fall at Laurel, where the dirt surface was rebuilt after it deteriorated early this year.

Fixed odds vs. pari-mutuels

With fixed-odds wagering on races approved but still not active in New Jersey, it has become a matter of when, not if, that format will be paired with pari-mutuel betting – and not only at Monmouth Park and the Meadowlands.

O’Rourke sounded enthusiastic about the idea of one day offering them side by side at NYRA tracks. Rubinstein was more circumspect.

“We’re certainly open-minded to fixed odds,” he said. “We just haven’t seen a model yet that is additive to pari-mutuel wagering. From Del Mar’s perspective, 100 percent of our purses, track commissions, funding for backstretch health and welfare, our regulators (and) stabling all come from the pari-mutuel system. That’s a very sensitive dynamic.”

O’Rourke said he sees fixed odds as a gateway for bettors who have grown comfortable with that system in other sports. He said it would be easier to sell players who are used to less volatile movement of point spreads on that concept rather than having them endure the unfamiliar experience of a pari-mutuel market that fluctuates until post time.

“You know what price you have,” O’Rourke said. “Our view is that it offers us another product alongside pari-mutuel that a bettor can play with a little bit.”

Rubinstein countered the point that pari-mutuels and fixed odds have co-existed successfully in other countries, such as Australia and the United Kingdom.

“If you look at purses in the U.K., outside of big festivals like Ascot, they’re pretty low,” he said. “We definitely don’t want to go in that direction. Purses are increasing in California. We don’t want to get in the position where we’re offering our product at a lower margin.”

Sports betting: Competitor or partner?

In the more than three years since a U.S. Supreme Court ruling legalized it, sports betting has spread to 30 states plus the District of Columbia. Whether it has siphoned potential handle from horse racing remains a subject of debate.

Arvin said racing as a whole should look for ways to be a partner and a beneficiary in the growth of wagering on other sports.

“We’ve got to do it in a smart way,” she said. “We’ve got to be really strategic in how we take advantage of sports betting so that it doesn’t cannibalize our sport, but it’s too huge of a market and an opportunity to pass up.”

“There’s opportunities in front of us, specifically on sports betting, that offer us probably what I would term a once-in-a-generation opportunity,” O’Rourke said.

Including horse racing in multi-sport parlays has been mentioned as an option that should be available to bettors. There is, however, the problem of varying takeout rates. Ed DeRosa of Horse Racing Nation pointed out to the CEOs that sports bets can be made at odds of 4-5 or 9-10 while racing has takeout rates that hover at a peak around 25 percent.

DeRosa asked, “Do you think 24 percent takeout on a Pick 4 is competitive with anything sports wagering offers?”

“I think 24 percent is high,” O’Rourke said. “Are there challenges for our pricing? Will (sports betting) push for more competitive takeout and probably a re-examination of the entire thing? I do think our product is very good. I do think when you’re looking at a win bet at like 15 percent, and you’re a race with eight runners, that is competitive with (two-team) sports betting. It’s a different dynamic.”

The Lasix evolution

The CEOs spoke in broad brushstrokes about the climate that led to HISA, including the sport’s failed attempts in the past to unite on issues such as whether Lasix should remain a legal medication.

Fravel recalled his early days as CEO of the Breeders’ Cup 10 years ago.

“Literally the first board meeting I attended, they decided that they wanted to ban Lasix in 2-year-old racing and ultimately at all Breeders’ Cup races,” Fravel said. “That caused a significant amount of controversy with horsemen’s groups around the country. We were forced to back off that. Not because we wanted to, but because horsemen basically threatened to withhold their consent for our simulcasts.”

Now the federal government has forced the hand of racing. HISA has specific language to make sure the sport is completely weaned from race-day Lasix by the summer of 2025.

That does not mean minds will be changed about whether the anti-bleeding drug is good or bad for the sport – and for horses.

“The Lasix issue is kind of the abortion issue of our industry,” Arvin said. “It is that divisive. People feel so strongly about it, one way or the other. With respect to HISA and evolving and talking through the process, we came to a compromise.”

Speaking during the Q&A opportunity at the end of the session, trainer and Illinois Thoroughbred Horsemen’s Association president Mike Campbell implored the CEOs to look harder at their impression of Lasix.

“Don’t just take for granted that Lasix is a bad therapeutic medication,” he said. “You’re in offices. We’re in the field. We’re watching these horses bleed out the nose. Most times we’re able to prevent that. We really want something that’s not just anecdotal. Let’s have mandatory scoping of these 2-year-olds. What’s wrong with that? It’s cheap and productive.”

Fravel responded by saying the terms of HISA “actually provide for academic type of study to look for the next step to take to make an evaluation of that.”

That give and take underscored something Arvin said early in the session. She crystalized the general feeling about the scheduled launch of the HISA era July 1.

“It’s not a silver bullet,” she said. “It’s going to have to evolve. It’s not going to come out July 1 and be exactly what we all want it to do and what it will evolve to be. But we have to try something different than what we’ve been doing for the past 40-plus years in order to let our sport move to that next level – in order to be a mainstream sport.”