Do Fixed Odds Have a Future in Horse-Racing Rich Kentucky? 

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With the debut of legal sports betting in Kentucky looming in September, there are questions about the impact it might have on horse racing in the Bluegrass State.

Horse racing’s rich tradition in Kentucky is juxtaposed with an industry trying to find its future footing. Fixed odds are viewed by some as a possible panacea for a sport in need of modernization, and one that operates on a time-honored parimutuel betting system.

The question: Can fixed odds flourish in Kentucky’s legal sports betting era at some point in the future? While fixed odds have played to rave reviews in Australia and other countries, they are stuck in neutral here in the states.

The only state where fixed-odds horse racing is legal is New Jersey, where it is available through Monmouth Bets. Colorado has legalized fixed odds, but no operator there offers them.

There is no provision for fixed odds in House Bill 551 that was signed into law by Kentucky Gov. Andy Beshear. But if any state could take the reins and become the model for fixed-odds horse racing in the US, shouldn’t it be Kentucky?

Making the Fixed-Odds Case for Kentucky

Thoroughbred Idea Foundation (TIF) Executive Director Pat Cummings wrote a 2019 white paper on fixed odds in the US. Cummings is an advocate of fixed odds and believes they can help usher horse racing into the modern era.

“I think it’s a safe bet to assume fixed odds will be legal for racing at some point,” Cummings said in an email to Gaming Today. “Interestingly, fixed odds betting on Kentucky racing is already permitted — just not for Kentucky residents, or really any Americans. Some of the tracks in the state have done deals with international fixed-odds providers, so foreign customers can legally bet on some Kentucky racing at fixed odds.”

Cummings also noted that there are little to no liquidity requirements for fixed-odds horse betting, which would allow for the creation of derivative betting markets on head-to-head matchups, markets without a horse or horses, prop bets on trainers or jockeys, and bets on winning margins.
Kentucky Fixed-Odds Horse Racing
The race is on to see if fixed-odds horse racing will be available in the future at Kentucky tracks like Keeneland. (AP Photo/Darron Cummings)

“Pari-mutuel wagering really demands decent liquidity to offer a market to a bettor, but a fixed-odds bookmaker does not need that,” Cummings said. “The pari-mutuel betting menus are almost wholly unchanged this millennium.”

He added, “It’s impossible to think that the sport can survive on an antiquated pari-mutuel-only model in its current form given the current competitive landscape.”

Fixed Odds Still Face Uphill Battle in Bluegrass State

Churchill Downs Inc. CEO Bill Carstanjen is not a proponent of fixed-odds horse racing. Carstanjen believes the parimutuel system ensures added value for horse bettors.

“It creates a lot of value in the pools when you can still get 50-1, you still can get 25-1,” Carstanjen said. “And as you know in the fixed-odds world, you don’t (regularly) see odds like that. You don’t otherwise see big payouts like that. So our game from a customer perspective remains a pretty interesting game.”

He added, “You sometimes hear ‘Wouldn’t fixed-odds wagering be good for horse racing?’ No, I don’t really think so. One thing you’d see as a player, you’d see a lot of that value disappear.”

Tracks would see a lot of guaranteed profit disappear, as well, given their approximate 20% takeout rate in the pari-mutuel system. Cummings believes that aids the cause for fixed odds in the soon-to-be legal era of sports betting in Kentucky.

“If US racing had been evolving its pari-mutuel bet processing infrastructure over the last 20 years and takeout rates for all bettors were competitive, maybe fixed odds wouldn’t take hold,” he said. “But none of that has happened, and now you have this robust, legal competition that is well-distributed, mobile, and marketed to the hilt.”

Red Mile VP of Racing & Sports Wagering Operations Gabe Prewitt understands the allure of fixed odds from a bettor’s perspective. Caesars Sportsbook will open for business soon at his harness track in Lexington. Prewitt noted the retail sportsbook will have dedicated space for horse players including multiple TVs and a self-service kiosk.

“It’ll all be done as it is in-house currently,” Prewitt told Gaming Today. “Fixed-odds wagering is interesting. It does service a complaint you hear quite often in the horse racing world. Odds obviously fluctuate for the good or worse. If a horse leaves the gate at 4-1 and all of a sudden he’s 5-2, I can certainly understand the complaint that ‘this is crazy‘.”

Prewitt does see some potential hurdles for fixed-odds horse racing, though. Anecdotally, he shared the story of a friend betting fixed odds in Canada to help illustrate his points.

“Every time he was betting, the system quickly identified him as a sharp guy because he was always getting the best of the number,” Prewitt said. “If he was getting fixed odds of 8-1, the horse could go off legitimately at 5-1 or 6-1. So, what happened is they cut him down to nothing, like a $100 max bet or something.”

Paul Zilm, horse racing oddsmaker for Las Vegas-based Circa Sports, a sportsbook that caters to professional bettors, told Gaming Today, “Limits need to be stated and fair. You can’t convert sports bettors and then limit them to pennies.

Additionally, Prewitt believes you could run the risk of cannibalization by offering fixed odds. There are nine tracks that can have sports betting licenses in the Bluegrass State.

“The problem with it is we have a select amount of people that are betting on horse racing,” he said. “If you begin to dilute that population into different streams, so to speak, I think you cannibalize yourself. I think fixed odds would dilute some of the players that are unsuccessful out of the parimutuel pools because they’d like to book them, and the guys that are sharp would be cut off.”

How Will This Race Play Out Over Time?

It’s far too early to determine the ultimate fate of fixed odds in Kentucky. Cummings and Prewitt were both asked if they could envision the day when fixed odds will be part of the sports betting scene in Kentucky moving forward.

“I honestly don’t know,” Prewitt said. “If the appetite is there, I’d be game for rolling forward with it, but I think the jury is still out on that. I really do.”

For his part, Cummings is much more enthusiastic about the prospect.

“Fixed odds shouldn’t replace pari-mutuel, but complement it, and I think it’s only a matter of time before the sport embraces it fully,” he said.

Stay tuned.

More from the Bluegrass State: Red Mile VP Sees Sports Betting as Boost for Kentucky Horse RacingA Closer Look at the Minimum Age of 18 for Kentucky Sports BettingFive Named Sportsbooks Confer With KY Regulators Ahead of Sports Betting Launch | Kentucky Sports Betting Launch Set for Sept. 7, Online Coming Sept. 28 | Kentucky Asks Massachusetts for Sports Betting Guidance, is Obliged (by Kentuckian)

About the Author
Kris Johnson

Kris Johnson

Senior Writer
Kris Johnson is a senior writer at Gaming Today with more than 15 years of experience as a sports journalist. Johnson's work has appeared in Sports Business Daily, Sports Business Journal, NASCAR Illustrated, and other publications. He also authored a sports betting novel titled The Endgame.

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