Advance deposit wagering has created new revenue in the horse betting industry

State Lawmakers Opposed To Online Gambling Should Look At Horse Racing, Sports Betting And NJ

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Most industries are doing everything in their power to adapt to the new online and mobile world. Brick-and-mortar retailers that fail to adapt are dropping like flies, while others that are embracing online distribution channels are reaping the benefits.

One industry that has been slow to adapt to this new reality is casino gaming.

Initially, most casinos were against online gaming, but now it’s only a handful of holdouts pressuring state legislatures to “just say no” to online gambling. Unfortunately, lawmakers seem to be listening to the holdouts’ claims that online cannibalizes land-based casinos, and ignoring all the evidence to the contrary.

It’s been over six years since the Department of Justice Office of Legal Counsel issued an opinion that opened the door for states to legalize online gambling. Plenty of states have looked into online gaming, but to date, only four states have taken the plunge and passed online gambling legislation.

And so far, wherever online wagering has been introduced, the results have been very good.

The Atlantic City example

After a decade of declining revenue, Atlantic City‘s casinos have seen gaming revenues increase in back-to-back years.

And online casinos, once thought to be the Netflix that would decimate the land-based casinos Blockbuster, have been credited with helping to buoy Atlantic City’s land-based casinos.

The Nevada example

Online sports betting was introduced in Nevada in 2011, and revenue has been rising ever since.

  • 2008: $136.4 million
  • 2009: $136.4 million
  • 2010: $151.1 million
  • 2011: $140.7 million
  • 2012: $170 million
  • 2013: $202.8 million
  • 2014: $227 million
  • 2015: $231.8 million
  • 2016: $219.2 million
  • 2017: $248.8 million

Mobile betting is now responsible for about half of all wagers in the state by some estimates.

As Sunset Station Sports Book Director Chuck Esposito told the Las Vegas Review-Journal earlier this year, “The mobile app has really brought the sportsbook to the palm of your hand. That’s really helped contribute to the increase in handle across the board.”

Horse racing provides the best example

These recent examples should come as no surprise. A similar series events unfolded nearly 20 years ago, when horse racing began offering its version of online gambling, advanced deposit wagering (ADW) in 1999.

Like online gambling in New Jersey, or mobile sports betting in Nevada, online horse betting hasn’t been a panacea, but it helped stem the bleeding of a struggling industry, and may very well be responsible for saving horse racing in the United States.

Despite the doom and gloom surrounding the industry, horse racing is still big business.

Throughout the years, the amount of wagering that takes place off-track (simulcast and ADW) has been trending upwards. So much so that off-track betting now dwarfs the amount of money wagered on-track in the United States by an almost 10-1 margin.

Online wagering is accounting for an increasingly larger percentage of off-track wagering, accounting for as much as 40 percent of total off-track betting by one estimate.

Even on the biggest racing day of the year for on-track betting, the Kentucky Derby, online wagering still makes up a significant portion of total handle.

According to Churchill Downs, the 2018 Kentucky Derby generated $225 million in handle. About $40 million of that came from Churchill’s TwinSpires online platform.

Keep in mind that Churchill Downs hosts the Kentucky Derby, so its numbers will skew heavily towards on-track betting.

According to an industry expert who spoke with Online Poker Report, about a third of all betting on the Kentucky Derby occurred online.

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Loads of benefits and no disadvantages

Racing was already trending downward when online wagering emerged. So conclusive evidence that online wagering has or hasn’t cannibalized on-track wagering and/or attendance doesn’t exist.

What we do know is ADW has provided the same benefits for tracks as online gambling has for casinos.

ADW wagering:

  • Creates a new revenue stream.
  • Increases distribution opportunities.
  • Is convenient and easy to use.
  • Appeals to a younger demographic.
  • Provides better, useful data about customers.

On the other side of the ledger, you’d be hard-pressed to find anyone in racing who thinks ADW has harmed the industry. Just as you’d be hard-pressed to find a Nevada sportsbook or Atlantic City casino with a negative view of online gambling.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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