Stuart S. Janney III:

Thank you for reassembling. Our next speaker is Joe Asher. You often hear that Thoroughbred racing is the sport of kings. Joe is proof that racing fans come from all backgrounds and his is especially impressive. I’m borrowing a bit from an article written this past March in CDC Gaming Sports, not a particular magazine that I’m subscribed to. The short story is that Joe grew up at harness tracks and in foster homes. He learned to count cards when he was 12, and his first job at 16 was at Brandywine Raceway. From there, and I quote from the article, Joe “became a racetrack publicist, an announcer, and moved on to become a lawyer. He owned a sports book, became CEO of a major sports book company and president of IGT Sports Gaming, and was appointed the chairperson of the board of trustees of the Woodrow Wilson International Center of Scholars, a Washington, D.C., think tank by President Joe Biden.”

He’s now turned the Woodrow Wilson Center into an adjunct resource for the sports betting industry. Just kidding. I wanted to make sure you were listening. Joe is an expert on sports betting and I’m pleased to welcome Joe here today to discuss how sports betting intersects with horse racing. Joe.

Joe Asher:

Thanks very much for that kind introduction, and we are trying to get some folks from the gaming world involved in the Wilson Center, so feel free to come up to me afterwards and we can talk about that as well.

It is an honor to have been invited to speak at this event and I’m especially pleased to have been introduced by you, Mr. Chairman. Like many racing fans, I learned about the sport from my father when I was a little boy. One of his favorite horses ever was Ruffian. In fact, we watched that match race on television together nearly 50 years ago, one of my earliest racing memories. I’m sure you know that she touched a lot of people all across the country. I’ve been to the Round Table once before about 20 years ago, but that time I didn’t have to do anything except make sure I was out of here in time to make the first race.

Today, I’m here because Jim asked me to speak about the intersection of horse racing and sports betting, and it’s not hard to convince me to come to Saratoga in August. This trip is a special one for me personally because it’s the first time my 11-year-old son, Carson, has been to Saratoga. We were in Northern Ireland last week because one of his sisters, Vivian, was playing in a soccer tournament over there. Of course, Carson and I persuaded mom and his other sister, Sydney, to drive five hours to go to the races at the Curragh, a legendary place where I had never been. By my count it was my 71st racetrack, but what an experience getting to see Aidan O’Brien giving a leg up to Ryan Moore on a young filly at that historic race course, and like any true racing fan would, I also insisted that we visit Giant’s Causeway. Carson is my wingman when it comes to the races. A few days ago we were in my hometown of Wilmington, Delaware, for a wedding and made sure to catch a couple of races at Delaware Park.

Typically, we’d be in Del Mar this time of year, but we had to leave early because of the Ireland trip. Here’s an old photo of when they let Carson into the money room at Del Mar. Don’t tell Josh Rubinstein. I’m not sure they were supposed to let Carson hold a half a million dollars.

Our other annual racing excursion is to the Elko County Fair over Labor Day weekend, which Carson will tell you is his favorite weekend of the year. Elko, for those who don’t know it, is a small mining town in Northeastern Nevada that has parimutuel racing two weekends a year. We play weekend cowboys and go up there for the races. It’s a great time. As some of you may know, I used to announce horse races back in the day, primarily harness races in Delaware and in Massachusetts. Although I did call the races at Fair Hill in Maryland once.

Anyway, I came out of retirement nine years ago in Elko. You can find the race on YouTube and they let me call a race a day when I’m there. The reason I mention this is to partly give Carson a shout-out – he’s sitting right there in the front row – but also to highlight the point I touched on earlier, that for many racing fans, our introduction to the sport comes from family members at a very young age. I was introduced to it as a young boy by my father, and I have now carried that forward with my kids. Getting people introduced to racing, obviously, is the first step towards getting them to bet on the horses, own horses, or simply watch racing on television. I encourage everyone to look for ways to get parents to bring their kids to the track, whether it’s the Donut Days that they used to have at Del Mar, the playground at Delaware Park, or other ways to welcome families.

Another way to get people introduced to racing is sports betting. Sports betting, of course, has exploded since the Supreme Court overturned PASPA in 2018. It is now legal in 38 states plus the District of Columbia and Puerto Rico. However, it’s worth noting that it’s not yet legal in California or Texas. We have all seen the massive advertising for sports betting on television, social media, arenas, billboards, you name it. Of course, the heavy promotion by DraftKings and FanDuel goes back to their advertising for daily fantasy sports betting back in 2011, and it’s fair to say that billions of dollars have been spent by sports betting companies to acquire customers in the U.S. In turn, the revenue for sports betting already is substantial. My friend Chris Grove, a super smart guy who among other things works with Eilers & Krejcik, a gaming advisory firm, was kind enough to let me use two of his slides.

They project sports betting revenue, which was around $11 billion in 2023 and should be somewhere between $14 [billion] and $15 billion this year, according to the American Gaming Association, will grow to approximately $20 billion by 2026. The 2026 projection assumes that neither California nor Texas have legalized sports betting. Obviously, those will be big markets when they regulate.

It’s turned into a very interesting market with substantial concentration. FanDuel and DraftKings together represent 75% of the revenue, and they show no signs of losing share. BetMGM, Caesars, Fanatics, Rush Street, and Penn, now branded as ESPN BETS, are the other major operators. Others are more localized and some small ones are throwing in the towel like Betway and SuperBook did recently. I don’t want to be sidetrack too much by it, but I often get asked whether the current market dominance by DraftKings and FanDuel is locked in for the future. I don’t think it necessarily is.

The first mobile phone that I ever had was a Nokia. Then I remember getting a Motorola flip phone, and then a RAZR. Next was a BlackBerry. I was hooked on my BlackBerry. They’re all gone today, or at least totally irrelevant. Apple and Samsung dominate the market. There’s no doubt that FanDuel and DraftKings have a huge lead today, but that does not mean it will always stay that way. FanDuel clearly leverages the sports betting expertise of its parent company, Flutter, and as you all know, they own TVG as well. They’re far ahead with respect to the integration of horse racing with sports betting. FanDuel has a common wallet allowing customers to wager with the same account balance on either horses or sports. No one else has that yet. DraftKings has a common login, but not a common wallet, and that’s a differentiator.

When I was in Del Mar in June, I had lunch with Andrew Moore, who runs the horse racing business for FanDuel. Much has been written about the success of the Kentucky Derby this year. Most watched Derby since 1989, the year of Sunday Silence and Easy Goer. Record handle, TwinSpires up 22% year over year, and so forth. Andrew gave me some FanDuel figures that I found interesting. 750,000 FanDuel customers bet the Derby, including 200,000 first-time race bettors on their platform. I don’t have the other operator’s numbers, but I did find this really interesting. This slide shows the top three sports apps in the Apple app store on Derby Day. DraftKings horse racing app was number one, TwinSpires was number seven. That’s good for them and maybe not a huge surprise, but check out the list of the top apps overall. This one did surprise me. It was DraftKings again, beating out Google, TikTok, Threads, and even Krispy Kreme.

Like you perhaps, I was curious as to why Krispy Kreme was so popular that day, so I did a little research and it appears that Krispy Kreme was offering a dozen donuts for free if you downloaded their app. Now, I’m not a big Krispy Kreme fan. I much prefer VG Donuts near Del Mar, but even I would’ve downloaded their app for a free dozen donuts. It is very impressive that a horse racing app beat out the Krispy Kreme promotion on Derby Day.

So, it was a great Derby across the board, but how much does that really matter in the big picture for folks who don’t work for Churchill Downs or aren’t smart enough to own its stock? It’s one race or maybe one weekend. Back when I was running the William Hill US business, I used to tell people that we did great on horse racing five days a year, the Derby, the Preakness, Belmont, and the two days of the Breeders’ Cup. It was the other 360 days a year that were a challenge.

Back to the numbers I got from FanDuel, about 30% of their Derby customers came back for the Preakness, and 20% typically for the Belmont, although the Belmont was up this year because it was run here in Saratoga, so about 200,000 FanDuel customers bet on it. That’s all well and good, but the issue is how many sports bettors will bet the third race at Delaware Park on a random Thursday or, more importantly, how can we entice some of them to do so?

A quick aside, I use Delaware Park in my example since I’ve been going there my entire life and now have a small ownership interest in it. I was there with my dad the day Spectacular Bid made his first start after losing the 1979 Belmont and his first start with the legendary jockey, Bill Shoemaker, aboard. Here’s the program from that day. It was a really big deal that The Bid was racing, and especially that Shoemaker was traveling to Delaware to ride him.

This was before simulcasting in the Breeders’ Cup, so pretty much the only time a regular racing fan outside of California saw Shoemaker was on television for the Triple Crown races and maybe one of the big New York races like The Jockey Club Gold Cup on ABC. One of the reasons sports betting is so popular is that millions of people are watching the games already. They follow sports news on television, on radio, and the Internet. They talk about the latest trades, injuries, and so forth with their friends. A few friends and I text regularly about the Vegas Golden Knights contract signings and how that fits with the salary cap. It’s also worth noting that the major sports leagues do a very good job with giving their fans interesting content. I think the NFL in particular does a great job with short-form social media content.

I loved being able to watch Rams Head Coach Sean McVay telling his quarterback, Matt Stafford, “This is going to be your game winner right here,” into his helmet when calling the winning touchdown play in the Super Bowl two years ago, or go back to 2018 when my beloved Eagles won the Super Bowl after Nick Foles suggested to Head Coach Doug Pederson that they run the Philly Special on fourth down. It’s tremendous content and just one of the many reasons the NFL has become such a juggernaut.

Making the transition from watching or following a sport to betting on it is quite easy in most states. You just need to set up your account, fund it, and away you go. For recreational players, there’s no additional work required because you already have the information that you need to bet. You can make up your mind on what to bet based on what you’ve watched and read recently. People are already spending a lot of time consuming information about the game they want to bet on. No extra work is required.

Now, contrast that with betting on the horses, where you have to buy and read the Daily Racing Form or some other handicapping publication, and then study them in order to form an opinion on what to bet. There’s work involved in doing anything other than just picking numbers or betting on the gray horse.

Brisnet is helpful for simplifying things not just for beginners, but also for those who just don’t want to do the work. I’ve got a good friend who’s quite knowledgeable about horses, used the Ragozin sheets for years, and then he just got lazy and started betting almost entirely on favorites using Brisnet.

I understand Equibase has some products targeted to beginners as well, but for a non-racing fan or a casual gambler just wanting a little action on a Tuesday afternoon, I’d like to see a simplified way of allowing people to make an informed wager. If you think about it, we now have millions of people across this country with legal gambling accounts. Sportsbooks are always looking for content to offer bettors and ways to have them betting on something other than the major sports. You have that content. A lot of customers simply disappear after the Super Bowl and don’t come back until the start of the NFL season.

Others stay active through the end of the basketball or hockey seasons, and of course some bet baseball, but there’s significant seasonality in the sports betting business, and it is largely content driven. Helping to fill that content void with horse racing is an opportunity worth pursuing, especially given this summer content in racing.

Think about this. You have an unprecedented opportunity to expand the reach of your content and engage new fans. Millions of Americans now have sports betting accounts funded with money to bet. There’s a lot of sports content, but it’s nowhere near 24/7, and outside of football, most of the games are played at night, while horse racing primarily is a daytime sport. You already have the content. The incremental cost to position it for consumption by sports bettors is so small that you’ve got to give it a shot.

One reason I think there’s something to be done with this is the experience during COVID when sports were shut down. Sportsbooks had no content to offer customers while their customers wanted to bet. At William Hill, we started offering Russian and Belarusian table tennis, and millions of dollars was bet on it. Few people had any idea about the skill of the players. They just wanted the action. In some states, the table tennis phenomenon continues by the way. In May of this year in Colorado, nearly $14 million was bet on table tennis, more than golf, MMA, and boxing combined. It’s just about the action.

Yeah, I don’t know what the idea of simplified betting information looks like, and to be candid, it’s not entirely my idea because this came out of my lunch with Andrew Moore back in Del Mar. Perhaps it could be a project spearheaded by The Jockey Club or a group of racetracks working together. It was back in the early 1990s that The Jockey Club decided to take control of past performance information from the DRF through the creation of Equibase. Tackling issues related to betting information is something with a historical precedent.

You have the content. It’s just a matter of getting it in front of people with a proclivity to gamble and an easy way for them to form an opinion on what to bet. I mentioned earlier watching the Triple Crown and some other races on network television many years ago. Today, major races are still broadcast on television, but they’re also streamed online for anyone to see. Day-to-day races are broadcast in some form for simulcasting or ADW purposes. We’ve got to get those broadcasts in front of sports bettors, so those who want some action on the third at Delaware Park, while they’re trying to pass a little time, have that option.

Now, I’m not suggesting that this is the silver bullet to save horse racing. You all know the myriad of challenges that the industry faces far better than me, but what I am suggesting is that there is revenue to be had and new fans to engage through sports betting beyond a few days a year and that the juice is worth the squeeze. Thank you for listening. I hope to see you at the races.