Legalized Sports Betting: Opportunity or Omen for Racing? - Horse Racing News | Paulick Report
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Legalized Sports Betting: Opportunity or Omen for Racing?

Next week, a federal court in New Jersey will hear oral arguments in a case that could have significant short-term and long-range implications for the country's betting landscape.

The case pits New Jersey against the four major professional sports leagues and the NCAA over a law that would permit wagering on sports at the state's racetracks and Atlantic City casinos.  The sports leagues – the NFL, MLB, NHL, and NBA – claim New Jersey's new law would “irreparably harm amateur and professional sports” by fostering the idea that the outcome of games could be influenced by betting.  The leagues' lawsuit says the New Jersey statute, approved earlier this year, violates a 1992 federal law banning sports betting in all but four states.

If the court doesn't strike down New Jersey's law outright and the legal process drags on, Monmouth Park plans to be first in line for an operating license, a move that could come in mid-January.  The track's chairman, Dennis Drazin, has said Monmouth is willing to risk the $50,000 license application fee and about $1 million in renovations to begin taking bets on games as soon as possible.  The track is willing to take such a risk because it's losing around $3 million a year, and the current management, the New Jersey Thoroughbred Horsemen's Association, has said sports betting is an “essential component” of plans to make Monmouth Park financially self-sustaining.  In a statement last month, the group said a court ruling against New Jersey's sports betting law would “likely sound the death knell” for the racetrack and put the state's entire racing and breeding industry at risk.

How much of that is true and how much is rhetoric is certainly debatable.  Monmouth is saying that sports betting would help level the playing field against states that allow slot machines and casino gaming at racetracks, something New Jersey Gov. Chris Christie has opposed in the interest of protecting Atlantic City.  But if New Jersey wins a case that could ultimately open the door to sports betting in all states, would that ultimately be good for racing?

One only has to look at the proliferation of slot machines and casino games at racetracks to see where this could be headed.  Gaming revenue has certainly given a healthy boost to owners, breeders and horsemen in states like New York, where racino-infused purses have skyrocketed and incentive programs have reinvigorated the breeding industry.  But at what cost to the sport long-term?

Many racetracks with slots have shown little interest in supporting the racing product, and it's hard to make the case that racing has seen an increase in popularity because of gaming revenues.  Furthermore, the very states that allowed expanded gaming at tracks are yanking subsidies out from under the industry (see: Ontario, Pennsylvania and yes, New Jersey).  States are building casinos that compete for gambling dollars with horse racing.  And, in many ways, slots revenue has been a crutch preventing the racing business from innovating out of necessity, from engaging in a survival-of-the-fittest exercise that, in the long run, would make the industry leaner and healthier.

And so it might go with sports betting.  Wagering on sports certainly seems a more logical partner to horse racing than slot machines, but if sports betting proliferates the way slots have, won't that be the ultimate competition for racing's wagering dollar?

There's a long way to go on this, but it would behoove the industry to think long-term about the potential gambling landscape.  The professional sports leagues may appear to have clout in their fight against legalized sports wagering, but their position is tenuous.  Billions of dollars are already wagered on games each year illegally.  How is that better for the integrity of those games than legal wagering?

Embracing sports betting as a partner to racing could be a positive development, but only if the racing industry views it as a competitive partner and not a crutch.  The sport cannot afford to outright dismiss opportunities, such as exchange wagering or other technology-driven enhancements, which could keep it competitive with wagering on other sports.  If New Jersey wins this case, other states desperate for revenue are sure to follow.  Depending on how horse racing responds, it could either be an opportunity or a death knell.

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