A potential breakthrough in the way New Jersey’s bettors wager on horse racing could boost slumping gaming tax revenues.
Sports bettors are familiar with fixed-odds wagering. It’s how pro and college football and basketball gambling is conducted (through point spreads) or baseball and hockey gambling (through odds of winning the game). A bettor checks the betting line, places a bet — often a day or two before the event —and the wager carries those odds for a winning payout.
Horse racing uses pari-mutuel wagering. Odds are set by the race track, and bettors place bets, knowing that the current odds they see when they get to the window or enter their bet online likely won’t be the final odds when the race begins.
A subtle example occurred Saturday at Monmouth’s most prestigious race: The Haskell. Authentic was listed as odds-on-favorite at 4:5 on the morning line, but so many bettors jumped on that line that it moved to 3:5 by the start of the race. Shifting odds in either direction is common in horse racing.
Australia-based firm BetMakers Technology Group and Dennis Drazin, owner and operator of Monmouth Park, entered into a five-year fixed-odds agreement in February and are awaiting a ruling by New Jersey’s commission. Monmouth Park is thus on track to become the first course in America to offer fixed-odds horse race wagering.
Bill Pascrell III, trustee at GVC Foundation US and partner at Princeton Public Affairs Group, is a leading expert on online gaming, lottery and sports betting. He was directly involved with BetMakers’ deal with Monmouth Park.
As for its authorization, Pascrell told Legal Sports Report last week that it’s not a question of if, but when.
“We are so close,” he said. “It’s about dotting the I’s and crossing the T’s.”
Pascrell played a highly influential role in other landmark efforts to bring online gaming and sports betting to the U.S. in recent years, saying bringing fixed-odds betting to the U.S. will be transformational.
Fixed-odds betting has been offered for 10 years in Australia — a country of 24.6 million people who now wager $25 billion on horse racing annually; 84% of which comes from fixed-odds betting. Comparatively, the United States has a population of 330 million people who wager about $11 billion annually, none of which is done through fixed-odds wagering.
Pascrell said it’s “hard to predict” what the commission’s approval could do to boost the state’s tax revenue.
The COVID-19-forced closing of casinos in June and the limited number of sports events available to wager on whacked the sports betting revenue for the month. Based upon filings with New Jersey’s Division of Gaming Enforcement, total gaming revenue for June was $97.6 million, compared with $283.8 million in June 2019, reflecting a 65.6% decrease from a year earlier. This is on top of the 65.4% decline year-over-year in May.
Most casinos reopened in July, which also hailed Opening Day at Monmouth Park for horse racing.
The state collects an 8.5% tax on casino and racetrack sports wagering gross revenue and a 13% tax on casino and racetrack sports wagering internet gross revenue. It also collects a 1.25% Racetrack Economic Development Tax.