Sports betting: Monmouth Park offers fixed odds, a change in the wagering game

A record $179 million was wagered on the Kentucky Derby. Less than .03% was bet on the long-shot winner, Rich Strike. Roughly 700 miles northeast of Churchill Downs, horse racing was making its next bet on the future of the industry. Opening day at Monmouth Park on Sunday featured the U.S. debut of fixed-odds wagering.

What is fixed-odds wagering?

Fixed-odds betting allows you to wager on a horse at a set price. It eliminates the risk of pari-mutuel wagering where the odds can change right until post time.

For example, fixed odds locks in the price. If you place a $100 bet on Philly Special at 50/1, that’s the price you are locked in at. Even if a big money handicapper pours in money and Philly Special’s odds change to 5/1 by post time, you still have the horse at 50/1.

Currently, fixed-odds wagering in the area is offered only for races at Monmouth Park. In the coming weeks, the track will offer fixed odds for races at out-of-state tracks. A new website and mobile app for fixed-odds betting should be live by the end of June.

If you think fixed odds sounds a lot like what you are doing on sports betting apps now, you’re right. The users at FanDuel and DraftKings are also the desired demographic. The retired men with Daily Racing Form ink in their blood and cigars in their mouths are becoming a thing of the past.

Bill Pascrell III is a partner with the Princeton Public Affairs Group that represents Monmouth Park and BetMakers. He was tired of seeing horse racing “die on the vine.” Fixed-odds wagering was in the works for three years before it finally went live, albeit after a Saturday rainout delayed its debut to Sunday.

Fixed odds wasn’t the only new feature at Monmouth. BetMakers, who set the odds, put a new, $2.2 million jumbo screen at Monmouth Park to display odds, results, and messages.

“It’s a necessary innovation we should have done years ago,” said Pascrell of fixed odds. “We think this is what horse racing needs to survive into the future. It’s the shot in the arm the industry needs.”

At its peak, there were over 300 horse racing tracks in America. Now there are about 100. The yearly racing handle has dipped from $16 billion to $10 billion. Racinos and off-track-betting were introduced to provide a jolt. The horse racing industry in Pennsylvania gets about 10% of the annual slots revenue (which Gov. Tom Wolf threatened to yank last year). Not to mention the larger issues surrounding horse racing such as doping and animal cruelty.

Professional sports bettor and co-founder of Unabated, “Captain” Jack Andrews is skeptical about fixed odds. He pointed out that the fixed odds displayed at Monmouth Park were decimal odds.

“They are not displaying the odds in a format familiar to American bettors,” Andrews said. “As sports bettors, we use the U.S. odds system [+110]. Horse bettors in the U.S. have always used fractional odds [3/2].”

The hold percentage of pari-mutuel betting fractional odds is 17-23%. Andrews said the house edge at Monmouth over the weekend was over 25%. It’s done for protection from “fringe events” like long-shot horses winning the Kentucky Derby.

Just like all the previous contenders to save horse racing, fixed odds has its doubters, but it isn’t as big of a long shot as Rich Strike. Fixed odds doubled the horse racing handle in Australia. It’s approved in Colorado and Pascrell said Gov. Wolf is supportive of it and he expects Pennsylvania and other states to follow.

“People want to see, touch, and understand it,” Pascrell said. “The numbers will be the best endorsement of fixed odds. If we are able to show the pari-mutuel system has stabilized instead of turning down and fixed odds has brought a new revenue stream, that’s when other states will jump in.”

Katie Kohler is the managing editor at Play Pennsylvania where she writes about sports betting and casinos.