Frankenstein Walks – Devo Rides (Part 14)

by Trey Nosrac

Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | 
Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13

“Until today, pari-mutuel wagering on horse racing has been the only legal form of sports wagering available throughout most of the United States at both physical locations and online. Now that the U.S. Supreme Court has ruled the Professional and Amateur Sports Protection Act (PASPA) unconstitutional and states are free to regulate sports betting as they see fit, our multi-billion dollar industry must rise to the challenges and seize the opportunities presented by this expansion of sports betting.” – Alex Waldrop, National Thoroughbred Racing Association President

When my passenger climbed into the front seat of my Prius, I was reading my I pad. His route today consisted of three errands, a stop at Drug Mart, lunch with an old high school friend at Taco Tico, and a three oclock appointment at a new spa with the catchy name, Massage From Mars.

“What’s with the massage parlor, you have less stress than a kitten in a patch of clover.”

“We all have stress, some of us just hide it. We have masseuses available 24/7 on the campus in California.”

“Must be nice. I’ve been mauled, maimed, maligned, but I’ve never been masseused.”

“You should try it.”

“I’ll put it on my on my to do list, right below a trip to Paris to see the Prix d’Amérique with Jennifer Lawrence.”

He smiled and said, “It could happen. Hey, Jennifer could give you a massage and shorten your list.”

Before heading off for the day’s destinations, I said, “It’s showtime.” Then I read from the blog on my iPad, “Following the May 14 ruling when the Supreme Court ruled the Professional and Amateur Sports Protection Act unconstitutional, Delaware will open sports gambling at three sites — Delaware Park, Dover Downs Hotel & Casino and Harrington Raceway & Casino.”

He said, “Yeah I read about the grand opening. New Jersey had a few snags but they will happen soon, maybe a week after Delaware. Then the avalanche will start.”

I read more of the article, “The Attorney’s General Office of Delaware has determined there are no legal obstacles to full-scale sports betting. Delaware can allow betting on professional and college sports, though not on Delaware-based teams. Delaware can allow betting on football, hockey, basketball, soccer, and golf.”

He said, “Trey, I feel you doubted this would happen.”

“I was skeptical. So, are you expecting flash mobs in Delaware?”

“No flash mobs.”

“Are horses racing at any of the joints? It this thing gonna help racing?”

He replied, “That probably depends on who is driving the state gambling bus. If the casino interests pull the levers, racing will be an afterthought. If horse racing is currently in the state mix, with contracts in place and seats at the table, then sports gambling will have some crossover possibilities with horse racing.”

I asked, “What about Delaware and New Jersey on the horse front?”

”I’m not sure. I searched this morning about the grand opening in Delaware and I didn’t find much about horse racing. Most everything was about sports betting, sample wagering cards, what sports are involved, and explanations on gambling terminology.”

I said, “Maybe they’ll have some horse activities planned at the racinos.”

“Hard to say, I’ve never been to Delaware.”

“Me either.”

He added, “These are early days. Soon, over 20 states getting in the game will create 20 different models.”

I said, “You don’t sound that excited. You predicted sports gaming would be a game changer.”

“It will, but not at this phase. The sports betting operations in Delaware will face the same obstacles that racetracks are living through — geography, economics, and convenience. The concept of brick and mortar sports gambling facilities will be a struggle. If a tech company like mine was running the show, we would blow right past this step.”

I mused, “Your crowd will wait for the damn phones and computers.”

He nodded, “So will most gamblers. To me, this rush to have sports gambling in various locations is unreasonable, a step backward. It is like opening a Blockbuster franchise in a Netflix world. The masses of people will not get into their cars and drive to make a wager. Maybe they will go a few times for the novelty, or they will use couriers, but herding people to place wagers will not fly for long. Like horse racing, gamblers will demand digital access.”

I sighed, “Tech companies are like vultures — watching, waiting for crashes, and plotting. Then you pounce.”

“We prefer to call it research, development, and optimal timing.”

“So you see this phase as a cruise to shake out the problems. You know gambling is going to hit an iceberg and high techie outfits will show up in lifeboats to rescue the passengers and their money.”

“Not a bad metaphor, Trey. My people do not see going back to brick and mortar buildings as a viable commerce option. Nor do we see individual state ownership of sports gambling workable. Gambling in the future would clearly appear to be interstate commerce and fall to the federal government. So yeah, the openings in Delaware and New Jersey will be test runs to get the bugs out. You need to hope horse racing gets in the mix.”

“Sheesh, you make it sound like everyone is watching to see if Frankenstein walks.”

“Another good metaphor; you’re on fire today. One of the issues in the new gambling world will find horseracing facing a choice. ADW sites currently take pari-mutuel wagers, where revenues come solely from the betting handle. They really don’t care who wins.”

“I know that.”

He added, “Plenty of people do not. Sports gambling is bookmaking with fixed rate wagering. Fixed rate wagering requires an active management of risk. All trends and demographics point in favor of fixed odds bookmaking. This is going to be a problem for horse racing. Account wagering companies have little experience with fixed rate wagering. They are not just flipping a switch; they need to learn a new game. And this is tricky because these companies do not want to alienate existing customers. This could be a shaky marriage.”

I said, “Well, starting on June 5, 2018, at 1:15 PM, Frankenstein takes his first step in Delaware.”

He nodded, “And steps are going on behind the scenes. One thing for sure, horse racing will have more competitors in the gambling marketplace. Lobbying is going on every day. Casinos, sports franchises, the NCAA, plenty of people are trying to get a handle on their piece of the gambling pie that new legislation will bring.”

I said, “It’s always about money.”

“Of course. The leagues are pushing for regulations recognizing their value as content providers. Remember that term, content provider, which is code for, “If they bet on our product, we are entitled to a piece of the action.”

I shook my head, “Quite the can of worms.”

“I wish the best for Delaware and New Jersey. I hope they can marry horse racing to new revenue. We will watch the numbers, measure the trends and bend some political ears. This next phase will be temporary. It will be short. It is not the answer. The world has moved past brick and mortar. The future of sports gambling is not in the buildings. It is not in states. It is in the cloud.”