Wagering in my old Kentucky home

IMG_5283The recently released Kentucky Horse Racing Commission report for the 2015 and 2016 fiscal years contains a positive — wagering in the Bluegrass State on live racing increased 4.84 percent to $197 million.

But how those dollars were wagered gives some fodder to those in the thoroughbred industry who  fear that account wagering, through services like TwinSpires.com and TVG, cannibalizes rather that grows wagering.

Of the $465.15 million bet in Kentucky in fiscal year 2015 (year ending June 30, 2015), 35 percent of that was bet at home or through a mobile device using one of the advance deposit wagering (ADW) services. Of the $487.64 million bet in fiscal year 2016, 40 percent was bet through an ADW. In just one year, the share bet online increased by 5 percentage points while the share bet on-track and on simulcasting both fell. Said another way, ADWs now are the largest source for betting in Kentucky.

In raw terms, ADW wagering in Kentucky increased 21.7 percent to $197 million in 2016 — again in just one year, while on-track wagering fell 2.5 percent to $110.8 million and simulcast betting fell 5.18 percent to $179.8 million.

A recent Blood-Horse blog post illustrated the issue in California.

A shift in wagering habits is behind the decline in pari-mutuel revenues generated for tracks. In FY2011, ADW handle through the licensed California ADW companies accounted for 21.1% of wagering on state tracks. In FY2016, that percentage ballooned to 30.4%, including 38% of the wagers by California residents. Because a percentage of that money goes to ADWs, there’s not as much money left for track commissions and purses.

As the blog post in the Blood-Horse notes, it’s highly likely that a chunk of the on-track and simulcast wagering would just evaporate if not for online betting.

As in California, Kentucky purses receive less for ADW wagers than from more traditional bets. But the impact is buffered (somewhat) — at least for the Kentucky racetracks that have revenues from thoroughbred auctions, the slot-like historical horse racing machines or a race called the Kentucky Derby. Those sources provide purse revenues that, for example, a Turfway Park in Kentucky or a California track don’t have.

As a result of those extra factors, Kentucky purses increased 2.65 percent (excluding the $25 million for the 2015 Breeders’ Cup at Keeneland Race Course) compared to the overall wagering increase of 4.84 percent.

Kentucky wagering 2015 Market share 2016 Market Share Year over year
On-track $113,657,516 24.43% $110,805,991 22.72% -2.51%
Simulcast $189,658,311 40.77% $179,832,085 36.88% -5.18%
ADW $161,833,970 34.79% $197,006,273 40.40% 21.73%
Total $465,149,797 100.00% $487,644,349 100.00% 4.84%

 

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