Las Vegas
It was a day that idle gamblers waited 78 days to happen. After being locked out of Nevada casinos because of the coronavirus, they were allowed back in.
Eager players poured through the reopened doors and were greeted by omnipresent temperature checks, fewer active slot machines and de rigueur social distancing, all obvious reminders that the pandemic was far from over. But where buffets were closed, the betting menu looked full.
There was, however, an exception that morning of Thursday, June 4. At 9:37 PDT the gates opened far away at Belterra Park near Cincinnati. It was the first North American thoroughbred competition on the first day back in the Las Vegas racebooks.
And any of those eager horseplayers wanting to bet that race was told, “Sorry, it’s not available here.”
Neither was the next race at 9:56 at Thistledown. And the next at 10:05 at Churchill Downs. And the next at Belterra at 10:09. It was not until the fifth race of the day – the first at Belmont Park at 10:19 – that a legal bet was available in Nevada at racebooks and through their apps.
Since so many sports are still in lockdown, horse racing has been a haven for gamblers looking for action around most of the country. But in Nevada exceptions have been a rule that has become more maddening by the day.
Although the racebooks may take action on as many as eight tracks on any given Friday, Saturday or Sunday, maybe another half dozen are off limits. And early in the week, when as many as 13 racecourses are open, sometimes there is not even one available for legal betting in a state that embraces the image of being the epicenter of world gambling.
Ultimately this is about money. What isn’t? To try and boil it down, some tracks have been trying for a bigger cut of the state’s handle, and racebooks are clinging to the percentage they have been getting. Other tracks that might be available to bettors around the country are not even in negotiations with Nevada, often because the amount of money they might bring in is small potatoes.
In the glaring case of Churchill Downs, collective bargaining with the racebooks has been at a stalemate for eight months. Now some of those shops are thinking about booking the Kentucky Derby on their own – completely outside the pari-mutuel system.
“It’s always been on the table as one of our alternatives,” Boyd Gaming race and sportsbook director Bob Scucci said Thursday.
Scucci was one of a dozen different sources from Nevada and racetrack offices who talked with VSiN about this matter in the past eight months. Most provided background information anonymously, because they were not authorized to speak formally on behalf of the various sides to this story.
Yes. It is complicated.
The cartel vs. Churchill
The racebooks negotiate their deals as a cartel doing business as the Nevada Pari-Mutuel Association. It is described on its one-page website as “a non-profit corporation that handles all administrative matters for pari-mutuel wagering in Nevada as well as providing representation for political, regulatory and public-affairs interests.”
But digging into the NPMA is like trying to unwrap a mystery. Its executive director Patty Jones has been on the job for nearly 23 years. At the direction of racebook directors based mostly in Las Vegas she is the chief negotiator on their behalf. Repeated attempts by VSiN to reach Jones by text and voice mail have gone without a response. Even so, some details have emerged from the talks with racetracks, especially with the nation’s most famous racecourse.
The impasse with Churchill Downs began when the betting plug was pulled Oct. 27. Each side has since claimed that the other tried to use a change in a takeout rate as a legal lever to renegotiate the existing deal for its benefit.
At the time a corporate statement from Churchill Downs said, “Unfortunately (our) races are not being distributed to Nevada pari-mutuel facilities due to the lack of an executed agreement. We would like to believe that this dispute can be resolved in the future so horse-racing fans in Nevada may once again wager on races taking place at the home of the Kentucky Derby.”
That was the last formal word on the matter from Louisville. Churchill Downs Inc. spokeswoman Tonya Abeln has not responded to repeated requests from VSiN for further comment.
There was a lot of buzz in January that a tentative resolution had been reached, but it proved to be a false alarm. As Churchill’s shortened spring-summer meet comes to an end Sunday, there is no hurry on either side to end the stalemate, since racing will not resume there until Sept. 1.
The word from Las Vegas: “There is no contract agreement in sight. Those guys will probably stand pat. Churchill Downs doesn’t have much to offer this time of year, and they wouldn’t even respond to (an NPMA) counteroffer. This Churchill squabble is going to go down to the wire.”
From Kentucky: “The closer we get to the Derby, the more serious the negotiations will get.”
Scucci would not confirm what sources from both sides say about the biggest bone of contention in the negotiations. Weighed against an average overall takeout of about 16 percent, Churchill wants to increase its percentage of the Nevada handle from a current rate of around 6¾-7 percent to 7½ percent. That does not even take into account the Kentucky Derby.
“They want the highest prices that we have ever paid for the Derby,” was the word coming out of one racebook.
Plan B in Nevada is to go the old-fashioned way and book the Derby on its own. Although they would not confirm it, Station Casinos and William Hill are said to be ready to join Boyd Gaming to do just that – outside the pari-mutuel pool for the rest of the U.S. and Canada.
“We have not discussed that internally yet,” Scucci said. “It’s never our desire to book the race separately. We’re always trying to arrive at an agreement. It’s always in both of our interests.”
Some sportsbooks in the NPMA may not have the wherewithal to book a full Derby betting menu on their own. Where Boyd’s Coast casinos, Stations and William Hill have big footprints, smaller stand-alone properties following their lead might have to impose less attractive limits while avoiding deep vertical and horizontal betting. As one sportsbook boss put it, “That could wipe out all my profits for one year if the Pick 5 hit.”
How much does one race mean to Nevada? Although specific figures for the Kentucky Derby were not immediately available, the Gaming Control Board said that $30 million in pari-mutuel bets were made last May, which also includes the Preakness. That was about 40 percent ($12 million) more than the monthly average for the rest of 2019.
It is not just Kentucky
Other negotiations have been more complicated – and more timely. Although it is not clear who made the first move, the NPMA and Tampa Bay Downs wanted financial relief from one another because of the economic impact of the coronavirus. After two race days were missed, the two sides made a deal on June 12, in time for bets to come in on the track’s last six cards before the season ends Tuesday.
“That was a last-second deal,” was the word from Las Vegas. “They cut their asking price in half so they could get in their last eight cards.”
Deals have apparently been struck with Los Alamitos and Ellis Park for their races to be open for wagering in Nevada this summer, and there is optimism that Monmouth Park will be available, too. And yes, it will be business as usual for betting on Del Mar and Saratoga.
But there are plenty of places that do not appear to be on the NMPA’s radar – and vice-versa. The worst day happened Tuesday, June 13. That was when thoroughbreds were running at Arapahoe Park, Assiniboia Downs, Belterra Park, Canterbury Park, Fair Meadows, Fairmount Park, Fort Erie, Grants Pass, Indiana Grand, Lone Star Park, Louisiana Downs, Mountaineer Park and Thistledown. All 13 were off limits for bettors in Nevada.
“Churchill also negotiates some of those,” one Las Vegas source said. “But some of the smaller tracks won’t even offer us a deal. Even if they did it would cost one book $800 per track to show their races, and it might not make that money back.”
It is not exactly big money
It is easy to say that racebooks and racetracks that do not have deals with one another are leaving untold dollars in the hands of horseplayers who either put the money back in their pockets or bet it through illegal means. Those back channels include off-shore sites. They also include advance-deposit wagering apps that are illegal in Nevada but not always geoblocked outside the 38 states where they are legal.
According to the Nevada Gaming Control Board there were $245 million bet statewide in 2019 on pari-mutuel racing, which includes harness and greyhound. The Jockey Club said $11 billion were wagered nationwide on thoroughbreds. The most recent figures available showed standardbred horses and greyhounds were attracting about $1.7 billion.
Although the Gaming Control Board’s standard monthly reports do not parse trotters, pacers and dogs, a conservative estimate based on the national figures is that at about 80 percent of the state’s pari-mutuel dollars are bet on thoroughbreds. That would mean roughly 2 percent of the nation’s handle comes out of Nevada.
Using Churchill Downs as the prime example, how much is being left on the table in Nevada? Other than an opening-day total of $14.3 million, the track has not reported handle since the fall meet last year, when it averaged $3.5 million a day. At that rate the current 26-day meet would reap $91.5 million. If Nevada could have thrown in its 2 percent’s worth, that presumably would have added $1.8 million, from which the takeout would be just short of $300,000. Subtract Churchill’s share of that under the old agreement, and Nevada might have held around $125,000.
Maybe that is really why the needle has been stuck with Churchill Downs. Was it worth $125,000 over two months for the NPMA and its 82 properties around Nevada to make a less than desirable deal with the track? The $1,500 per shop probably would not even pay the light bill.
Taking that one step further, if the biggest track that is not available to horseplayers is costing the state’s racebooks that mere pittance, what is the financial point of making deals to allow betting on tracks from Grants Pass, Ore., to Fort Erie, Ontario?
One casino operator said that that stark economic reality was the main reason that racebook apps were unavailable for daily, pari-mutuel bets during the 11 weeks when casinos were closed. “Nobody asked the association to have them turned on,” he said. “It wasn’t worth it.”
Bottom-line dollars and perceptions
The amount of money bet in Nevada on racing has plunged since it reached an all-time high of nearly $600 million in 1998 to $245 million in 2019. There is no doubt that 2020 will mark the 14th consecutive year-to-year decline. That is in contrast to the nation as a whole, which has experienced slight gains in racing handle four of the last five years.
But bettors and, frankly, the average reader is unlikely to get this far in the story. For most this is about the image that the world’s capital of gambling looks bad by not offering every racetrack that is available to horseplayers who are able to make bets in other states without even getting out of bed.
The ADWs (including 1/ST BET, a VSiN sponsor) that make betting life easy for horseplayers are off limits in Nevada, because laws were written to protect the state’s casinos and encourage foot traffic into its racebooks. Even though those shops now have apps of their own, they still do not offer all the tracks available on the ADWs.
In essence, then, this is like those signs that say, “We reserve the right to refuse service to anyone.” When it comes to certain racetracks’ availability in Nevada those signs may as well say, “We reserve the right to refuse service to everyone.”
Ron Flatter’s weekly racing column is posted every Friday morning – more frequently for big races – at VSiN.com. You may also hear the Ron Flatter Racing Pod posted Friday mornings at VSiN.com/podcasts. On the current episode Peter Eurton, trainer of Storm The Court, and his daughter Britney Eurton, reporter for NBC TV and TVG, talk about their lives in racing and about Saturday’s Ohio Derby. Former Horse Racing Nation editor Jonathan Lintner discusses challenges for racing media and racing itself. DraftKings Sportsbook’s Johnny Avello handicaps weekend races. The RFRP is available via Apple, Google, iHeart, Spotify, Stitcher and at VSiN.com/podcasts and is sponsored by 1/ST BET.
