Fixed Odds Horse Racing: Good or Bad for Horse Wagering in the US

Pari-mutuel wagering in the US dates back to 1867, and the model hasn’t changed much since its inception. Digitalization and the internet have made it more effective, allowing purses to grow to the point that there are only a few separate pools today. Over the decades, competition has emerged from lotteries, casinos, and sportsbooks. First, it was offline, and then, in the past decades, online casinos and sportsbooks have taken hold of American gamblers, so much so that horse racing is comparatively becoming a niche.

In Europe, it’s possible to wager on horses at fixed odds under the traditional bookmaker model. Horse racing used to be exclusively pari-mutuel, but many European sportsbooks have added fixed odds for horse and dog racing to adapt. In these cases, you bet against the house at a fixed price, the odds are locked in, and you know your potential winnings at the time of bet placement.

In the United States, we’re sticking exclusively to the pari-mutuel wagering model, partly due to its deep roots, and the other explanation is regulations. But could fixed odds horse racing have a future alongside the existing model?

We asked the sportsbook expert and writer Patrik Lidin from JustGamblers Sports, who said this about pari-mutuel wagering and fixed odds horse racing: “It (horse racing) is deeply rooted in European gambling culture, particularly in northern Europe, where trotting dominates. Pool betting (pari-mutuel wagering) is extremely popular there, so much so that the model extends to other sports. Daily, you’ll find pools of matches across different sports like soccer and ice hockey, where you need to guess outcomes and results with relatively large purses. In other words, pari-mutuel wagering is even more prevalent in northern Europe than in North America. At the same time, sportsbooks and racebooks in those markets offer pari-mutuel and fixed odds wagering. There’s no reason they can’t co-exist.”

A survey commissioned by BetMakers Technology Group found that 83% of U.S. horse bettors want fixed odds alongside traditional pari-mutuel wagering. Fixed odds horse betting is currently only available in New Jersey through MonmouthBets, powered by BetMakers’ technology. Fixed odds have been legalized in Colorado but are not yet live, and other states are considering legislation.

As part of the survey report, Jake Henson, CEO of BetMakers, noted that this strong demand represents a significant opportunity for innovation in the U.S. horse racing industry, potentially attracting a new generation of bettors. The survey also highlighted a potential crossover with sports betting, as 67% of sports bettors indicated they would be more likely to bet on horse racing if it were available in sportsbook apps, and 66% said they would bet on horse racing if fixed odds were an option.

Despite this interest, 20% of U.S. sports bettors view horse racing as too complicated, which may deter them from participating.

Lidin commented on the survey: “It (fixed odds horse racing) could have third-order effects outside of just horse racing. Where regular sports bettors get into horse racing and gain exposure to pari-mutuel models, something that could create a demand for other pari-mutuel wagering products in American football, basketball, ice hockey, and baseball. Similar to how pari-mutuel wagering has expanded outside of horse racing in northern Europe.”

Lidin also said that “a problem in smaller countries has been that pools are small, where sharps assisted by computers, so-called CAW (Computer-Assisted Wagering) put in massive bets at the last second at undervalued outcomes, creating unfair conditions for other pool participants and swaying the odds massively in the process. In fixed odds, you bet against the bookie, and other bettors who have their wagers down are unaffected. Fixed odds are simply more consumer-friendly in comparison to pari-mutuel wagering.”

In the US, New Jersey and Colorado are the only states that have legalized fixed odds wagering on horse racing. New York introduced a bill in January this year and is likely to introduce it in the future. In the rest of the US, there’s a general pushback out of fear from existing racetracks and pari-mutuel wagering operators because fixed odds could result in less money for purses. That horse betting revenue would go to sportsbook operators instead of the existing pari-mutuel wagering industry.

Other key findings from the survey by BetMakers included:

• 64% of U.S. horseplayers have placed bets outside the traditional pari-mutuel system, using offshore sportsbooks or racebooks.
• The most popular wager type among U.S. horseplayers is Win, Place, Show (WPS), favored by 32%.
• Over half of U.S. horseplayers bet more than $200 on a typical race day, with 32% wagering between $200-$499 and 20% wagering between $500-$999.

As the survey shows, there’s overwhelming support for fixed-odds horse racing, and regardless of what opponents think and say, the market will likely cater to that demand eventually. With New York, we would have three states that legalized fixed-odds horse racing; in another five to ten years, we may have ten times that. And as the expert from JustGamblers mentioned, this may open up for pari-mutuel wagering alongside fixed odds betting in other sports.