Prediction Markets Have the Racing Industry's Attention

Churchill Downs Inc. officials in the final week of February delivered a "Don't tread on me," message to prediction markets. A similar message is expected this first week of March at a National Horsemen's Benevolent and Protective Association conference. The sites allow players to wager, or accept wagers, on various event outcomes—elections, news events, etc.—including sporting events. The sites are able to do this by saying these "wagers" are actually "contracts." Prediction markets have characterized themselves as something similar to stock futures and say they're regulated at the federal level by the Commodity Futures Trading Commission, an assessment backed by that commission's new chairman Michael Selig. But many other players, including the American Gaming Association, view prediction markets as wagering sites. Like racing, tribal casinos and state-regulated sports betting sites also have voiced concerns. Speaking with investors and analysts during a Feb. 26 conference call, CDI CEO Bill Carstanjen said his company opposes prediction market sites taking wagers on horse racing. As money from state-regulated pari-mutuel wagering directly funds tracks and purses, Carstanjen noted that horse racing has a stronger interest than other sports—which don't directly benefit monetarily from sports wagering—in keeping prediction markets out. He noted the racing industry also has tools it can use to ensure prediction markets do not take wagers on racing. The CDI head noted that while states regulate pari-mutuel wagering, the sport's interstate wagering falls under federal legislation. "Horse racing has a different legal paradigm than other sports offerings in the United States," Carstanjen said. "Pari-mutuel wagering on horse racing is conducted under the Interstate Horseracing Act, which is a federal umbrella statute that essentially gives us a series of rights—call them intellectual property rights in our content. "So to take wagers (on racing) across any forum, whether it be a sports wagering platform, another horse racing platform, such as an ADW or a prediction markets platform; you need our express consent. You can't just do it without that." As prediction market bettors typically focus on big events, future wagers on prominent horse races already have found a level of interest. Tom Chignell, consultant for the Hong Kong Jockey Club, has said one prediction market site saw $1.2 million wagered on the 2025 Triple Crown races. Besides its racetracks, CDI also owns the successful advance-deposit wagering platform TwinSpires.com, which takes pari-mutuel wagers. Churchill offers several future book wagers on the Kentucky Derby (G1), and of course, those wagers benefit tracks and purses. As prediction market wagering does not directly benefit horse racing, Carstanjen is not interested in licensing prediction markets. "We haven't agreed to provide our content to prediction markets. We feel like we have plenty of distribution, and we like the terms of our distribution, so that's our focus for delivering access to our content to the customer base out there," Carstanjen said. "For the time being, that's how we expect to proceed, and that's what's best for our customers and our constituents, including the horsemen." Money wagered on racing through unlicensed platforms are likely taking away dollars that could be going through licensed pari-mutuel outlets that benefit the sport's bottom line. Knowing that, National Horsemen's Benevolent and Protective Association CEO Eric Hamelback thought it would be an important topic to discuss at his organization's conference this week at Oaklawn Park. On March 5, a panel will discuss: "Prediction Markets and Wagering, an Emerging Threat to Horse Racing and Interstate Horseracing Act Revenue." Hamelback said that prediction market operators have not sought industry approval. "They're not acting like they have to have a revenue-sharing contract with the horsemen, or a host fee that would be from a racetrack," Hamelback said. "It's even to the point where they're trying to purposely go around the verbiage of a wager and call it a contract. They're really trying to fight that narrative, but it is a wager, especially when you look at the way they put parlays together. "They can say whatever they want, but I doubt they even believe it themselves." Hamelback credited Dennis Drazin, who heads Monmouth Park owner Darby Development, with bringing the issue to the fore in December at the University of Arizona Race Track Industry Program's Global Symposium on Racing. "This is something horsemen better pay attention to. … When you look at it, we as horsemen, or let's just say the horse racing industry, we're the only ones that really have a defense against them, and that's because of the Interstate Horseracing Act," Hamelback said. "Horsemen need to be aware of it and make sure we understand that we could have a fight on our hands, or maybe we all come together, and there's something that can be done together."