https://www.bloodhorse.com/horse-rac...ide-for-racing
Excerpt:
REVISITING THE CASE FOR FIXED ODDS
The key difference between pari-mutuel and fixed-odds betting is when the odds are set: for fixed-odds, the player locks in the odds at the time the bet is placed; while in pari-mutuel, the odds are set when the race begins. In the U.S., legal sports books will operate with fixed odds and possibly exchange wagering, which enables player-to-player fixed-odds betting. We need to reconsider whether a shift to fixed-odds betting would maximize the appeal of race betting to sports bettors.
In the UK, exchange betting for sports has appealed to younger players and arguably has expanded the universe of bettors. Fixed-odds or exchange betting would also address the concerns many current racing fans have with past-post odds changes (which would be expensive to address through changes to the tote systems) and lack of visibility to odds for exotic bets.
In jurisdictions, such as Australia and the UK that offer pari-mutuel betting in parallel with fixed-odds betting, handle has shifted steadily to fixed-odds. For example, in Australia, fixed-odds now represents 39% of Tabcorp's racing revenues vs. only 14% in 2013. Fixed-odds revenue in Australia has grown at 25% per year since 2013 while pari-mutuel revenue has decreased at 5%.
Although the UK commission on exchange betting is only 2%-5%, there is no barrier to U.S. states setting commissions at 10% or higher, allowing for host fees to tracks that are comparable to those under current pari-mutuel structures. For fixed-odds wagers, the same level of takeout could be accomplished through a royalty or similar fee levied on handle.
In a fixed-odds system the bookmaker takes the financial risk of underwriting bets, which is why sports books set limits on wagers and have sophisticated systems and staff to analyze and manage risk. For U.S. racing, operators would need either to develop those skills or outsource the trading/risk management function.
Operators could offer fixed odds for single-race bets while using pari-mutuel pools for multi-race bets (which have the potential for multi-million-dollar payoffs).
Fixed-odds systems make it easier to bet against a horse and therefore could elevate the risk to competitive integrity. Therefore, a shift to fixed-odds would heighten the need to elevate and standardize testing, monitoring, and enforcement of racing rules.
