Sunday, June 7, 2015

Horse racing: what is advance deposit wagering?

It finally happened: after 37 years, we have a Triple Crown winner in American Pharoah. There are many numbers that go into this win, all of which are detailed in this report from Forbes. Some of the most important numbers - from the industry's perspective - involve betting. At the 2014 Belmont Stakes, over $7 million was wagered by racegoers. An additional $83 million was wagered by people watching live simulcast of the race.

Advance deposit wagering allows bettors to create an account with an off-track betting facility, and the facility places bets for the bettor once the account is fully funded. ADW can be done over the internet or over the phone. It is not legal in all states. Indiana Governor Mike Pence recently vetoed a bill that would have allowed allowed ADW, stating that such a bill would expand gambling in the state. However, Governor Pence also acknowledged that gaming has become an important part of the economy in many Indiana communities. This is true in many states, and is the reason many legislatures have been addressing the ADW issue.

The takeout from ADW wagers is often split between the track hosting the race that is being bet on, the ADW operator, and the race purse. This means that ADW wagers generate revenue for the tracks, the ADW operators, and the horsemen who have horses running. The California statute authorizing ADW - BPC 19604 - allocates a certain percentage of ADW revenue to supplement pension plans for backstretch personnel and to welfare funds established for horsemen and backstretch personnel. In this way, ADW not only contributes to the state economy, but also to the racing industry.

What do you think about ADW? Let us know in the comments!

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